Category: Uncategorized

Individual (personal) taxes – the deadline for personal tax filing has been pushed out from April 30th to June 1st. Sole Proprietors and those in a Partnership are considered individuals but their normal regular tax deadline is June 15th, so there is no filing change for them, it will still be June 15th. Individual payments (including sole prop and partnerships) was due April 30th, but this deadline has now been extended to August 31st.

https://www.canada.ca/en/department-finance/news/2020/03/canadas-covid-19-economic-response-plan-support-for-canadians-and-businesses.html#Flexibility_for_Tax-filers

For Corporations – the deadline for any corporate taxes that are due between now and August 31st, will be extended to August 31st. So anyone with a corporate tax payment due date before August 31st, 2020 will have an extension until August 31st.

https://www.canada.ca/en/department-finance/news/2020/03/canadas-covid-19-economic-response-plan-support-for-canadians-and-businesses.html#Extension_of_Deadline

HST Deadlines – Update as of 03-27-2020

The Canadian government has announced that HST deadlines will now be extended to June 30th, 2020.

https://www.canada.ca/en/department-finance/news/2020/03/additional-support-for-canadian-businesses-from-the-economic-impact-of-covid-19.html#_Deferral_of_Sales

“To support Canadian businesses in the current extraordinary circumstances, the Minister of National Revenue will extend until June 30, 2020 the time that:

• Monthly filers have to remit amounts collected for the February, March and April 2020 reporting periods;
• Quarterly filers have to remit amounts collected for the January 1, 2020 through March 31, 2020 reporting period; and
• Annual filers, whose GST/HST return or instalment are due in March, April or May 2020, have to remit amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.”

Is mortgage interest tax-deductible in Canada?

Generally, mortgage interest cannot be claimed as a tax deduction since it is not subject to GST or HST. However,  if an individual borrows against home equity to purchase income-producing investments (for example, purchasing stocks) then the interest paid on that loan can now be claimed as a tax-deductible. Therefore, creating savings or additional cash flow the homeowner.

Source:

https://www.canada.ca/en/financial-consumer-agency/services/mortgages/borrow-home-equity.html

What can I write off as a homeowner?

Below are the different tax deductions a homeowner in Canada may be able to claim:

Home Buyer’s Plan (HBP)

The Home Buyers’ Plan (HBP) is a program that allows you to withdraw from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.

Certain conditions must be met in order to be eligible to participate in the HBP, including the following:

• you must be considered a first-time home-buyer
• you must have a written agreement to buy or build a qualifying home, either for yourself or for a related person with a disability
• you must be a resident of Canada when you withdraw funds from your RRSPs under the HBP and up to the time a qualifying home is bought or built
• You must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability to buy or build a qualifying home, you must intend that that person occupies the qualifying home as his or her principal place of residence
• In all cases, if you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions.

Source:https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/participate-home-buyers-plan.html

Rental Income

If you are renting out your property and generating rental income, then you may deduct any reasonable expenses that you incur to earn rental income.

The two basic types of expenses are current expenses and capital expenses. A current expense is one that generally reoccurs after a short period while a capital expense generally gives a lasting benefit or advantage.

The following is a list of expenses that are deductible:

• Advertising
• Insurance
• Management and administration fees
• Office expenses
• Prepaid expenses
• Professional fees (includes legal and accounting fees)
• Property taxes
• Repairs and maintenance
• Salaries, wages, and benefits (including employer’s contributions)
• Travel
• Utilities
• Interest and bank charges
• Motor vehicle expenses
• Other rental expenses

Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/rental-income-line-126-net-line-160-gross.html

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals.html

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct.html

Moving Expenses

Generally, you can claim moving expenses you paid in the year if both of the following apply:

• you moved to work or to run a business, or you moved to study courses as a full-time student enrolled in a post-secondary program at a university, a college, or another educational institution
• you moved at least 40 kilometres closer to your new work or school

Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-219-moving-expenses.html

Work-space-in-the-home expenses

You can deduct expenses you paid in 2019 for the employment use of a workspace in your home, as long as you meet one of the following conditions:

• The workspace is where you mainly (more than 50% of the time) do your work.
• You use the workspace only to earn your employment income. You also have to use it on a regular and continuous basis for meeting clients, customers, or other people in the course of your employment duties.

