You’ve Got to Go

It’s mere days away. But it’s not too late to register. QuickBooks Connect. Downtown Toronto. Dec three-to-five.

You’ve got to go.

Why? If you’re a number-cruncher. A tax preparer. An IT type. If you have clients that rely on you. Then you need to be at QuickBooks Connect.

Our profession is changing. It’s transforming. Listen, I’ve been at this game more than twenty-five years. And never, never, have I seen our profession evolve. Never like it has in these last two, maybe three, years.  You’re a seasoned pro? You remember the dawn of the PC age? Think that was big? That’s nothing compared to today.

The dust has settled. Cloud is in. Cloud won.

The way we deal with data. The way we interact with clients. The tools we use. Our internal practice-management tools. Our client tools. Communication. On-boarding. Payment, Billing. It’s all changed.

You still keeping timesheets? You still using cheques? You still have legacy desktop software? Backups and software-versions? Well, that’s why you need to be at QuickBooks Connect.

Times have changed. Time are changing. You need–we all need–to keep up. Or get left behind.

QuickBooks Connect. You’ve got to go.

That Gateway Thing

We were in Granby.

Granby, just east of Montreal, is a gateway kind of place. It’s where the rolling hills of the Eastern Townshops begin to make their presence felt. If you haven’t been there, the Eastern Townships are a picturesque part of the world. Luscious hills, sparkling lakes.

But I wasn’t there for that. I wasn’t there for the lakes or the hills. I was there for work. I was there to discuss QuickBooks Online (QBO). Me and about forty other number-crunchers.

Later on, driving back toward Montreal, cool jazz playing on the car stereo–Miles Davis, that kind of stuff–I reflected on the day’s discussion. The word “gateway” came up; there was a lot of talk of gateways. About the way that QBO facilitates the transferring and sharing of data.

That’s what I like, you know, about QuickBooks Online. It’s a gateway app. A gateway to third-party applications that lets you do, well, just about anything. Need point of sale? Need time tracking? Need cash flow management? Need scheduling and CRM and project management? Yeah, we got that. And then some.

You use an app to take pictures of a receipt. You bridge that app to QBO and you’re now using your phone’s camera to input expenses. Use another app, also via QBO’s gateway, and you can pay anyone electronically. No more cheques, no more stamps and no envelopes. I mean come on, cheques and stamps? That’s so 1990, isn’t it?

Soon enough, the talk turned to something else, another sort of gateway. The gateway between the practitioner and client. Lines of communications have narrowed. Roles strengthened. Support more immediate, and information more current and more relevant. All of a sudden, the practitioner/client relationship is closer, more in sync. There’s less talk of what happened six months ago, or last year. There’s less talk of how someone did something. And more talk about how to do something. And why to do it.

The mood changes. There’s less (as one of my dear clients once termed it) “rear-view-mirror” discussions and more “where are things going?” planning. More depth; more meaning. All because of that gateway thing.

Oh sure. There are some, still today, who won’t get onboard. And that’s OK. Some people don’t want to hear of gateways, and even less of cloud.

Cloud! Cloud! Cloud! Cloud! What’s all this fuss about cloud?

Some don’t see the point. Some don’t get the benefits. My old software does this, my desktop software does that. And sure, that’s all good and true.

But it’s not about software. It’s about the philosophy of software. It’s about the way we think about it all. How are we going to use that software to strengthen relationships? To modernize the game? The playing field is larger, but the players are closer together. Things are more immediate, information more crucial and relays ever shorter. Today, we need to build communication, and support, and trust. And we need a gateway to do that. A really dynamic, really reliable gateway.

And that’s what stayed with me as I drove out of Granby, that gateway to the Eastern Townships. Gateways, everybody needs gateways.

Yes, You Can

There’s been talk, a lot of talk, regarding QBO and sales taxes. The gist of that talk, of course, is about the inability to mix journal entries and sales tax accounts.

