Simple, Stress-Free Bookkeeping For Freelancers - Bob Wang

Transcript

1. Accounting shortcuts that can cause you problems later on
2. Hello! I am Bob Wang × CPA, CA Firm × But we only do bookkeeping - We see a lot of shortcuts that cause problems later on
3. Who here already has a bookkeeping system in place?
4. #1 - Putting everything through one bank account × Why do people do it? × It’s easy! Keeps it simple × More points! × Why is it going to hurt you in the long-run? × Heavily scrutinized by the CRA × Takes more time, so costs more, to get the bookkeeping done × What should I do? × Have separate business vs personal × If you don’t do anything else, do this.
5. Who is putting both personal and business through 1 set of accounts? What are you going to do instead?
6. #2 - Pay your staff as contractors × Why do people do it? × It’s simple, cost effective, and they can deduct more expenses × Why is it going to hurt you in the long-run? × The CRA is going to penalize you for your AND your staff’s portion × It’s very expensive! × What should I do? × Perform the following assessment and pay accordingly
7. #2 - Pay your staff as contractors × How can you tell the difference? × Control × Tools × Ability to subcontract × Financial risk × Opportunity for profit × Responsibility for investment
8. Who has Contractors right now? Who thinks they are paid as a contractor, when they are actually an employee? What are you going to do instead?
9. #3 - Use GST or Source Deductions as your own funds × Why do people do it? × It’s money in my bank! Why not?! × Why will it hurt you in the long-run? × It’s not your money! GST & Payroll deductions are trust money. You collect it on behalf of the government × What should I do? × Set aside the funds in a savings account × Make monthly installments even if you file Quarterly or Annually × Really educate yourself and talk to your bookkeeper
10. Who has no idea how much GST they owe? (and can’t find out within 30 minutes?) What are you going to do instead?
11. #4 - Hiring a friend/family to do your bookkeeping × Why do people do it? × It’s easy, it’s cheap. I can trust them. (btw, if your friend/family is a designated accountant, then there’s no problem at all) × Why will it hurt you in the long-run? × People always underestimate bookkeeping. Here’s just a short list of what they need to know to do their job well
12. #4 - Hiring a friend/family to do your bookkeeping × GST, PST, Source Deductions × 50% GST on meals & entertainment × GST/PST discrepancy reconciliation × Intercompany transactions, and agreeing the balances. × Shareholder transactions × Payroll, ROE, PIER reports × Invoicing, writing off bad debt, recognizing deferred revenue × Bank, loan, c/c, supplier account reconciliations × Prior period adjustments, and year-end procedures. × (btw… you can use this to interview candidates)
13. #4 - Hiring a friend/family to do your bookkeeping × What should I do? × The issue is not with hiring friends/family it’s × Do they have the skills × Do they have the time/interest × Make sure they have the skills × Make sure they will prioritize you and not just do your books on the weekends. × Hire someone else to at least review the bookkeeping × (Legacy can do this)
14. Who has a friend & family member do their bookkeeping? What are you going to do instead?
15. #5 - Turn a blind eye and hope things are OK × Why do people do it? × Just because you have someone doing your books, doesn’t meant it absolves you from understanding your financial situation. × Fear × “Weakness” × Why will it hurt you in the long-run? × No one is perfect × Wrong cashflow decisions because running your business blind
16. #5 - Turn a blind eye and hope things are OK × What should I do? × Review your books with your bookkeeper × To ensure accuracy × To gain understanding × To leverage that information × Understand your Cashflow
17. Who here looks at their financials at least once a quarter? What are you going to do instead?
18. Choosing the right help × Ensure cultural fit × Assess for skill
19. Choosing the right help × Questions to ask: × Show me how to do a bank reconciliation × I have 2 invoices that are still sitting in my AR, but I’ve already received them. What would be journal entry to fix these errors? × (Answer: Dr. Revenues Cr. Accounts Receivable) × How can you check if my GST’s have been filed on time? × (Answer: I have to first gain access to your CRA online account. Then I can check whether your GST has been filed.)
20. Review × Shortcuts that will hurt you in the long run × Putting everything through one bank account × Pay your staff as contractors × Use GST or Source Deductions as your own funds × Hiring a friend/family to do your bookkeeping × Turn a blind eye × Tips on how to hire the right help
21. Review Bob Wang CPA, CA bwang@legacyadvantage.ca www.legacyadvantage.ca @bob_wang23 https://www.linkedin.com/in/bobwang23/
22. Demo! If we have time