Quebec Business Accounting Services - Bookkeeping
Accounting is essential, whether it be in our personal lives or within the business world. If we define it further, it simply means keeping track of revenues and expenses in regard to both aspects of our lives. The accounting method generally includes keeping a ledger of all the different disbursement categories of spending as well as keeping track of revenues generated. The second step is preparing reports that reflect the losses or profits of a business or your personal spending. For business accounting, once a general ledger has been produced for a 12-month year-end cycle, and company statements have been reconciled, a profit and loss balance sheet and a trial balance report are produced to prepare the corporate tax returns (T2 and CO-17) as well as the financial statements. These tax returns and financial statements are then sent to Revenue Quebec and Revenue Canada.
In order for companies to keep track of the ins and outs of their finances, they generally use financial accounting. The process entails of recording things such as revenues, expenses, assets, shareholder loans, shareholder payables, dividends etc. The information collected is then implemented in a formal financial form, known as a financial statement. This form of accounting is useful as it prepares financial reports that provide information about a company's performance to external parties - tax authorities, investors, creditors, etc.
Managerial accounting is commonly used for managers and business owners. This method is beneficial when it comes to making financial decisions about the company. It also helps clarify where the company's financials are at particular standpoints. This facilitates the task for owners and managers to forecast the company's growth and its health. These factors can help with making decisions such as reducing COG (cost of goods), and/or whether or not the company can afford to purchase certain assets in the near future. Unlike financial accounting, which is designed for external use, managerial accounting remains within a company.
Cost accounting is used for companies when they need to determine the actual cost of manufacturing, providing a service or production. This can sometimes go hand in hand with social control accounting, which helps with building choices in regards to management. They look at things such as rent, lease expenses, interests on loans, maintenance, depreciation, etc. They analyze all expenses in order to budget themselves properly prior to making a decision that is most beneficial for the company. This can also be used to foresee when a company may reach the break-even point in their business.
The Steps to a Complete Bookkeeping Cycle
The first step to accounting is to select the software best suited for you. When doing so, it is important to do research and be comfortable with the software you eventually decide to use. With today's technology, many companies opt for an online or cloud-based software. These types of software are more practical as they are cost and time-efficient. In addition, what makes this type of software more desirable is that the client has remote access to it at all times.
The second step to accounting is to find an experienced bookkeeper. This person must be able to do the bookkeeping on a monthly, quarterly or annual basis for the business depending on its needs. The task of finding a good bookkeeper can prove itself very tedious, and it may be challenging to find a detailed oriented and experienced bookkeeper to complete a proper bookkeeping cycle. Therefore, it is essential to meet with the individual or the accounting firm that will be handling your accounting mandates and feel comfortable. Creating a rapport with your bookkeeper is also an essential aspect as it will facilitate communication and decrease misunderstandings. Accountants are extremely qualified to handle the bookkeeping tasks as well, but most will delegate this to experienced bookkeepers allowing them to focus on tasks that are more difficult and revise the bookkeepers' work for final filings.
When it comes to completing a bookkeeping cycle, it is crucial that the client cooperates with the accounting firm and the accountant or bookkeeper who will be taking on the bookkeeping task. Clients must provide all company banking, credit card statements, cash and/or other receipts, sales invoices and summaries for the period that needs to be completed. It is essential to be vigilant when doing so; if all documents are not provided, this may lead to future complications.
Once all of the documents are received from the client, the receipts and invoices are matched and attached to the proper statements. This procedure is completed in case a client requires to be audited; CRA (Canada Revenue Agency) and Revenue Quebec request for a "two-tier system" which means statements and receipts, and then they invoice both.
The information provided is then entered into the general ledger of the software. In order to avoid mistakes or complications, it is highly recommended to prevent multiple entries at once. Another recommendation is to have much detail possible entered into the general ledger of the software. This process might take a few extra minutes. Still, a detailed general ledger is more beneficial in the end if ever the government requires additional information and is proven to be more efficient.
Once all entries have been entered into the general ledger of the accounting software, then the company bank and credit card reconciliations are completed. All accounts must balance on the balance sheet.
Profit and Loss, Balance Sheet and Trial Balance reports are then generated for the period worked on. This is later revised and reviewed with the client.
Reconciliation of company accounts
Reconciliation consists of balancing all of the company's accounts after the entries from the bank statements and all credit card statements have been entered into the software's general ledger. Once all of the statements have been reconciled, the balances must match the figures at the end of the period on a balance sheet.