You can deduct the part of your costs that relates to your workspace, such as the cost of electricity, heating, maintenance, property taxes, and home insurance. However, you cannot deduct mortgage interest or capital cost allowance.

Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-229-other-employment-expenses/commission-employees/work-space-home-expenses.html

Can you deduct property taxes in Canada?

Yes. You can deduct property tax assessed by a province or territory and by a Canadian municipality that relate to your rental property for the period when it was available for rent.

Sources: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct/line-9180-property-taxes.html

Is there a tax credit for homeowners?

Yes. Below are the different tax credits a homeowner in Canada may be able to claim:

Homebuyers’ amount

A homeowner can claim $5,000 for the purchase of a qualifying home in the year if both of the following apply:

• you or your spouse or common-law partner acquired a qualifying home
• you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years (first-time home buyer)

A qualifying home must be registered in your or your spouse’s or common-law partner’s name in accordance with the applicable land registration system and it must be located in Canada. It includes existing homes and homes under construction.

Sources: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-369-home-buyers-amount.html

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-369-home-buyers-amount/qualifying-home.html

GST/HST new housing rebate

A homeowner may be eligible for a new housing rebate for some of the GST/HST paid if he/she is an individual who:

• purchased new housing or constructed or substantially renovated housing, which could include housing on leased land (if the lease is for at least 20 years or gives you the option to buy the land), for use as your (or your relation’s) primary place of residence
• purchased shares in a co-operative housing (co-op) complex for the purpose of using a unit in the co-op for use as your (or your relation’s) primary place of residence
• constructed or substantially renovated your own home, or hired someone else to construct or substantially renovate your home for use as your (or your relation’s) primary place of residence and the fair market value of the house when the construction is substantially completed is less than $450,000

The GST/HST new housing rebate allows an individual to recover some of the goods and services tax (GST) or the federal part of the harmonized sales tax (HST) paid for a new or substantially renovated house that is for use as the individual’s, or their relation’s, primary place of residence, when all of the other conditions are met.

Source:https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-home-construction/new-housing-rebate.html

Home Accessibility Tax Credit (HATC)

Renovations or expenses incurred which make homes safer or more accessible for Canadians 65-years of age or older or for the disabled may qualify for the HATC provided they are being claimed by the eligible individual or by someone who looks after the individual and meets all of the CRA’s requirements.  Up to $10,000 in expenses can be claimed under the HATC.

A qualifying renovation is a renovation or alteration that is of an enduring nature and is integral to the eligible dwelling (including the land that forms part of the eligible dwelling). The renovation must:

• allow the qualifying individual to gain access to, or to be mobile or functional within, the dwelling
• reduce the risk of harm to the qualifying individual within the dwelling or in gaining access to the dwelling

An item you buy that will not become a permanent part of your dwelling is generally not eligible.

Source:https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-398-home-accessibility-expenses.html

Medical Expenses Tax Credit

The medical expense tax credit is a non-refundable tax credit that you can use to reduce the tax that you paid or may have to pay. If you paid for healthcare expenses, you may be able to claim them as eligible medical expenses on your income tax and benefit return.

Fees related to the changes made to a home that you can claim as medical expenses:

Driveway access – reasonable amounts paid to alter the driveway of the main place of residence of a person who has a severe and prolonged mobility impairment, to ease access to a bus.

Furnace – the amount paid for an electric or sealed combustion furnace bought to replace a furnace that is neither of these, where the replacement is necessary because of a person’s severe chronic respiratory ailment or immune system disorder – prescription needed.

Renovation or construction expenses – the amounts paid for changes that give a person access to (or greater mobility or functioning within) their home because they have a severe and prolonged mobility impairment or lack normal physical development.

Sources:https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-330-331-eligible-medical-expenses-you-claim-on-your-tax-return.html

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4065/medical-expenses-2016.html#cnstrctn

What is income splitting?

Income splitting, in a nutshell, is a tax term that describes splitting a person’s income on a tax return to reduce taxes owing.  Income splitting is a strategy that can be used by high-income owners of private corporations to divert their income to family members with lower personal tax rates.

