taxdetective-Sandusky-Register

Hot topic these days, crowd-funding.

It seems there are at least two types, equity, and donation with benefits.

There's also legal controversy swirling around this topic. Here's some links from Alan Baggett who has been following this topic because it's new and interesting, of course, because it's about raising money for businesses...and who doesn't want to figure out how to do that more effectively.

http://www.prweb.com/releases/2013/10/prweb11267067.htm
http://business.financialpost.com/2013/10/09/crowdfunding-financing-is-taxable-income-cra-says/
http://www.ctf.ca/ctfweb/EN/Newsletters/Canadian_Tax_Focus/2013/4/130407.aspx

As for the two types, donations with benefits, and equity funding, they are quite different.

Remember, donations, they have to be for charitable purposes, and can't come with strings attached. And most sources of income are taxable, especially when you're in profit making mode, and your source of funds doesn't fit any of the criteria in S. 81 of the Income Tax Act. 

S. 81, that's what I call the hero section, where if you provide extraordinary service, for example, you take in someone who isn't family, who is on welfare, or you're a foster parent, or...here's the actual section, which sets out exactly what isn't income.. and crowd-funding, well it's not on that list.

http://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-81.html

Equity funding has typically come about by the issuance of share capital. How exactly will it work when you're issuing shares on the street without going through the usual channels? That's where the controversy likely comes in. I'm sure we'll hear more about this in the next few months as our securities system attempts to come to grips with this new financing methodology.

Start-Up week is over. 

You might want to follow @Start-up_Canada on Twitter to see what all the fuss is about. Apparently there are so many young people starting businesses that Intuit Canada has partnered with Start-Up Canada to offer QuickBooks Online to start-ups for a full year for free.

If you're not a Start-up and you don't have a deal yet, you might want to consider contacting me because I can get you 30% off your QuickBooks Online subscription for a lifetime if you're my client.

Now you're not likely to want to switch accountants, and I'm great with that, as I don't want to do year ends or corporate tax.  But I love helping people master QuickBooks. That is what I want to do full time.

So I'm offering a Service Pack - and here's my thinking.  I've been working with several business owners on getting them caught up because they are a few years behind. I've been doing that pretty consistently for many years.  It takes time, and the business owner needs to build skills like how to organize their paperwork. It's about new habits, building them and maintaining them.

I've got several owners with whom I have a weekly meeting. We meet online because they live far away, and I'm not going to want to drive to them, or them to me. It's very convenient, we meet on the phone, and hook up our computers using a secure encrypted GoToMeeting hosted by Citrix. I pay the monthly subscription and can hold as many meetings with up to 25 people as I want to.  Been using it for years.  Try it out yourself, free for 30 days.  You can even hook up your webcam so you can see each other.

Anyway, that led me to thinking what if I offered a Service Pack for other business owners, just to make sure their QuickBooks data files were healthy. There's a lot to check up on. Everything from security, preferences, the chart of accounts setup, how the Items are linked, are the reports set up property, why doesn't the opening balance agree to my last S100 and S125 schedules on my T2 Corporate return, why doesn't my bank that is supposedly reconcile show me the right balances on my financial statements, that sort of thing. That's what I'm really good at, figuring out how to fix all of that stuff.

And that's what costs you big time at year end, if you haven't dealt with all that stuff, your accountant will get a headache just dealing with all those loose ends. And that's what costs you so much at year end.

So, what if, for $99 a month, you could have someone work on those things with you, to guide you to where your year end was a mere formality, and your accountant was sooooooooo happy with your bookkeeping that their bill was way less than last year end.

Don't believe me, go look at your last year end bill, and tell me whether you think it was too much, and what your accountant said was the reason.  I'm not here to replace your accountant, I want to make sure they like you because your books are complete and correct.  BTW, complete and correct record keeping, it's actually the law, it's not an optional thing  Sometimes CRA sends out auditors to blanket a town to check that everyone has books and records that are complete and correct. If they find that business owners don't have complete and correct records, they will issue demand letters with deadlines at which time they will come back to check to make sure you've caught up.  That means up to current, not just up to the end of last year end.

I can help but you'll have to work with me.  How does once a week sound? On the phone at your desk, no tidying up, just you and me, talking about your record keeping.

http://eileenreppenhagen.fullslate.com/

Electronic sales suppression devices are in CRA's sights!

If you are involved in a business where there is sales suppression software installed, you may want to check in on your sense of morality

... and your comfort with the new proposed fines and jail time for being associated with a business who suppresses sales to cheat on their taxes.

If you aren't already subscribed to my website newsletter,
http://www.taxdetective.ca/news.html

here's today's post...Orange is the new Black...

http://www.taxdetective.ca/newsletters/newsletter/1482040/91448.htm

Instalments, once you're on the system, are to be paid March 15, June 15, September 15 and December 15.

But when you're starting up a business, they don't apply until after you've filed your first tax return, which is due June 15 of the next year.

That's when the tax preparer tells you that you were supposed to pay your taxes (estimated) by April 30, and your GST/HST for your annual return, also filed June 15, that was due April 30 as well.

Then, they hit you with the news that not only was that due, so there's interest outstanding for not having paid it on time, BUT...

you'll be assessed in the summer for the instalments for the current year, all of which is due in two instalments, on September 15 and December 15.

The reason you're freaked? You had all this money in your account, so you've booked the entire family on a summer holiday to Europe for 6 weeks. The money is gone.

That's why I Tweeted today that CRA should get addicted to your tax instalments a whole lot sooner.

Yes, you're supposed to be responsible, accountable, and responsible again, but who can resist the opportunity when that money is sitting there for soooooo long, that you forget what it's really for.

The worst part? Once it's gone, you'll never get the chance to re-coop it, it will take about ten years to catch up because you'll always be behind.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/pymnts/nstlmnts/ntrst-eng.html?=slnk

I've just updated my web page on penalties and interest to include some useful links about proposed legislation

Check the moral compass of your clients or your employer

Seriously, if your clients or your employer are suppressing sales with software, where do they fit in your life?  A, B, C, ...why are they in your life at all...?

They could be looking at jail for 2-5 years if this legislation passes (see the link below to go straight to the legislation on the Finance website)

Anyone else read or watched "Orange is the new Black"?

I'd recommend the book, there's lots they don't show in the TV series.

http://www.taxdetective.ca/penalties-and-interest.html

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