The fail is known by most of us. To recap, it goes like this. Debit or credit a sales tax account and, yes of course, QBO will update the general ledger. However, what QBO won’t do is capture that amount in the sales tax reports. And it won’t reflect it in the File Sales Tax routine either. Which means you’ll end up overpaying or—perhaps even worse—underpaying the sales taxes owed to CRA or other government agency.

This is not a good thing. And we all therefore go out of our way to avoid mixing jounral entries and sales tax accounts.

But did you know you can use a journal entry for sales tax accounts? And did you know that it actually works? What I mean is that, not only will QBO update the GL but the sales tax reports as well?

All it takes is a little workaround, and a clearing account. Here, let me show how to do it.

Let’s say you want to record a $50.00 GST credit. And let’s say you also want to debit a revenue account for the same amount.

The first step involves grossing up the sales tax amount. All  you need to do is figure out the grossed up amount of the aforementioned $50.00. In other words, assuming that the $50.00 reflects GST, then you have divide that fifty bucks by five percent. Which gives you a grossed up amount of $1,000. And that, right there, is the hardest part. You’re now ready to record your journal entry. Don’t forget, though, that you also need that clearing account I mentioned earlier.

OK? Alright then, let’s record the journal entry

Start by crediting $1000 to a clearing account. Then, choose GST in the sales tax column. Notice what QBO does at the bottom of the window? It adds a $50 credit to GST.

Now, debit $1,000 to that same clearing account. What you end up with, of course, is a wash. In other words, those two clearing account entries cancel each other out. Which means your final step is to debit $50.00 to your desired revenue account and, voila! Job done.

Using this method will mean that your GL and sales tax reports are always in balance. If you don’t believe me (and it’s OK that you don’t, you’re an accountant. You’re paid to be skeptical), here’s proof.

Here’s the GL: 

And here’s the Sales Tax report:

So there you go. Journal entries and sales tax accounts. Yes, you can.

Kinda cool, no?



How to Track 50% HST in QBO

This much is true: If you’re an entrepreneur, you have expenses. And if you incur those expenses in order to get more business, then those expenses are tax-deductible.

However, in their infinite wisdom, the kind folk over at CRA (Canada Revenue Agency) have determined to make Meals and Entertainment expenses only 50% deductible. Their logic, as I understand it, goes like this. If you take a client to a nice restaurant, the pleasure they derive from that fine meal is fully deductible. Your portion of the culinary treat, on the other hand, is on your own dime.

Hence the 50% deduction. And that’s the bad news.

The even worse news, though, applies to those that are GST/HST registered. CRA, driving the point to its logical conclusion, goes on to say that you can only claim 50% of the tax on that meal. Yes, you read right. When it comes to meals and expenses, you cannot claim the full GST or HST amount.

And so, in order to stay compliant with CRA’s rules and regs, this means you’ll have to set up a special sales tax in QuickBooks Online (QBO) that captures only 50% of the total tax amount.

Here’s how to do it.

Step 1:  With QBO running, click on Sales Taxes (in the left-hand Navigation Bar).

Then, in the Sales Tax window (below), click on Add tax.


Step 2: In the Add tax window, select Tax rate

Setting it all up is actually quite easy. Just keep in mind that, in order for QBO to properly calculate the tax amount, you’ll need to set up two taxes, each of them for 50% of the actual tax paid. The first tax you set up will track the amount of HST you’re entitled to receive as a refund (CRA calls it Input Tax Credit). The other tax you set up will treat the non-deductible portion as an expense

Also note, in this example, the assumption is your business is in Ontario and is therefore subject to 13% HST.

Okay? Great! Let’s move on.

Step 3: In the Add tax window (from Step 2) enter a tax name and description for the refundable portion of tax. Note we’re using M as the Tax name. “M”, for meals obviously.

Next, select Receiver General as the tax agency.

Now, click the Purchases checkbox, enter 6.5% as the tax rate, and select Liability as the type of account. Then, in the Show tax amount on return line field, choose Input tax credit (ITCs). 

