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Do you have a question for our experts at Amin Accounting? Hopefully, you will find the answer here in the FAQ; if not please feel free to call or email us with your question.
What Do Accountants Do?
The primary duty of an accountant is to prepare financial records and ensure that they are correct. Some of the specific duties of an accountant include the following:
Prepare tax returns.
Make sure that the company’s financial statements comply with state and federal laws.
Make recommendations to management on ways to decrease costs and increase income.
Prepare reports to explain their findings to upper management.
Meet with private clients to provide financial advice.
There are three different career possibilities within the field of accounting.
The first is a government accountant. In this role, you would ensure that all money spent and received by local, state or federal government agencies are lawfully used. You may also be involved with auditing individuals and businesses that are subject to taxation or government regulations.
Management accounts are responsible for preparing financial information for internal use at their company. Preparing budgets is a big part of their jobs. Some may also be involved with asset management, such as real estate, stocks and bonds.
Public accountants generally work with the individuals and corporations to help them manage their finances. As a public accountant, you may release balance sheets to potential investors or consult with a private client to help him or her make investments.
What is the Difference Between Auditors and Accountants?
While accountants and auditors both work in the financial field, they have different job responsibilities and goals. Accountants are more concerned with daily tasks, such as processing financial information, paying the company’s bills and balancing the books. The position of auditor is higher than that of an accountant. Someone in this role may review the work of a company’s accountants to ensure that it is correct. They are responsible for testing internal controls to determine if they are adequate to prevent errors and monetary loss for the company.
The types of reports that are issued by accountants and auditors are also different. Accountants are responsible for preparing tax forms, presenting management with budget proposals and working on aging accounts receivable reports. Auditors study these reports as a whole and present errors and discrepancies to management. They tend to look at their organization as a whole, while accountants are more involved in detailed transactions. Accountants typically remain in the office to complete their duties. Auditors may travel to other locations to review older reports. The bottom line difference between the two occupations is that accountants work with current fact and figures, while auditors are most concerned with work that has already been completed.
What are the requirements to the documents if I work as a self-employed?
You are required by law to keep records of all your transactions to support your income and expense claims.
Keep a record of your daily income and expenses. There are many record books and bookkeeping systems available. For example, you can use a book that has columns and separate pages for income and expenses.
Keep your records, along with your duplicate deposit slips, bank statements, and cancelled cheques. Keep separate records for each business you run. If you want to keep computerized records, make sure they are clear and easy to read.
If you do not keep the necessary information and you do not have any other proof, CRA may have to determine your income using other methods. CRA may also disallow expenses you deducted if you are unable to support them.
How I can determine what expenses I claim and what I don’t?
According to the Income Tax Act expense is deductible for tax purposes if it is:
— Deductible using Generally Accepted Accounting Principles;
— Not a capital expenditure;
— Incurred to earn taxable income;
— Not personal or living expense;
— Reasonable in the circumstances.
You cannot claim some of the expenses and among them are:
— Life insurance premiums (there is an exception where such insurance policy is used as a collateral for a business loan);
— “Capital” expenses – those expenditures, for tax purposes, are subject to the capital cost allowance (CCA), which provides for deduction based on a percentage of cost on declining balance basis;
— Personal expenses (there still could be a “business part” in some of them);
— Prepaid expenses (for future periods);
— Financing of business projects (such expenses should be amortized);
— Most types of CRA’s interest and penalties;
— Interest for vacant land (there is a limit you still can deduct);
— Golf/sports clubs memberships (there are circumstances where you can deduct a portion of such fees – consult with your accountant for details);
— Payments for some legal and accounting services;
— Most payments for advertising in a foreign media;
— 50% of meals and entertainment expenses (some of them qualify for 100% deduction, check the CRA’s website or consult with your accountant for details).
What are the minimum accounting and reporting requirements for small businesses?
A corporate tax return must be filed annually, GST/QST must be remitted if the business is registered for GST/QST, and source deduction must be reported and paid if the business has any employees. If your business is registered in Quebec, you will have to file the Quebec tax return.
When are personal tax returns due to the CRA?
Income taxes are calculated for a calendar year and the deadline is April 30th of the following year for individuals’ tax returns or June 15th for self-employed persons
It is advised that you have your taxes done well in advance of this date. If you are late filing, you should still file your taxes, but know that if you owe any tax then there may be interest associated with your account.
How does a tax-free savings account (TFSA) work?
The TFSA allows Canadians to earn tax-free investment income.
Canadian residents age 18 or over can contribute up to $5,000 annually to a TFSA and withdrawal amounts tax-free; however, contributions are not tax-deductible.
How is tax payable calculated?
Total income from all sources
Less: Deductions (e.g. RRSP, Childcare Expenses, Alimony Expenses, Moving Expenses)
= Taxable Income
x Federal tax rate
= Net Federal Tax
Less: Tax Credits (e.g. Tuition Credits, Medical Expenses, Donations)
= Tax Payable