GST. QST, and HST Filing
For businesses that generate over $30,000 of sales, they must obtain sales tax numbers and bill their customers with GST and QST in Quebec, or HST in Ontario. Once an individual registers their business' sales tax numbers, they then get to select how often they would like to file or remit them. The periods for this process can be monthly, quarterly (every three months) or annually (12 months). In Quebec, GST is 5%, QST is 9.975%, and in Ontario, HST is 13%.
Remitting it to calculate the sales tax collected on the revenue generated for the filing period, and then to minus it from the sales tax accumulated on the expenses for the filing period. Once this is completed, the difference is what you remit to the government. The submitting needs to be done prior to the due date that you will find on the remittance form. For example, if what was collected in sales tax is more than what was spent, you will then have to pay the difference. However, if what was spent is more than what was collected, you will then receive a refund.
Corporate tax return (CO-17 and T2)
A CO-17 tax form is a form that is necessary for corporate tax in Quebec. A T2 tax form is a form that is necessary for companies to file their income tax returns in Canada. When practicing business in Quebec, both the CO-17 and T2 forms are required to be submitted to the Federal (Canada) and Provincial (Quebec, and/or any of the other provinces) agencies. Every incorporated entity is obligated to produce a CO-17 form after a 12-month accounting cycle. Fortunately, the government does provide companies a six (6) month grace period for these tax forms to be submitted. So, for example, if your company's year-end is December 31st, the corporate tax return is due by June 30th.
What data is required to fill out the CO-17 tax return ?
Knowing what information and documents are necessary to fill out the CO-17 tax returns is not always evident to company owners. This is one of the many reasons why they turn to and trust accountants to facilitate this task.
The information required for the CO-17 form are the following:
- Company name and address.
- Name (first and last), addresses and country of residence for all company shareholders.
- Names (first and last ), addresses and country of residence for all licensed mortal shareholders at intervals the corporate.
- Complete monetary statements (income statements and balance sheets) - the GIFI (General Index of Financial Information.
- The principal activity of the corporation.
- The different revenue sources of the corporation (investments, earnings, etc.)
- Whether shareholders hold shares in alternative corporations and if the corporation is coupled or related to alternative establishments.
- Whether the corporation participates in any activity abroad or has any international assets.
- Whether the corporation participates in any event in other Canadian provinces.
- Whether the corporation received or paid any dividends.
- Acquisition of fastened assets.
If any changes are made, it is crucial to submit this information.
It is important for companies to keep all previous tax returns, receipts, bills, and documents for at least six (6) months as they can be requested to be audited. It is also essential to submit forms no later than their due date, as this may result in penalties and interest.
Financial statement and/or notice to reader
A notice to the reader is also produced at the year-end. This is an unaudited financial statement prepared by an accountant. This document summarizes the activities throughout the entire year. The notice to reader consists of an income statement, which reflects the revenues, COG (cost of goods), operating expenses for the year, and a balance sheet, reflecting all company account balances. This wraps up the AR (accounts receivable), the AP (accounts payable), assets and equity at the year-end. A final page can be a part of the notice to the reader reflecting the company assets and, if any, deprecation that was recorded at year-end. Since this document is unaudited, it is not as reliable as documents that have been audited or reviewed.
Payroll in Quebec
In Quebec, payroll decisions must be remitted monthly. As an employee, your employer will deduct income taxes from your paycheck. This process is referred to as deduction at source or DAS. Both the employer and the employee are deducted taxes for QPP (Quebec Pension Plan), QPIP (Quebec Parental Insurance Plan), Federal UI (Unemployment Tax), as well as Federal Income Tax.
Source deductions are remitted to both government agencies (Provincial and Federal) by business owners on the 15th of every month. It is strongly recommended to avoid late filing as it results in high penalties and interest amounts.
In certain instances, if a company enrolls in payroll but does not have any employees, they must still submit nil remittance - meaning the total is zero dollars. This also applies for GST and QST taxes as well as corporate tax returns; if a company had no revenue, nor expenses, however, have actual sale tax numbers, they must remit a zero return.
As mentioned previously, accounting is essential in the business world as well as in our personal lives. Business owners must remit even if their company had no activity. The same goes for an individual who has not had any income throughout the twelve-month year, and they must still remit an income tax return. In both cases, the income tax return will reflect the situation for the business owner and his company as well as the individual during the specific tax year they need to file for.
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