supporting community entrepreneurs: business startup basics

Supporting Community Entrepreneurs: Business Start Up BasicsLinks to Learning 2013

Overview

What is a Business?

Getting Started

Getting Organized

Business, Vehicle, Home Office Expenses

Money In, Money Out

Record Keeping Methods

CRA – record requirements

Financial Reports

Workers Compensation Act – Worksafe BC

What is a business?

• CRA definition• A business is an activity that you intend to carry on for

profit and there is evidence to support that intention. http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/wht-eng.html

Getting Started

• You do not need to register for a business number• If revenues are under $30,000 per year and only services – no GST• If total revenues under $10,000 and you sell goods – no PST• There are no employees • The business is not incorporated• Goods are not being imported or exported

• Resources• Canada Revenue Agency

• Free courses on GST/Payroll• Business enquiries open 8:15 am – 8 pm

1-800-959-5525 press * to speak to an agent• www.cra.gc.ca

• Small Business BC & Community Futures• www.smallbusinessbc.ca

Getting Started

April 1st, 2013 – PST Returns to British Columbia• Do you sell goods subject to PST?• Do you have a storefront?• Registration is required• Revenues are under $10,000 per year and you do not have

a storefront• Registration is not required• Resource – Consumer Taxation Branch• One-on-one consultations in person or on the phone• www.sbr.gov.bc.ca

Getting Organized

• Keep Business separate from Personal• Use dedicated bank account and credit card• Sole Proprietor vs. Incorporated

Getting Organized

• Sole Proprietor? • is a type of business entity that is owned and run by one

individual and in which there is no legal distinction between the owner and the business.

• The owner receives all profits and has unlimited responsibility for all losses and debts.

• Every asset of the business is owned by the proprietor and all debts of the business are the proprietor’s.

• simple, year end is always December 31st

Getting Organized

• Incorporated? • is a business entity that is created as a legal entity distinct and separate

from the individuals who own the business.• The assets and liabilities of the business are separate from the

shareholders or owners.• An incorporated business has limited liability – if the business fails

owners may lose their investment (equity), employees may lose their jobs, but in most cases neither are liable for the debts of the business.

• If the business is closed or wound down, the corporation must be legally dissolved

• recommended when you are earning more money than you need to live on

Business Expenses

• anything which is involved in generating income• Cell phone & Internet• Office Supplies• Meals & Entertainment• Advertising & Promotion• Insurance• Legal & Accounting Fees• Licences, Dues, Memberships• Interest• Private Health Service Plan

Vehicle Expenses

• Sole Proprietor or Incorporated ? • Sole Proprietors - expense proportion of business use plus a

portion of the cost of the car• Incorporated – submit a mileage claim or claim a

proportion of expense

Vehicle Expenses

• 25% of expenses is reasonable• Record percentage use for business• Calendar with appointments and locations• Log Book

• 100% Business Expense• Extra insurance premium for business use• Parking

• Proportion of Expense is Business• Gas• Insurance• Repairs & maintenance• Residential parking permit

Home Office Expenses

• Home office • if this is where you primarily run your business a proportion of

the total expenses is allowable• 10% is reasonable

• Expenses• Utilities (gas and electricity)• Insurance• Rent (if you do not own your home)• Repairs & Maintenance• Strata Fees• Mortgage Interest• Property Taxes

Money In, Money Out

• Cash• Cheque• Point of Sale/Debit• Credit Card• Electronic Funds Transfer

Money In, Money Out

• PayPal • Setup is free • Request payments by email paid with credit card• Credit Card information remains with the customer

• SquareUp• Setup is free • Works with smart phone and can swipe credit cards• Designed to work with tablets • Customize the receipt • Transaction fee 2.75% for swiped transactions

• Email – bank to bank and some credit unions, e.g. VanCity

HST/GST – when to charge

• Off reserve charge everyone GST. • On reserve - GST is not charged to individual Indians - needs to have status

identity number on file• No GST is charged to band empowered entities – Certificate below

required, to be kept on file with the invoice for the event in case of GST audit.

