Even if you’re not in the tech industry, you’ve most likely heard of the cloud. We’re not talking about the fluffy white ones that float in the sky, but rather it’s your spot on the internet where you do business. When you work in the cloud, you are accessing software programs, applications, and storage features through the internet. You will use a personal computer, laptop, or other connected devices to get to this information – it is no longer kept on your in-house server or office computer.
More than just a buzzword, the cloud is transforming how business is done. Below we discuss five ways that the cloud can change the way your company operates – for the better!
Access from Anywhere
Traditional bookkeeping programs are often kept on a local hard-drive or server in a company’s office. If you need to get to your financial data, you can only run it from that computer or from by accessing the server in your office. But if you are like most owners, managing your finances can’t always be done on a 9-to-5 schedule. You may be out at clients all day and not able to work on your books until you get back to the office. Even if you have a bookkeeper on staff, you are still limited to when they are working. Unless you are willing to make a special trip to the office, you’re out of luck if they have left for the day or go on vacation.
Enter cloud-based bookkeeping services. By moving your accounting system to the cloud, you will always have access to your books, at any time of the day. All you need is a secure internet connection and you can work from anywhere. Your finances will no longer be constrained to business hours. You can bill customers, enter vendor invoices, download bank transactions, and reconcile your accounts on your schedule.
It’s Easy to Use
Since users could be using a variety of connected devices to access their financial records, cloud-based bookkeeping systems are designed to be easy-to-use. You will find that adding a new customer or vendor, reconciling your bank account, or uploading your receipts are simple tasks you can do easily through a cloud-based bookkeeping program. Popular online software packages from Quickbooks and Xero offer apps that you can put on a smartphone, which gives you easy access from anywhere.
Improve Your Efficiency
Cloud-based bookkeeping systems can improve how your company operates. Some features that can impact the efficiency of your operations include;
Client invoices – When you bill a client, your cloud accounting software can automatically send the invoice via email. A client may also be able to pay you directly by clicking on a link in the email. Not only does this speed up the time it takes for you to get paid, the client’s payment is automatically posted against their invoice – saving you or your bookkeeper time. It also helps to reduce posting errors, since payments are automatically linked to the invoices.
Receipt capture – No more forgetting to turn in your receipts! Many cloud-based accounting packages give you the ability to capture your receipts by using an app on your phone. Just take a quick picture and link it to the right expense account.
Multiple users can work in real-time –Your staff will become more efficient when they can work in the system at the same time. This also you to generate reports that have the most current information available. Whether you are in the office or out on the road, you can easily use your laptop, smartphone, or connected device to see where your finances are. So if you are on the way to see a client, you can easily pull up their account to see when you billed them last, if they owe you any money, and what they typically purchase from you.
Software Can Grow with You
Cloud bookkeeping software programs are scalable, which means that as your company grows – the software can keep up. Companies that are growing may need for more than one person to have access to the financial records at the same time. Traditional bookkeeping programs that a small business owner may have may be limited to just one person.
Perhaps you are considering opening up a new location or introducing a new line of services. A scalable software solution will allow you to do such things as add a new company, calculate multiple currency rates, or consolidate multiple business entities into one report.
Your Data is Secure
There are many risks to your company if you house your financial data onsite. If your hard-drive fails and you don’t have a current backup, you can lose days or even weeks of work. The laptop or computer that you use to keep your books could be stolen. Files can accidentally be deleted. Disgruntled employees can pose a threat to the data that you keep on site.
With this in mind, keeping your data in the cloud is one of the best ways to keep it safe. Software companies who offer cloud-based solutions have IT departments that are dedicated to keeping your information safe and secure. They will have the most up-to-date security solutions and protocols in place to prevent unauthorized access and data loss. For even more safety, data is often housed on multiple servers, possibly in different physical locations. This helps to keep information safe in the event of a natural disaster.
More than just expert bookkeepers, the staff at Valley Business Centre will help you to transform your business through the cloud. From implementing a cloud-based bookkeeping system to integrating useful applications for your business, our team will work with you to find the best cloud-based products. We work with clients that are located in the BC area and throughout the region. For more information, contact the bookkeeping specialists at Valley Business Centre today.
As you prepare to file your tax return at the end of the year, you may be entitled to deduct operational costs that you paid to run your business. To ensure that you take the maximum amount of deductions that your business is eligible for, it is important to keep your financial books and records up to date. This will help you to identify deductible expenses and evaluate your expected tax liability. Doing this before the end of the year can help with tax planning.
Business owners have a variety of deductions that they may take. Below we have included some of the most common ones.
Advertising and Promotion – Whether you promote your business online, in print, or on the radio, you may be able to deduct these amounts on your tax return.
• The amounts that you pay to host your website, pay-per-click ads, and other online ads can typically be deducted in full.
• Print advertisements that are run in a Canadian magazine can be deducted in full. Newspaper advertisements may only be deducted in full if the newspaper is Canadian and the total advertisements within the paper make up 20% or less of the total content with the remaining 80% being editorial in nature. If the advertisements exceed 20%, then your deduction will be limited to 50%.