Now click Save to close the window and proceed to the next step.






Step 4: Repeat Steps 1 and 2 and QBO will bring you back to the Add tax window. And this time you will set up the non-refundable portion of the HST amount.

As in Step 3, enter a Tax name (in this example “M Exp” which is an abbreviation for Meal Expense) and then enter a description. Once again choose Receiver General, click the Purchases checkbox, and enter 6.5% as the tax rate. This time though, in the Account field, choose Expense. Finally, click Save.






Step 5: In this last step, you need to group the two taxes that you set up in Steps 3 and 4. To do that, as explained in Step 1, click Add tax, and then select Group rate.












Enter a name and description, such as 50% HST, for the grouped tax, and then choose the two tax rates that you created in Steps 3 and 4. Make sure to select Net amount for each of the tax rates. Click Save and you’re done,










To use your new sales tax rate–in an Expense form for example–just select it in the sales tax field. In this example, we have a restaurant receipt for $113 which includes $13 HST.


In this window you can clearly see the background journal entry confirming that QuickBooks is treating 50% of the total HST as a refundable amount, with the other 50% going to an expense account. Which will make the kind folk over at CRA nod in admiration of your efficient bookkeeping practices.



If Kirk needs one, you do too

Capt Kirk“Stardate: 1434.5.”  Not being a Trekkie,  and therefore not convinced beyond a reasonable doubt, I think that’s how every Star Trek episode began. With some rather primitive special effects. Primitive, that is, when compared to a modern day, CGI point of reference. And then there was Captain James T. Kirk’s voice-over providing context, “Captain’s log, stardate 1434.5. Our destination is Sigma Iota II.”

I always loved the exotic names those Star Trek writers pinned on their planets; Cerberus II; Altair IV; Sakura Prime. But I often wondered, “What the heck’s a stardate anyway?”

So I looked it up.

According to Wikipedia, stardates are completely arbitrary. They don’t have real significance. Other, that is, than to keep the viewer from sensing a pattern, establishing an actual date, and then announcing, “There’s no way a tricorder’s going to be invented by then!” Hence the random sequencing of stardates.

But you know what?  There’s something else interesting about Captain Kirk’s voice-over. Something that each one of us can learn from.

And that is, Captain Kirk keeps a log. Imagine that! Somewhere out there, sometime in the 23rd century, there’s a captain of a sophisticated and advanced space vessel dutifully jotting down a travel log. Which, kind of, raises the question. Does Kirk actually have a log book? One made of paper and cardboard? And does he use an old-fashioned pencil too, to post his entries? Or is the log more of a futuristic, automated type of gizmo. With accelerometers and geo-fences, and God knows what else, that monitors and records every little degree of movement? You know, like an iPhone?

But never mind all that.

Because the point (and yes, it is taking me a long time to get to it) is that even Federation captains keep a log. And the bigger, more important point is that you should too. Especially, that is, if you’re claiming any sort of vehicle expense on your tax return.

Yes, I know. You’ve heard it all before. And no matter how often someone tells you about the importance of a vehicle log, it remains something you simply haven’t gotten around to. Sort of like going to gym. Or cleaning out the rain gutters.

There are, though, huge benefits to keeping a vehicle log. Monetary ones. For example, with a vehicle log, you’ll be sure to maximize the car expenses you can write off on your tax return. And with a log, you minimize the risk of having the tax folk (your silent partner that I mentioned in a prior post) disallow some, or all, of your vehicle expenses. So yeah, a vehicle log’s pretty important. Even if it is, at the same time, mundane and pedantic.

But hey, if you’re one of those Trekkie or techie types, I’ve got good news!

There are all kinds of high-tech solutions for tracking your mileage. Just download an app to your mobile device and let technology take care of it all for you. If you’re on an iPhone, check out these solutions. If, on the other hand, you’re an Androidite, then take a look at these..