If you do a simple internet search, there are two broad definitions of income splitting that produces results.  Income splitting on pensions relates to retirement planning and how to best optimize income splitting on retirement pensions between spouses (or common-law partners).  The income splitting that will be discussed in this blog post, however, is not for retirement planning, but to lower taxes paid on income earned in a private corporation.

When a private corporation makes a profit, there is a corporate tax on the net profit.  When the net profits are disbursed as dividends to shareholders, the individual shareholders are then taxed at a personal level.  Personal tax in Canada is taxed in a tiered system, and so the more income earned the higher the overall tax.  The idea behind income splitting is to disburse the dividend income among multiple family members so as to reduce the personal tax paid on this income.

Who is eligible for income splitting in Canada?

The strategy for income splitting is typically used for high-income owners of private corporations to divert income to family members with lower personal tax rates.

What needs to be considered?

There are a lot of considerations to be made when taking on this tax reduction strategy.  Generally speaking, there are rules that would prevent simply transferring income from a corporation to various family members.  There are rules in place that require family members receiving dividends from a corporation to be at least 17 years of age and be significantly involved in the corporation.

The rules are called tax on split income (TOSI) and if these rules are not followed then the income transferred to the receiving family member may be taxed at the highest income bracket, which then defeats the entire purpose of splitting income.

It is highly advisable to talk to an accountant when splitting income to avoid this exact case of being taxed at the highest income bracket.  Furthermore, there are other tax strategies that should also be considered in these types of situations.

A few articles for reference:

Income Sprinkling – https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/income-sprinkling/frequently-asked-questions-income-sprinkling.html

Tax on Split Income – https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/income-sprinkling/guidance-split-income-rules-adults.html

Since the inception of Fint Cloud Accounting, we’ve had numerous interns from volunteers to high school students to international university students.  Interns can be so difficult to manage due to their short work-term, lack of real work experience and misalignment in expectations.  I hear this same feedback about interns across the board.  In this blog post, I want to share my own experiences and how I’ve tried to overcome some of these challenges.

Commonplace challenges of internships

Here is a summary of my experience with my first batch of interns that hopefully captures some of the challenges that I’ve had.  *Note that real names are not being used in these examples.

Sarah was a recent graduate with experience in retail, but wanted experience working in an office.  I thought it would be a great idea for her to be my administrative assistant, to which she agreed.  I even got her an opportunity to shadow a professional administrative assistant.  Turns out, Sarah didn’t know how to manage a calendar and she hated talking on the phone. She was reluctant to reschedule appointments if it required a phone call and she hated this position so much that she turned down the opportunity to shadow a professional.

David was an experienced manager in the retail industry, and wanted to learn more about bookkeeping.  After he did the bookkeeping training, I assigned him a task that had some urgency to it and while I checked in with him during the week the task was not completed by the due date.

A new approach to internships: Allowing interns to lead their own internship experience

These stories are commonplace when managing interns.  In the cases that I had, I felt that the issue lies with me trying to drive the direction of their internship too much.  I took this as a learning experience for myself and created a new approach for managing new interns.  Here are some guidelines that I’ve adopted:

1. The bulk of tasks assigned to interns now are general training tasks or tasks that have low urgency.  Interns are expected to take their own initiative with these tasks, and they have one dedicated hour each day where they can ask any questions they might have.
2. We discuss our expectations weekly.  This is a two-sided conversation about what they expect to get out of the internship and what I expect from them.
3. Should the intern be ambitious about taking on additional tasks, we work together to figure out assignments that they can do during their term that would add value to the company.

The key in my new approach is that the interns now are leading their own internship experience.  With this approach, the internship experience becomes the priority (as opposed to adding value to the business).  I found that this worked much better for us.  It allowed me to discern interns who need more time with the training or just want to do the bare minimum to the interns who were looking for more.  I do not push interns to do work, but I help guide interns to a more fulfilling internship experience.  I also provide continuous weekly feedback on their performance.

Advice to interns

When I give advice to interns, I think about what helped me the most when I started my professional career.  What was it that made me stand out from my peers?  And this may vary from industry to industry.  The one thing I stand behind is thinking about how I can add value to the organization and then making sure that it is recognized.

