Generally, businesses will need an accountant when they reach a certain level of complexity. This is because accounting can be time-consuming and requires knowledge of the tax code. However, there are many software programs that can help with bookkeeping and financial statements. If you’re just starting out, you may be able to handle your own accounting. But as your business grows, you’ll likely need to hire an accountant or bookkeeper.

Accounts payable refers to the amount that a company owes in order to purchase goods and services on credit from a vendor or a supplier. It acts as a liability. Accounts receivable refers to the amount that has to be collected by a company due to the selling of goods or services on credit. It acts as an asset to the company.

There are some common mistakes that people make in accounting. Let’s take a look:

Mixing a personal account with the professional account of the company is the most common mistake that people make in accounting.
Lack of communication between the accountant and the company is another common mistake made by people.
Not having a backup, misallocating resources are some of the mistakes that should be avoided in accounting.
Performing manual accounting should be avoided
Some people don’t keep the accounting books up to date which is a mistake that should be avoided.
Some people forget to save the receipts which leads to errors in accounting. So, such practices should be avoided.

A corporation is a separate legal entity from yourself. If you’re incorporated, you would have ‘Articles of Incorporation’, however registering for a business number or registering a trade name does not mean you are incorporated. If you incorporate your small business, you need to register for a business number and can also register a trade name. You do not need to incorporate to protect a trade name.

A proprietorship means you are the business. You are able to operate a business, register for a business number and register a trade name, but still remain a proprietorship. Read our Guide for Sole Proprietors.

While bookkeepers record the financial transactions of your business, accountants analyze the data and use it to generate reports and prepare financial reporting records, including tax returns, income statements and balance sheets.

Accounting involves creating the balance sheet, accruing for non-cash transactions and calculating the income taxes. At this stage, we make sure you get credit for all the deductions and write-offs you qualify for. We’ll also explain where all your cash went and how much equity you are building in the business, review your company’s financial results, plan for the future, and e-file all the tax returns, GST returns, T4 slips (wages), T5 slips (dividends) and T5018 slips.

This is a very important question and has been at the centre of many court cases and tax disputes. The answer depends on many contributing factors and there’s no silver bullet that decides either way. The penalty for paying a worker as a contractor, when the CRA later deems them to have been an employee, is that your corporation should have been paying half that employee’s CPP and EI contributions during the entirety of employment. There would also be penalties and interest on these amounts. The employee would also have been eligible for all other benefits under employment law.