• The cost of running television and radio advertisements can be deducted in full as long as the show is Canadian.
• Promotional expenses can typically be deducted in full. These include expenses such as the printing of brochures, merchandise that is branded with your company name or logo that is given out for free, or the cost of running a seminar.
Bad Debts – If you billed a client but were never paid, this amount can be deducted on your tax return if you already recorded this as income in the current or prior year. If you have not already included this as income, no allowance for a bad debt can be taken.
Bank and Interest Charges – The fees that you pay to the bank on your business accounts are deductible for tax purposes. If you were you charged by the bank, this may also be deducted.
Insurance – Payments made toward insurance policies that are used to secure the assets and operations of a business are generally deductible. These include premiums paid for business interruption, liability, and property policies. Premiums paid toward life insurance policies are not deductible unless the policy was used to secure a business loan.
Interest Expense – If you have taken out a loan with the intent to benefit your business, the interest that you paid can be deducted. Keep in mind that if the loan was used for personal reasons, any interest paid cannot be deducted on your return.
Legal and Accounting Fees – Fees paid to attorneys or accountants can be deducted if the services rendered were in connection with your business.
Meals and Entertainment – Amounts that you pay for meals and entertainment expense can be deducted up to 50%. If the meal is considered excessive, however, the amount that can be deducted will be limited to 50% of what a reasonable expense would be.
Exceptions to this rule include:
• If you own a restaurant or hotel and regularly provide meals to customers in the course of your business, the 50% limit does not apply.
• If you include the cost of the meal on an invoice to your customer, the meal expense deduction will not be limited to 50%.
• Meals served at fund-raising events are not limited if they were incurred to benefit a charity.
• Meal expenses that are incurred for an office party may be fully deductible if you invite all employees from a specific location to attend. There is a limit of six events of this nature each year.
Entertainment expenses may be deducted up to 50% of the cost. This includes costs incurred for tickets to sporting or other events, renting out a room, and gratuities.
Different rules may apply to meals for individuals who are self-employed, fishers and their crew, and truck drivers who travel for a continuous 24 hour period. You can learn more about these deductions here.
Rent Expense – Office lease payments are deductible on your tax return.
Repairs and Maintenance Expense – Amounts that you pay to maintain or repair equipment or property can be deducted. If you are making repairs to a building, they must be incidental in nature. If the amounts paid will extend the useful life of the asset, it would not be considered a repair and maintenance expense. Rather, this would be included in the calculation of depreciation expense under the tangible property.
Salaries and Wages – Amounts paid to employees for wages are fully deductible. Other related employee expenses, such as payroll taxes and insurance, are deductible as well.
Shareholder Loan Repayments – Any loan that is made by a shareholder to a company is not considered to be taxable income. When the company repays the loan, it is not considered income to the shareholder, nor can the company take a deduction. However, if you charge the company interest on a shareholder loan, interest payments the company makes are deductible on a corporate tax return. Keep in mind, however, that interest payments received by you personally will be considered taxable income to you.
Tangible and Intangible Assets – Assets that have a useful life beyond one year are considered tangible or intangible assets.
Tangible assets include such things as buildings, equipment, and vehicles. These assets are written off through a depreciation expense deduction using the Capital Cost Allowance (CCA). Under the CCA, assets fall under certain classes, which determine the percentage of depreciation that can be deducted each year.
Intangible assets include patents, goodwill, and trademarks. Assets that were acquired on or after January 1, 2017, are deducted at a rate of 5% each year until fully amortized.
Taxes – A business can pay several types of taxes. Income tax, property tax, and payroll tax can be deducted.
Travel Expense – Expenses that you pay for traveling on a business trip are deductible. This includes airfare, taxis, rental cars, and trains. Overnight stays at a hotel are fully deductible. In addition, 50% of amounts paid for meals are deductible. Expenses that were incurred for personal travel are not deductible.
Vehicle Expense – If you use your personal vehicle for business reasons, you may deduct a percentage of expenses incurred.
Your deduction is based upon the ratio of:
Total kilometers driven for business purposes / Total kilometers driven
Expenses such as gas, oil, repairs, and registration fees may be deducted based upon this percentage. Certain expenses, however, such as parking fees are fully deductible.
To learn more about the deductibility of your expenses, visit the Canadian Revenue Agency here.
You can start preparing for your year-end tax return now. Strive to keep your bookkeeping records current, as it will help you to identify potential tax deductions and plan for the year-end. Be sure to keep invoices, receipts, and detailed logs of kilometers driven for business purposes to support your deductions. If you lack the appropriate documentation, your deduction may be disallowed.
If you have fallen behind in your bookkeeping and need help, contact the professionals at Valley Business Centre. Since 1990, we have helped small and medium-sized businesses with their bookkeeping and payroll need. Serving clients in the BC area and beyond, we offer reliable and timely service. For more information, contact the bookkeeping specialists at Valley Business Centre today.