For me, this meant taking notes when my manager was talking and actually understanding what it is that he does.  From there, I can figure out what I could do to make my manager’s work-life easier.  This means thinking of ways to add value to the organization that even my manager has not yet thought of.

I tell my interns that getting recognition for accomplishments is just as important as the work that goes into doing these tasks.  Each week, I ask my interns to write a short update on what they have accomplished last week and what they aim to accomplish this week.  In a competitive field, this is what made me stand out against my peers.  As a manager now, an update like this allows me to understand that my team has a direction, and also that it is the direction that I’d like for them to take.

Some might say that I take this bit of advice too far.  More recently, a friend asked me why I always say things like, “I would like to cook this dish, FOR YOU,” or “Let me know what you want for dinner so I can cook it, FOR YOU,”.  I didn’t even realize how obnoxious it sounded until he pointed it out to me.  I was just so used to internalizing this concept that I forget that it can come across as imposing when not in a business setting.  Personal interactions and business interactions can be and sometimes need to be different.  These are the kind of subtleties that can only be learned through experience.

A personalized approach to internships

Notice that the heading to this blog has a year stamp.  I think the internship approach needs to constantly be evaluated and tweaked.  As a millennial, I have to say that I was a bit difficult to manage.  I share many common traits of this generation which included being ambitious, but I also had this notion that I knew how to do things better.  Each generation of interns will have their own traits, their own nuances.  And so it would only make sense that this approach would have to be tweaked or updated to accommodate the changing needs of the new interns that come through our doors.

In our first year of operation, my main challenge was building a great team. Today, I am very proud of my growing team.  In our second year of operation and with a client base of over one hundred and growing, my operations manager and I reviewed our numbers.  Our team was consistently going above and beyond in their level of service.  It was not surprising then when an internal analysis showed that roughly fifteen percent of our clients were not profitable.

There are certainly reasons to continue to service clients who generate a net loss: future gains, building a brand, other mutual benefits etc.  What concerned me more than the losses were that the clients who were showing up on the non-profitable list were the same ones who gave my team the most grief.

We provide a unique service in our landscape, as one of the first completely virtual cloud accounting firms in Canada.  It is not surprising then that a small percentage of our clients were just not a good fit.  As a leader, it is my responsibility to ensure that my team does not burn out by servicing clients who do not see the true value in the services that we provide.  I did this by reviewing our existing client relationships and ensuring that we have a more rigorous screening process for new clients.

As a leader, it is my responsibility to ensure that my team does not burn out by servicing clients who do not see the true value in the services that we provide.

Reviewing Existing Client Relationships

The client receiving steeply discounted services

When you’re starting a new service company, more likely than not, there will be a few clients that you develop a personal rapport with due to the sheer fact that they were one of your first clients.  This happened to me.  I didn’t set clear expectations, because I was still figuring out the whole thing when they first became my clients.

It was extremely difficult to have these conversations with these clients to raise prices or discontinue services.  This is because the clients that pay the least for the services are the same clients that do not know the true value of the services being provided. It was not feasible for us to continue providing these services at steep discounts, and not only that but it was taking away from my company’s operational efficiency and taking away from clients who were paying full price for services.

…the clients that pay the least for the services are the same clients that do not know the true value of the services being provided.

The client that thinks that everything they need is urgent

Setting expectations is key here, but if that doesn’t work then steering clear is my advice.  I’ve had very emotionally driven clients that treat every request they send to us as urgent.  Having a client like this puts additional emotional strain on the team, this I think is something important that service companies need to think about.  Taking on a client like this could be the difference between your team member having more bad days at work.  While not completely unavoidable, it’s something that’s not insignificant and should be considered.

These were the two glaringly obvious red flags in our client-based that we addressed immediately.

Developing a Screening Process

Our existing client screening process was quite lenient.  If a client was opened to moving to cloud accounting and they knew how to use email for communications, they were in!  We needed to move beyond that and so we are in the process of refining our screening process to ensure a better client fit before moving forward.