• This is to certify that the property or service being acquired by [Insert the name of band or band-empowered entity] is for band-management activities (if applicable) or for real property on the reserve. This supply will not be subject to the goods and services tax/harmonized sales tax (GST/HST).

• _____________________________ Signature of Authorized Officer • _____________________________Date• _____________________________Title of Signing Officer

FNGST – when to charge

First Nations Goods & Services Tax• Has the same operating rules as GST/HST and replaces the

federal portion of HST, there is nothing which replaces PST• The tax rate for FNGST is identical to the GST, or the

federal part of the HST.

List of First Nations who have implemented FNGST• http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/frstntns/fngst

pp-eng.html

Record Keeping Methods

• Shoebox / Safeway bag• Expensive – pay someone to sort it out• Inaccurate• Likely things are missed

• Spreadsheet• Organizes the paper receipts• Works well for tracking expenses

Record Keeping Methods

• Accounting software• Can issue invoices• Tracks HST/GST• Tracks bills still to be paid (accounts payable) and sales

invoices outstanding (accounts receivable)• Can produce Financial Statements

Record Keeping Methods

• Wave• In the cloud• Free• Sole proprietor or Incorporated Business• Recurring Invoices & Payments• Accept Credit Card Payments via Stripe• Add Payroll

Record Keeping Methods

• Sage 50 (Sage Simply Accounting) or QuickBooks• Payroll• Inventory• Supports more detailed reporting requirements

• Using a Mac or a network with both Mac and PC• MoneyWorks

Canada Revenue Agency Requirements

• Whatever system you use -• A receipt (till receipt) for expense purposes has the GST/HST

number on it and the tax amount. • Credit card receipt or direct debit is proof of payment – not a

receipt

Canada Revenue Agency Requirements

• Whatever system you use - Keep the Receipt• A receipt (till receipt) for expense purposes has the GST/HST

number on it and the tax amount. • Credit card receipt or direct debit is proof of payment – not a

receipt

Canada Revenue Agency Requirements

Canada Revenue Agency Requirements

Canada Revenue Agency Requirements

• Record Retention• There are different rules, safe is 6 years after the date of

filing.

Invest in Good Record Keeping

• Budget for a Bookkeeper and/or Accountant• Do regard good record keeping and accurate, up-to-date

financial records as an investment

• Lender Expectations• Need to see Financial Statements– • Balance Sheet or Statement of Financial Position • Income Statement or Statement of Operations• Statement of Cash Flow

(another workshop topic!)

Worksafe BC – last but not least

• Statutory requirement for all workers in Canada – the person paying the bill is the one liable• As a sole proprietor – Optional Personal Protection • All corporations are required to register, there may be

no liability if there are no workers, file a nil return.

No Cost Method

• One Bank Account & One Credit Card• Pay Pal / SquareUp for Credit Card Payments• Wave Accounting / Stripe for Credit Card Payments

Business Start Up Basics Resource List

Business expenses, vehicle and home office expenses, record retention • Revenue Canada Agency www.cra-a rc.gc.ca• Business enquiries open 8:15 am – 8 pm

1-800-959-5525 press * to speak to an agent and bypass the messages

PST Registration & Information• To schedule one-on-one consultation www.sbr.gov.bc.ca/ctb/ask_a_tax_specialist.htm or call 1 877 388-4440.

• Email: CTBTaxQuestions@gov.bc.ca • www.sbr.gov.bc.ca

Seminars, courses • Small Business BC www.smallbusinessbc.ca• Outside Vancouver Community Futures

Record Keeping & Payments• PayPal www.paypal.com • SquareUp www.squareup.com/ca • Wave Accounting www.waveaapps.com • Sage 50 Canadian Edition http://na.sage.com/sage-50-accounting-ca• QuickBooks Desktop or Online http://quickbooks.intuit.ca/accounting-software/small-business-accounting-software.jsp

Employee LiabilityWorksafe BC www.worksafebc.ca

Supporting Community Entrepreneurs: Business Start Up BasicsLinks to Learning 2013