Audit-Proofing: How and Why?

How many times have you lost receipts or have found them later disintegrated or faded?

One of our clients’ favourite features of online bookkeeping is the ability to audit proof their records. You have heard us mention this before, but likely are wondering what this means.

There are a couple of ways in which you can set-up your online bookkeeping system to audit proof.

When we talk about audit proofing what we are referring to is the ability to attach you invoices and receipts directly to the recorded expense in your accounting application. Now that CRA is accepting its desk audits/reviews through its online portal, this is a great feature to have. When you are asked to provide support for an account or for HST purposes for example, you can go directly into the entry and the pdf you need will be right there.

How do you get the pdf into your file? There are a few different ways. You can manually upload the pdf to the entry from your computer, you can use the QuickBooks app on your phone to take a picture of the receipt at the time of entry or you can use an application such as Hubdoc to take a picture or the receipt and make the entry later.

We personally recommend using Hubdoc and here’s why.

When you take a photo of your receipt through QuickBooks, you are also responsible to code and create the entry in QuickBooks. This puts the entire onus on you. With Hubdoc, you have the flexibility to take the picture of your receipt, email or upload to your Hubdoc account and leave the entry for someone else. This then allows for the flexibility for your staff to also take pictures of their receipts and email them to Hubdoc. How many times do you or your staff lose receipts and never find them, find them later disintegrated or faded, or after your tax return has been filed?

Another feature that we like about Hubdoc is the ability to auto fetch your documents. For your bank statements, credit card statements, PayPal, hydro, telephone bills, etc. you can set-up your Hubdoc account to retrieve these for you. How often do you receive an email or phone call from your bookkeeper or accountant looking for a missing statement? Wouldn’t it be nice if it was just there and one less thing you needed to think about?

Are you running out of space for storing your paper copies of your information? In that case, you should know that Hubdoc also acts as your filing system. As your invoices, statements and receipts are pulled into your Hubdoc account and pushed to your QuickBooks Online account, Hubdoc will file them into folders so that you can easily find a receipt/statement at a later point in time.

Do you have receipts that are for a specific project or job? You can add tags to these so that they are all grouped together. Then when it comes time to invoice, you can search by the tag and ensure that you have charged the customer for the billable/reimbursable expenses.

There are many other features that we love about Hubdoc. To learn more about how this may be a fit for you, reach out to us today.

Changes to Electronic Distribution of T4s

Did you know there have been changes to the regulations around providing T4 slips to your employees?

It is that time of year again – businesses are rushing around ensuring that they have all their employees personal information and payroll complete in order to prepare their T4s. T4s are required to be filed on or before February 28, 2018. Failure to file on time, results in severe penalties to the business.

Did you know there have been changes to the regulations around providing T4 slips to your employees?

Prior to 2017

Employers were required to provide employees with a T4 information slip by the last day of February following the calendar year in which an employer paid an employee any remuneration.  The options for providing the T4 were as follows:

  • Electronically (email or secure employee portal) if employee’s consent has been provided;
  • Two paper copies delivered in person; or
  • Two paper copies sent by regular mail to the last known address for the employee.

Changes (effective for 2017 calendar year)

Budget 2017 proposes to allow employers to electronically issue T4’s for 2017 and subsequent taxation years to employees without the initial need to obtain advance consent.  The Minister of National Revenue will require that employers meet specific criteria before they can issue the slips without advance consent.

Employer Criteria

Employers wishing to issue T4 slips electronically without advance employee consent must provide the employees with:

  • A secure electronic portal for employees to access their individual slips
  • Access to a secure site for T4 slip printing, and
  • An option to request and receive T4 copies in paper format

Employee copies of slips for a specific calendar year must be provided by employers on or before the last day of February in the following year.  For example, T4 slips pertaining to 2017 must be accessible online on or before February 28, 2018.

Paper Version of T4 Slips

Paper versions of T4 slips will have to be provided to an employee:

  • If an employer cannot meet one or more of the conditions listed above and has not received prior employee consent to electronically issue the T4 slips;
  • If employee specifically requests a paper version, such request should be written or in electronic format;
  • If the employee is on extended leave or no longer employed at the time the slip is issued; or
  • If the employee cannot be reasonably expected to have electronic access to the T4 slip.

Emailing T4 slips

Under the new rules, employers cannot issue T4 slips by email without employee consent.  T4 slips contain sensitive information about individual taxpayers, and in our opinion, email is not a safe way to provide these tax slips. Consider secure, confidential employee tools when providing T4 slips electronically.

For information on systems we recommend contact us today!

Six Limitations of Traditional Accounting Software

It is important to us, that you as the business owner understand what your numbers mean…

We’ve had a lot of conversations with our clients over the past few years, with road blocks and frustrations they have had with their traditional accounting software. It is important to us, that you as the business owner understand what your numbers mean and where they are coming from, while at the same time not find yourself limited by the technology in place.

The following are six limitations of using traditional accounting software:

i) Your data is not current, neither is your software

If you are always using old data, or worse can’t access you data on a timely basis, how can you be expected to make your business decisions?

ii) Accounting software is limited to the computers it is installed on.

There are a couple of issues with this. One you can only access your information from select computers. When the computers are not on the same server, data often flows back and for through backup files and/or USBs. This increases the risk that data is not reliable. I have heard more than once from a client who continued working on an out-dated backup file. In addition, when the file is being passed back and forth there is an increased risk that the data is not secure. Either passwords are not on the files, or the backup ends up in the wrong individuals hands.

iii) Limitations to how many individuals can access the data.