The benefits of cloud accounting are becoming clearer to business owners: access to data anywhere, efficiencies in automation, efficiencies in integrations to POS systems, lower cost of bookkeeping.  Business owners are turning to cloud accounting as the answer, but when it comes to cloud accounting software there are two major players in Canada – so how to choose?  Here is a fully comprehensive guide to QuickBooks Online (QBO) vs Xero (Canadian Edition) from the perspective of a business owner.

Want to skip the details? Scroll to the bottom for a summary.

Initial Setup

QuickBooks Online is owned by Intuit, a rather large company that seemingly operates their Canada division in what seems to be a bit of a silo from the US.  QBO Canada and QBO US are totally different, and if you make the mistake of signing up for the wrong QBO account, you’re left having to re-do everything.

QBO and Xero have both created a step-by-step setup in the format of a survey.

QBO’s survey is a simple two steps.  The second step of this survey (below) seems really daunting.  It feels like you’re back in high school and you need to select your destiny right now.  In fact, this step is just a waste of time.  Your answer to this question is to help QuickBooks learn more about their own software and seems to be irrelevant to the setup.

The bulk of the setup in QBO is not in a survey format and looks more like this below.  Notice how setting up a chart of accounts, setting up taxes and setting up opening balances are not part of this guided process.  As an accountant, that boggles my mind.  QBO has in the past year removed their default chart of accounts, which allows for more flexibility in creating a custom chart of accounts but seriously, what small business owner has the time to create a chart of account from scratch?  Don’t know what a chart of account is?  Most small business owners don’t either, so good luck asking them to build one from scratch.

The Xero setup process is smoother and is more comprehensive while at the same time allowing users to skip steps that cannot be completed immediately.  An improvement to this setup process is to be able to more easily be able to get back into the setup at a later date.  During the process step, you are asked to select the country in which the organization will pay taxes.  Now, isn’t that intuitive?  Here is a screenshot:

Xero is the winner for this one, hands down.

Price

Without going into the detailed pricing plans for each software, the retail price of QBO and Xero are very comparable for small business owners.  Keep in mind that Xero invoices in USD, which is annoying for Canadians who want to pay in CAD.  It’s still comparable and so I declare this one a tie.

Invoicing and Payments

Creating and sending invoices to clients is simple to setup in both software.  Customization for invoicing is available in both software.  Payment processing fee options for both software is also comparable.

While both software allows for the integration of payment processing information, what this section will cover is the simple case of using the cloud software to invoice a customer using the software and offer the customer the ability to pay the invoice by credit card.

QuickBooks offers built-in payment processing whereas Xero allows users to connect to a variety of payment processors including Stripe, PayPal and Square to name a few.  While the built-in setup process for QuickBooks is much simpler, I found that QuickBooks as a company is terrible to deal with for matters of payment processing.  Without going into too much detail, their merchant service support line is horrendous to deal with.  QuickBooks payment processing also falls short when it comes to allowing users to invoice and accept payments in non-local currency.  By not offering a seamless payment processing integration options for invoices created within the software, QuickBooks falls short here.

So while it takes a few extra steps, seamless integration with a more established payment processor such as Stripe, PayPal and Square can offer less administrative headaches.  Xero takes this one.

Payroll

Similar to the merchant payment processing option, QuickBooks Online offers a built-in payroll option, while Xero does not.  That said, both software offers integrations to a number of fantastic cloud payroll providers.

The QuickBooks payroll option in Canada is just not competitive in terms of features.  Since QuickBooks does provide an option to run a built-in payroll module it gives users an added option to easily setup and run payroll within the cloud software.  Unlike with payments, QuickBooks offering this option does not take away from its ability to also integrate smoothly with an external payroll software.  QuickBook wins in the category of payroll because it is able to provide additional options (both a built-in option and integration)

Bank Reconciliation

Bank reconciliation in Xero and in QuickBooks is typically the first major difference that a bookkeeper will notice.  For the purposes of this blog, I will not be elaborating and will assume that the business owner has a bookkeeper and/or accountant.  Both software can perform bank account reconciliations in a similar manner by pulling in bank transaction data automatically from bank feeds and creating reconciliation rules.  From the perspective of a small business owner, let’s call this one a tie.