So there you go. Now you can be the Captain Kirk of your business. Just do me a favour, deep-six the voice-over. And that weird stardate thing too.

You and your silent partner

File FoldersIt’s getting easier. Technology is making everything easier. Take, for example, your business software. You know, software like QuickBooks Online, or Wave Accounting, or Freshbooks.

This new (OK, relatively new) strain of “Cloud” software brings full-blown automation and data entry  to heights unheard of just a few short years ago.

As an entrepreneur, all you need to do is connect your bank and credit card accounts to the cloud solution of your choice, and then sit back as the app imports and categorizes your banking transactions all by itself. It’s like having a built-in bookkeeper, and it’s all pretty cool.

Yeah, sure, you’ll want to check the entries; pay particular attention that the transactions are going where they’re supposed to go (travel goes to the travel account. Rent to the rent account. And so on and so on). But these apps are pretty smart. Cause, as time goes by, they’ll begin to learn what goes where.

Which all means that the bane of so many small business owners–that dreadful task known as bookkeeping–can now be crossed of your To-Do list.

Or can it?

Listen up now, cause there’s something that all small biz owners need to know. And that is that every entrepreneur has a “silent partner.” Here, in Canada, that silent partner is called The Canada Revenue Agency (CRA, to those in the know).

And as a silent partner, CRA has taken a not-so-silent interest in all of them there new-fangled, automated, cloud software apps. Their interest, to be clear, is not so much with the software itself, but rather, with something else. Something I’ll call Burden of Proof.

Here’s how it works…

Let’s say you travelled to Vancouver. You went to a conference. And because conferences are never cheap, you racked up a host of travel-related expenses. Let’s see, there were taxis to and from airports. There was at least one hotel. There were restaurants, and there was schmoozing and networking and all of those other marketing-related expenses. And that’s just to name a few.

But you’re using cloud software so it’s all covered, right? I mean, when the software “reads” your credit card statement it’ll just import all of those transactions and plop everything into the appropriate expense categories, right?

Actually, yeah. Yeah, it will.

However there’s one little thing you might be overlooking. And that little detail is actually not so little to your silent partner. Because what CRA is really keen on, is knowing, not one, but two things.

The first thing is, do you have receipts for all that travelling and networking and schmoozing? And the second thing is, where are they–the receipts?

Bottom line is that, to stay on CRA’s good side, the answer to that first question really needs to be “Yes!” As for the second question, they’re looking for an answer that goes something like, “Oh I’ve got all the original receipts right here, neatly stored in my logical and orderly filing system.”

Yep, that’s correct. What CRA is essentially saying is that the onus is on the entrepreneur to make sure that all the receipts (and yes, the originals, not scanned duplicates), are present and accounted for, and that they’re close at hand–and that means they’re here, in Canada.

And, to make things easy, CRA’s even gone and prepared a guidebook. Think of  it as a filing-system primer for small-business owners. If you’re so inclined, you can view that primer–the official title is RC4409 Keeping Records–right here. If you’re not so inclined, you might, at the very least, want to chat with your tax advisor about all this record-keeping stuff.

Like I said, Burden of Proof.  It might seem like small potatoes. But to your silent partner, it’s a big deal. And like so many partners, it’s not so much fun when we do things that upset them.

Partners are funny that way.


Easy. Easy as Pie.

Wave LogoAs entrepreneurs we’re always thinking of how best to serve our customers. We want to provide great service at a fair price. We want to foster a solid working relationship. We want to understand their needs. We want to be upfront and honest.

Let’s face it, when it comes to customers, there are a ton of things—big and small—that entrepreneurs need to keep front of mind.

But I bet there’s one thing—one important thing—that a lot of entrepreneurs never stop to consider.

And that thing is: making it really easy for your customers to pay you.

Stop and think about that for a second. Think about your typical customer interaction. You do all the right things to win the job. You drive through the effort to deliver the work on time and on budget. And only once all of that is done, do you then take the time to send your customer the invoice.

