Archive for the ‘Business’ Category

Bookkeeping – Working Smart

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Bookkeeping is not just entering transactions, reconciling your bank statement and saying, “I’m done!” Bookkeeping lays the foundation for everything that is extracted from your financial data, and business owners deserve data they can trust. Good bookkeeping does require work, but working smart now saves time, money and headaches later. Here are some tips for working smart.

Be organized and efficient – We’ve all been there – scouring pockets, wallets and vehicles searching for a missing receipt from months back. That’s human, but frustrating nonetheless. However, when you have a consistent and secure location for receipts and allocate expenses as you pay for them, you decrease the risk of missing receipts or transactions.

Be software friendly – Trying to save money by not upgrading to the latest software or software update is not working smart. Not using current software can leave your files vulnerable to cyber hackers, not to mention the frustration of a slow and glitchy software experience. Keeping current also means you’ll benefit from many new features and improvements that can make bookkeeping easier and more efficient.

Be financially separate from your business – It may take some time to set up business accounts and credit cards but doing so is working smart. It’s much easier to track business transactions, and you’ll save money as your accountant won’t have to spend time sorting business vs personal transactions at each year end.

Be reconciled to reconcile – Reviewing your bank statements, credit card and vendor statements monthly (at the very least) can help you catch errors or potential fraud early in the game.

Be mindful – Use a sticky note, set an alarm in your calendar – whatever it takes to prepare and file sales tax, employment and payroll tax, worker’s compensation and income tax ON TIME. Also, remit the amounts owing ON TIME to avoid penalties and interest.

Be careful – If your bookkeeper is unsure about the posting of any unusual or complicated transaction, they should seek guidance from your accountant. A quick call can save a lot of trouble down the road.

Working smart may mean some extra effort and diligence today, but is definitely worth it to have a successful tomorrow!

Do You Need a Financial Advisor?

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Costco, Superstore and Wal-Mart have got us used to the efficiency and convenience of one stop shopping. However, should this same concept be applied to your financial needs? Not necessarily.

At Scarrow Yurman & Co. we do our best to attend to the tax needs of our clients. We go beyond simply fulfilling their legal obligations and are proud to provide advice for buying and selling businesses, corporate restructuring, estate and succession planning and even retirement planning.

However, depending on the complexity of the situation or the scope of business, we feel that a “one-size-fits-all” approach is not always in the best interest of our clients. That’s why there are situations where we encourage our clients to expand their financial team to include a Financial Advisor. Having a broader support group with complementary financial services can help move a client in the right direction and give them peace of mind.

Types of Financial Advisors
Bank Financial Advisors
Financial Coaches
Financial Planners
Insurance Advisors
Investment Advisors
Mutual Fund Representatives
Stock Brokers (Investment Representatives)

Recently, we have become aware that some of our clients would like to know more about financial planning strategies including portfolio management, stocks and life insurance. We also realize that there is a sea of financial advisors out there and we want to ensure that our clients find the right fit for their unique personal and business needs. Therefore, if you are not sure you require a Financial Advisor, or would like us to recommend one, please contact us today.

Let’s get your questions answered together.

Cloud-based Bookkeeping Software – A Word of Caution

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Over the years we’ve learned that:

  • A “server” doesn’t always refer to the person at your favourite restaurant;
  • A “router” isn’t simply a power-tool; and
  • a “floppy” doesn’t merely describe your best sun hat!

Perhaps now you’ve heard the latest “techy” phrase “the Cloud” and you’re wondering: What is this “Cloud” anyway?

The “Cloud” Defined?

Basically, the Cloud is the Internet. The Internet hosts certain software packages that users can access anywhere via an Internet connection, as apposed to installing software directly on their personal computer. In fact, there are Cloud-based products on the market now to do your bookkeeping, such as QuickBooks Online, Wave and FreshBooks, to name a few.

These products boast of their accessibility, drastic simplification and user-friendliness. While we don’t necessarily disagree, we would like to offer a word of caution to business owners.

Cloud-based Bookkeeping – Our Caution

Would you trust someone without a valid driver’s license to drive you to Florida just because your car had an automatic transmission, was self-parking, and had hands-free phone access? A ridiculous concept indeed! However, as accountants, we’ve seen many business owners doing something quite similar. They’re putting too much trust in the automated “ease of use” claims of the Cloud-based software companies, reasoning that they no longer need an experienced bookkeeper “at the wheel”.