Financial Planning and Analysis

A simple look at both QuickBooks Online and Xero from a business owner perspective would show that both software has a number of standard reports for financial analysis, management of receivables and payables, and simple inventory tracking.  The software even allows users to load a simple annual budget, which allows for some simple tracking to budget.

Want to create custom income statement and balance sheet reporting?  Xero has a drag and drop interface that will allow for custom categorizations of accounts and save it in a template.  Xero also allows for multiple report templates to be saved.

As an organization begins to grow, its needs for financial reporting and analysis will also inevitably become more complex. A business owner needs to keep scalability in mind.  What becomes more important is not the canned reports provided, but how easily data can become exported in standardized formats.  Being able to export a flat list of data makes it easy to analyze a subset of data or even use the subset of data to help develop a more accurate forecast.  There is no contest in this category as it is much simpler to pull flat data files from Xero than from QBO.  Xero is the winner for financial planning and analysis.

Taxes

With the ability to pull GST/HST reports in summary and by detail with form line number references, ability to submit GST/HST reports directly from the cloud interface, ability to assign GIFI codes to accounts and even a brand new development to create and file tax returns, QuickBooks Online is the winner in this category by far.

This very straight-forward GST/HST report can be generated by business owners to submit their own GST/HST reports.  All of the tax line items are provided, which makes the filing process that much easier.

Xero tax reports are generic and likely because they have not been as established in the North American market for as long.  Xero tax reports are adequate to create an HST report and also to create financial statements that can be used to file taxes, however they are more like a data dump than actual tax reports.

Support

QBO has a customer service telephone call centre with very reasonable wait times.  Their customer service line provides excellent service, especially for basic how-to questions.  When it comes to more complex issues and inquiries into software glitches, this is where their call centre is not so helpful.  They have an escalated helpdesk with only outbound calling capability and they will call at random unscheduled times, just like the guy that fixes your cable.

Xero does not have a customer service line, but it does have a support e-mail that responds very quickly and is able to provide a high level of support remotely.  Xero also has a function to invite your customer support agent to your organizations so they can see what you are seeing.  This saves time because then you don’t have to do a screen sharing session on the phone.  I’ve found the Xero support to be very competent.

QBO and Xero both have a database of accountants that support their software so small business owners do not have to deal with this entirely.  I’m giving this one to QBO, because I understand the need for business owners to want to pick up the phone and call and speak to a real person.  I’ve also seen a formidable effort by QBO to connect to small business owners in real life through conferences and help connect them to bookkeepers and accountants.

Integrations / Apps

This blog article compares Xero and QBO side by side without the use of integrations to other applications.  The real power of cloud accounting is its ability to connect to powerful apps.  While many cloud accounting apps connect to both Xero and QBO, there are some that only connect to one.  A deciding factor of which software to choose is whether it has a certain app.  For example, a client of mine uses a specific real estate cloud system that only connects to QBO and not Xero.  In this case, it is clear that if they want to upgrade their accounting system to cloud, it would be much easier for them to pick QBO.

Both Xero and QBO have a strong app community and continue to encourage developers to use their software.  They both have sites that support the app community and allow for apps to be rated by users and for users to share their experiences with various apps.  It would be interesting to see how this continues to build out in the coming years, but for now, this is a tie.

Overall Ease of Use

Both QBO and Xero were designed with small business owners in mind.  Everything is designed to be click-button friendly, and there is no real need to understand debits and credits to use the basic functionalities of either platform.

QBO had an edge on menu layout as it has this really easy + button on the top right of the screen that allowed users to intuitively add new invoices, expenses, sales receipts, credit memos etc. without toggling between different screens.  As of earlier December 2018, Xero has entirely ripped off this layout.  Xero generally runs a lot smoother and has less lag and glitches.  The lag issue in QBO is one that I hear across the board from all users.  The load and refresh time is significantly slower in QBO than it is in Xero to the point where productivity is impacted.  I’m giving this one to Xero.