While there are systems that allow for multi-user access, you are locked out of updating certain modules while another individual is in the file. If you have ever tried to update your inventory module while another user is in the file, you have likely run into this issue. When these situations occur key users cannot access the financial and customer details while the other user is updating.

iv) The process of maintaining backups is often overlooked and completed incorrectly

Backups! Enough said.

Backups are an area that can be complicated and not the most straight-forward. Many clients forget to take regular backups at all. This is a huge risk. If there is a computer glitch, or worse your computer stops working and you have not taken a recent backup – poof, everything is gone!

v) Upgrading software is expensive and time consuming

New versions of software are released a few times a year. These updates result in time being required for the installation of the new version, and depending on the accounting software in place this can also become expensive.

Software is not automatically upgraded each time a new version is released. Many clients choose not to upgrade their accounting systems at all. This leads to its own set of issues, when payroll tables for example become outdated or are no longer supported by the version of accounting software being used.

vi) Customer support

The complications that are derived out of each of the above issues result in customer support calls and down-time of your system. Customer support can be slow to resolve your issues, taking additional time way from your business. If your accounting system is down during this time, your option is to continue in a manual form. This doesn’t sound like the best use of your time.

These are common pain points our clients have come to us with. They have discussed the feeling of burnout and that they just don’t what to do next. Many have been cautioned away from cloud accounting by previous bookkeepers and accountants. When these programs first came out, yes we would agree that they were not the best solution, but that is not the case today.

Having a discussion of the possibilities that are available to you when you make a change to using a fully-integrated accounting system is worth the conversation.

Cash is King!

What would the effect of collecting receivables a week or day earlier mean for your business?

Every business owner knows that cash is the life bone of your organization.  Without it you can’t pay suppliers, employees, CRA and most importantly yourself.  How often have you woken up in the middle of the night worrying about the next pay run or that large HST payment due to CRA at the end of the month?

What would the effect of collecting receivables a week or day earlier mean for your business?  Our cash flow program can help you to determine exactly what this would do for your business.

Have you ever wondered how you are doing versus your competition?  We have the tools to help you determine this.  We can show you how your key performance indicators measure up against your specific industry.

Wait, what is a “key performance indicator” you ask? Key performance indicators (KPI’s) help business owners gauge the effectiveness of their business.  We use these with you to determine if you are on target with your goals.

Some of the KPI’s we examine are new revenue generation, accounts receivable collection time, cash to payables ratio, profit ratios and many others tailored to your individual business.  The examination of KPI’s allows us to educate our clients so we can have more meaningful conversations; beyond this is profit for the year and this is your tax bill.  As we examine the KPI’s together we start to get a clear picture of the strengths of your business as well as what areas are holding you back.  This allows us to help you plan for future large purchases like that building down the road that would be the perfect place to operate from, or that piece of equipment that would allow you to increase revenue and efficiencies.

Knowing that you will have the ability to make these types of purchases while meeting your payroll obligations, paying suppliers and CRA on time all while enjoying a good night’s sleep is the sign of the right relationship with your business advisor.  After all it’s about you!

Who are we?

We are trained accountants, but have always believed that bookkeeping is very important for your business. This is overlooked by many individuals, both in and out of the industry. Our philosophy is that your records are your story. If time and care isn’t taken in writing your story, no one can read it.

How do we know that our system works?

We are trained accountants, but have always believed that bookkeeping is very important for your business. This is overlooked by many individuals, both in and out of the industry. Our philosophy is that your records are your story. If time and care isn’t taken in writing your story, no one can read it. And if no one can read it, it becomes expensive from a correction perspective but also increases your risk. Risk of not being compliant, risk of filing incorrect information, risk of triggering an audit, risk of not being able to prove you numbers. All of these risks add up and cost you.

In addition, we have found that our clients’ needs extend past compliance. Our clients need a partnership with their accountant/bookkeeper. They need to be able to strategically plan and this goes past discussions on “how much was in my bank at the end of last month?” Sometimes, our clients need a sounding board to run ideas off of. Other times, they need assistance with pricing their products. We help with this.

So how does going to the cloud help with this? Simple – by creating efficiencies within your business on how you report, track inventory, invoice, pay suppliers, collect payments we can help you stay current and have relevant, timely information. Having these systems talk to each other; we can create a situation where your bookkeeping is current, not behind by a month, quarter or year. This then means that you have more current information to base decisions off of. We can identify your issues much quicker, or help you reach your goals for the rest of this year, rather than next year. We can take your numbers, and discuss your pain points and help you determine if you need to hire, or if you can save the cost of an employee today by investing in another application that is specifically designed for you pain point. Would you rather have a $50,000/year employee cost or an $800/year solution? Sometimes that is the difference, other times, you really do need to hire.

We use an example of one of our clients quite often – he runs a successful and growing company, but his information was always behind. He never had a handle on his costs and it was time consuming to find when supplier prices were not correct or had changed, directly impacting his own profit margin. He wasn’t a big user of computers and technology, but knew something had to change to reach his goals. We worked with him one-on-one with transitioning to a cloud system – this included setting up a new computer, installing a scanner, setting up online banking & accounts, setting-up his cloud-based accounting system, training him on invoicing through the system and updating his price lists. The rest of his information was sent virtually to us, so that he did not need to schedule time to drop-off, resulting in more time spent selling his products. There was a steep learning curve for him, and after 3 months he emailed and met with us excited to ask what else he could do. He no longer felt overwhelmed by the thought of keeping his records up-to-date and told us he had the best handle on his pricing that he had ever had.

This is just one example of why we know our system works. Imagine what this could do for you.