Here’s what we’ve noticed:

  1. Many times, the individual preparing the books has no prior bookkeeping experience.  This is a bad idea and leads to very messy bookkeeping – garbage in, garbage out.
  2. A frequent feature for these Cloud-based bookkeeping packages is the ability to upload your bank activity right from your bank account into the bookkeeping software. This is a beneficial feature for sure. But if not set up properly from the start, each time the bank transactions get uploaded, the books get worse. For example, it’s tricky getting the income and expense accounts set up for bank transactions. If done wrong, your books quickly become unusable for your accountant.
  3. In most cases, we find that before any year-end work can begin, the books must get fixed first.  In fact, there have been several instances where fixing a client’s books has taken considerably longer than the time it takes to prepare their year-end financial statements and tax returns.

Therefore, we urge you, when it comes to bookkeeping – use the cloud, but don’t keep your head in the clouds!  Please ensure you have responsible personnel at the wheel. Why not consult with us about your choice of bookkeepers or bookkeeping packages. We can help you make sense of it all and make informed decisions for your business.

ProfitCents Makes Profit Sense

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If you are a business owner, no doubt you are concerned about the financial health of your business. But how can you be sure your business is truly healthy and headed for growth? Could it be that you’ve been putting off asking your business advisor because the financial lingo, reports and graphs seem to too hard to understand? Maybe though, you enjoy the nitty-gritty of numbers and reports but are just not sure where to get accurate, helpful information. Or, like many of us, perhaps you feel you just don’t have the time. We feel your pain and want to help! That’s why we are introducing ProfitCents to business owners.

ProfitCents is a web-based suite of financial analysis solutions that Scarrow Yurman & Co. can use to assist business owners to get a deeper understanding of their over-all financial health and make better business decisions.

If financial information seems like another language to you, no worries. We can use this powerful tool to convert the financial numbers into plain language, so you can easily grasp your financial information. We can use ProfitCents sophisticated financial analysis, including financial projections and analytical procedures to:

  • Leverage industry benchmarks to compare your business with peers in your specific industry (over 1400 industries available)
  • Use a projection tool to perform “what-if” scenarios to show you how certain changes in your business can positively impact your financial condition
  • Help your business improve cash flow by identifying and prioritizing business improvements

Our Narrative Report

Once we have created a report specific with your business information, we will meet with you to clearly explain the results and answer any questions that you may have. Our typical report involves the following criteria:

  • Ratio & Liquidity Analysis – A measure of the company’s ability to meet obligations as they come due.
  • Profits & Profit Margin – A measure of whether the trends in profit are favorable.
  • Sales – A measure of how sales are growing and whether the sales are satisfactory.
  • Borrowing – A measure of how responsibly the company is borrowing and how effectively it is managing debt.
  • Assets – A measure of how effectively the company is utilizing its gross fixed assets.
  • Industry-Specific Performance Ratios – Key Performance Indicators (KPIs) for the business being analyzed, and they are specific to the business’s industry and revenue. We will track these KPIs over time and compare them to the industry averages to identify areas where the business might be able to improve operations.

Don’t let the financial health of your business rob you of sleep any longer! Call Scarrow Yurman & Co. today to find out how we can help you help your business 905-475-5200.

Going Green in the Workplace

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Green with envy – move over! We’re green with pride!

The same core values Scarrow Yurman & Co. are known for, such as ethics, loyalty and proactiveness has motived our office to make the necessary changes so we can enjoy an echo-friendly workplace. We think deeply about the implications of what we do. We thought you may be interested in how we are shouldering our responsibility in protecting our valuable resources.

Living healthier

  • We have many plants throughout the office which naturally filter toxins from the air.
  • Our staff has resolved to take the stairs instead of the elevator each day.
  • Some of us enjoy yoga each week to reduce stress and promote health and well-being.

Short route to commute

  • 70% of our staff have a 5-10 minute commute to work, thus limiting greenhouse emissions.

Use energy wisely

  • Our staff makes it a habit to turn off computers and monitors at the end of each work day.
  • We monitor lights and thermostats when no one is in the office.

Water conservation

  • We only run our dishwasher when it is completely full – not just at the end of each day.
  • Water in the boardroom that isn’t used will be used to water our plants.