Summary

Feature	Winner	Comments
Initial Setup	Xero	Xero offers an easy setup wizard and a nice default chart of accounts
Price	Tie	Both products are priced similarly, Xero pricing is in USD
Invoicing and Payments	Xero	Xero offers seamless integrations with popular payment providers
Payroll	QuickBooks	QuickBooks offers the option of built-in payroll
Bank Reconciliation	Tie	Both software perform bank reconciliation with automated bank feeds
Financial Planning & Analysis	Xero	Xero offers easy drag and drop custom reports and clean data exports
Taxes	QuickBooks	QuickBooks produces summarized tax reports to easily fill tax forms
Support	QuickBooks	QuickBooks offers a live customer support line while Xero support is more competent, live customer support is what small business owners want
Integrations	Tie	Both offer a slew of app integrations
Overall Ease of Use	Xero	Less of a laggy experience, less glitches

Each of these tools has its own strengths and weaknesses.  From a small business owner perspective, I find that QuickBooks offers an all-encompassing solution that is more suited for small businesses that needs something simple.  It also offers a familiar product that many bookkeepers and accountants in North America are used to. For small business owners who have aspirations to continually scale and improve the efficiency in which they do things, I find that Xero is a great option.  As a forward-thinking accounting professional who continuously strives for continual efficiencies, Xero is typically my software of choice in most cases for the reasons in this blog article and for a slew of other more technical reasons that have not been covered.

Grammarly has changed the way that I work

Grammarly is a Chrome add-in that has changed the way that I’ve worked.  I’ve been trying Grammarly for almost a month now. While I feel that I am an advanced writer, I was surprised to see how many errors I was making without realizing.  I noticed that when I am interrupted often or just don’t have a smooth flow of thought, I sometimes double type words.  Grammarly made me become more aware of this and helped fix these errors in a way that just seemed less annoying than your typical word processor software.

It’s not as annoying as you would think

What I like about Grammarly is that it checks my written emails, messages, tweets, blog posts and even when I fill out surveys.  It basically works with every text field in the chrome browser.  I was initially hesitant about installing Grammarly because I felt that it would be really annoying to be corrected.  It isn’t like the correction feature on your phone, it does not autocorrect your typing, it just underlines errors or potential errors much like a word processing spell check.  While it does underline errors it does not look like the eyesore red squiggly line that you’re used to in a word processor.

It does not correct common short-forms.  An example of this is when I type “thx” in my messages.  I don’t get a red underline for this.  I like that.  I’m not writing a novel when I type and short-forms should and is allowed.

Look at this screenshot!  I love that it did not correct my tweet.  I would have been so annoyed if they highlighted my smiley face.  Thanks for understanding Grammarly.

Our entire team is now on Grammarly.

It’s not perfect

Like any spell check and grammar check, it isn’t perfect.  It’s not going to pick up on all errors.  If I use a word in the wrong context, it isn’t going to pick up on that.  I imagine that it follows some sort of algorithm for grammar and look-up for spellcheck.  I still think it’s great though.

Not a fan of the phone app

I really was so impressed with Grammarly that I decided to check out the phone app.  They have a downloadable keyboard app that installs like any other non-native keyboard app.  I have an android phone and it was easy enough to install.  I immediately uninstalled it when I realized that it does not allow for swipe typing.  I am a swipe typer and so I just couldn’t live with that.

If you would like to try Grammarly, click here to give it a go.

 

Your Start Up and E-Commerce Accountant

Jenny Tran, CPA, CMA

@fintcloud

Your company’s image and how your target market perceives you as a company is so important.  This is something that needs to be considered from business inception.  Faking it until you make it can bring you further as a company – have you watched Leonardo Dicaprio in The Wolf on Wallstreet?  At the very least, taking some small steps can make your company seem more organized and makes it easier for customers to trust your company.

Below are a few ways to make your new business seem established without any large upfront fees.  All of these suggestions that I am making are things that you will eventually need anyway and will make your business look more established right away if implemented on day one.

You need a website

I’ve connected with new business owners, who talk excitedly about their business and just as I get intrigued and ask to see their website, they tell me they don’t have one.  My saying is that if you don’t have a website, you don’t have a real business.  There are so many services to create a website, but if you are lost, let me help you with a recommendation: Blue Host.  Blue Host has an easy integration with WordPress.Org which has a ton of different plug-ins that makes it easy to create a website.