Waste less

  • Our paperless initiative required that we purchase quality scanners, Adobe Acrobat and ShareFile software which has significantly reduced the amount of paper our office uses and has resulted in more secure file sharing and confidentiality with our clients.
  • We use dual computer monitors to compare/review documents instead of printing hard copies.
  • When we do need to print documents, we print double-sided to reduce waste.
  • Our fax is set to print to an electronic folder on the server – no paper required.
  • Our office uses filtered water as opposed to bottled water.
  • All staff is encouraged to recycle and have necessary bins at their workstation and in our kitchen.

If you have already implemented these types of initiatives in your home or workplace, bravo! If not, why not join us in making ecologically responsible decisions that protect our environment and our natural resources. Small consistent changes made by everyone can make a huge difference.

Go green with pride!

The Benefits of Job Costing

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An important costing technique that can make your bookkeeping easier is job costing. But what, you may ask, is job costing?

It is a costing technique where revenue and expenses are tracked by the specific job they relate to, instead of being grouped by function (e.g. supply purchase, travel expenses, etc.). If your business undertakes a lot of contracts where each new project comes with relatively unique specifications, then job costing just may be the costing technique for you.

Here are some ways that job costing could improve your bookkeeping and benefit your business:

  • It allows accurate tracking of revenues and expenses related to a specific project, which in turn makes it easier to track the profitability of that project; this can help you decide whether to accept a similar job in the future
  • It provides you with the chance to make proactive changes: if significant discrepancies are identified between estimated and actual costs before a job is finished, you will have the chance to take corrective action before the job is even complete
  • It enables you to give more accurate quotes for similar jobs in the future, because you will be able to rely on historical data to better estimate the costs; this in turn will help you calculate the desired markup accordingly
  • It gives you better knowledge of your own business: by providing you concrete data on the actual margins on specific jobs, you would be able to judge whether your expectations about profitability of these jobs are accurate

Ultimately, using job costing takes a lot of the uncertainty out of your business: you can use the past experience of your own company to help make management decisions that arise in the future.

There are a number of ways that QuickBooks has of making job costing an easy and manageable part of your business’s bookkeeping. If you’re interested in pursuing this further, talk to us and we can get you started!

Incorporation Of The Business; The Advantages

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  • limited liability – separates your personal assets from business and limits legal liability exposure to business assets only. Becomes even stronger factor if consider expanding the operations and hiring more staff.
  • allows for flexibility in choice of compensation:
    • timing of income – instead of getting your income when it’s received, being incorporated allows you to take your income at a time when you’ll pay less in tax
    • dividends – may offer overall income tax savings vs. salary (on a side note by taking the compensation in dividends you are not accumulating RRSP contribution room)
    • you may choose the compensation on a year-by-year basis (i.e. can switch between the 2 options)
  • small business tax rates – with this flat rate of federal and provincial tax on active business income, a maximum of $500,000 of active business income qualifies for the 15.5% flat corporate tax rate – lower than personal tax rates in Ontario.
  • continuance– unlike a sole proprietorship, a corporation has an unlimited life span; the corporation will continue to exist even if the ownership of the business changes- in case of the future buy out/partnership arrangement
  • flexibility in share structure
    • income splitting, family tax planning
    • in the case of the sale of the business, a sale of shares allows for the possibility to take advantage of lifetime $750,000 capital gains exemption on Qualified Small Business Corporation shares

While incorporation has the advantages listed it also requires additional compliance costs associates with accounting and tax return filings.

This is just high-level overview and more detailed tax planning will be based on your individual goals and situation at the time.

A Business Use For GPS Systems

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Normally you would think of a GPS system as a useful tool in your own vehicle to get you where you are going.

GPS systems have become very sophisticated and are now being used within business operations, but not in a way you would traditionally expect.

In a company where you have one or more vehicles out on the road most of the day you may want to consider this option.  A tracking system using GPS technology is installed into each of your corporate vehicles which will then report to you, normally on a screen within your office, exactly where the vehicle is located at any point in time.

The information obtained can help in day to day management of your fleet and ensure that company assets are being used to the maximum benefit for the company.  Where service calls require quick response times, the system can show you which vehicle is in the best location to respond. If you are worried about where corporate vehicles are being taken on weekends and after work hours, this can be tracked and reported.  If idle time is a concern, this can be tracked, as can the speed of the vehicle (the maximum, the average etc).

Companies using these systems found that their labour costs can be better controlled and savings can be achieved for gas and vehicle maintenance expenses.  It is even possible to track employee hours worked for payroll purposes using these systems.

Clients we know who are currently using these systems have found the cost benefit to be very positive and would highly recommend them.

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