If you don’t have a website, how can prospective customers of your service or product see what you are able to provide and/or how to find you?

Don’t use a free e-mail service

Nothing screams amateur and unestablished like a @gmail.com, @hotmail.com, @yahoo.ca and don’t even get me started with a @sympatico.ca e-mail.

My firm uses GSuites to host our e-mail.  It also brings together all of our calendars and allows us to share calendars easily.  There are a slew of tools that come with GSuites that I use on a daily basis for my business.  I’m not sure how I can run a business without GSuites.  I like that every time I sent out an email, I am promoting my business brand.

Does setting up an e-mail address with your personalized domain seem too daunting?  Contact us, and we can refer you to someone who can help set you up.

Accepting electronic payments

If you are accepting cash-only for your business, you are more than likely turning away potential clients.  If you are accepting personal e-mail money transfers, this can look unprofessional and can make your business look less established (not to mention create a bookkeeping nightmare).

There are many ways to accept electronic payments from customer.  There are many solutions out there for payment processing that can process credit card payment to direct debit payments.  I will do a separate article on electronic payments, but if you need some help with this you can contact us to get setup.

Your Start Up and E-Commerce Accountant

Jenny Tran, CPA, CMA

Our business is growing and there is just so much to learn along the way.  We want to share some tips and tricks for managing a growing business.  There are three topics that is relevant for every growing small business: staying organized, mental health and appreciating employees.

 

1. Staying Organized

A company with just one owner might be able to get away with mental notes or just a simple notebook, but a growing company needs to be aware of what it means to stay organized at different sizes.

When we were just one, it was just a notebook.  Then we became three, and we started using Trello to manage tasks.  I highly recommend Trello, but we’ve grown out of it and now we started using a more robust tool called Karbon HQ that also allows us to track each other’s e-mail trails.  This journey would look different for different types of small businesses, but the underlying theme of proactively seeking the right tools is one that every growing business needs to consider.

At what point does one need an administrative assistant? This was a big question for me as of late.  We’ve been using Calendly to manage the need of having to coordinate back and forth the question of, “So, when can you meet?”.  It was fantastic, until I realized that it cannot make appointments, or make judgemental decisions on the priority of a meeting over another.  Personally, I made the decision that when my calendar became so full that it became a matter of having to decide which meeting is more important than another.

2. Mental Health

Most entrepreneur would agree with me that staying healthy mentally is something that needs to be proactive.  I don’t think the typical person appreciates how many decisions a business owner needs to make in a day, and how mentally exhausting it can be.

It is our responsibility to take care of ourselves.  My advice is to surround yourself with people who at the very least can sympathize with why you might immediately book a direct flight that costs more to having to check flight prices everyday, or stress out over connecting flights.  Making reasonable choices to avoid unnecessary stress is sometimes more important than saving a few dollars.  Yes, I’m an accountant and I actually said that.

Most recently, I’ve discovered how difficult it is to just look at my phone and not be immediately stressed out over the volume of notifications.  I thought it was normal until my friends started mentioning to me that they get stressed out over my notifications even when I ignore them.  I’ve now manually turned off notifications on almost all apps now.  I’m also trying out a meditation app called Calm.

3. Appreciating Employees

I used to work for big corporations prior to becoming an entrepreneur.  Big corporations are known for having disgruntled employees, and I admit to being a disgruntled employee at one point in my life.  Rather than hold a grudge, I take it upon myself to never forget how being unappreciated made me feel.  As hard as I may be on my employees sometimes, I will always try my best to appreciate them.  Many of my employees are young and new to the working world.  They probably have not seen how an unappreciated team with poor communication can quickly deteriorate.  I realize that having zero disgruntled employees can be difficult as a company grows, but do I take it upon myself to take preventative action.

We encourage open communication channels, welcome informal feedback and most recently we introduced an appreciation program using HeyTaco, a Slack integrated app.  Appreciating employees is something that needs to be ever-evolving and re-assessed from time to time for a growing company.  It should not be just a program that is implemented and forgotten.

 

Your Start Up and E-Commerce Accountant

Jenny Tran, CPA, CMA