So how do you do that? Do you snail-mail an invoice? Hand-deliver it? Email it? And then, once that’s done, do you just sit tight and leave the crucial payment phase to chance? Because, you know, before you even begin to sniff your payment, your client has to go through a whole host of steps: prepare a cheque, find an envelope—not to mention a stamp—and then remember to actually drop your cheque in a convenient mailbox.

It’s a bit of a hassle, all that, not to mention a routine that’s inefficient, time consuming and–worst of all–one that keeps you out of the loop.

Let’s face it, you’ve been proactive in landing the job and delivering the work, so maybe you need a payment portal that’s as effective and dynamic as you are. And besides, in today’s technologically-driven world, cheques, stamps and envelopes are about as proactive as floppy disks and electronic pagers.

So forget all that and consider this.

Imagine emailing your customer an invoice that has a big Pay Now! button on it. Your customer clicks that button, securely enters her credit card information, and… That’s it! Invoice paid!

Now imagine this.

Imagine that the same system which allows you to send out the invoice and facilitate its payment also takes care of the bookkeeping aspect of the whole process. Which means the accounting’s all done and there’s absolutely no need for you to think about those dreaded debits and credits that most entrepreneurs loathe and avoid.

And how about this? What if the software that powered all this cost nothing? Absolutely nothing?

Yep, free software.

Begin fine print… Well, free software yes. However there is a 2.9% service charge (plus 30 cents per transaction) to handle the credit card payment processing portion. Which, if you ever looked into accepting credit cards at your place of business, you’ll then know that that particular service is never, ever free. So what we’re talking about here is a fee that runs pretty close to what you’ll pay to any merchant credit card provider anyway. So you’re not really out of pocket, to be honest. …End fine print.

And here’s something else. What if all this functionality was accessible from any web-enabled computer, and on from your iOS devices too? Would that be cool?

Okay, let’s take a step back and recap. Automated invoicing, instant payment-processing, built-in fully-featured bookkeeping & accounting and mobile access from any iOS device. All built in and ready to go. And all of it free (except for that little service fee mentioned earlier). That would be pretty cool, wouldn’t it?

Well it does exist and, while some of it (like the credit card processing) is new, the rest of it has been around for a bit. So it is tried, tested and true. And, here’s something else that it is too. It’s pretty damn cool!

It’s called, by the way, Wave Apps and it really does include all of those powerful features, most of which are, unbelievably, absolutely free. So, if you’re an entrepreneur, you need entrepreneur-level software. And right now, I’ll have to admit that I’m pretty impressed with what Wave offers. So go ahead, check it out. Then please let me know how cool you think it is.

In the meantime, all I can say is… Well played Wave! Well played!

Baby You’re Already in the Cloud Too

Cloud logo

Used to be that that teachers scolded me for having my head in the cloud. Nowadays clients are scolding me cause that’s where I want to put their accounting data. In the cloud. With cloud accounting software.

“But, I don’t want all my important info in the cloud!” They tell me, “What about security, what about privacy?”

Sure. I get it. Security, privacy; they’re critical.

But here’s thing.

“Your data,” I tell them, “Is probably safer in the cloud. It’s backed up, it’s version-controlled, It won’t get lost because of a hard drive failure or because someone stole your computer.”

“And,” I add, “It’s accessible from anywhere—your smartphone, your tablet, and from any web-enabled computer.”

Sometimes, some of them start coming around. They love those benefits. But then comes the biggie; the sharp-toothed, mean-spirited, data-hungry monster that lies under the bed of almost every small-business owner.

“Yeah, but PRIVACY! What about privacy? I don’t want some hacker stealing my accounting data.”

And you know what, they’re right. In today’s world, privacy is quickly becoming a lost art. And like most valuable art, it’s appreciated by some (small biz owners it seems) and pretty-much ignored by others (any kid with a smartphone). And this is where I’d explain encryption and vault-like security, “Just like your bank!” And this is where I also explain that no one–not a soul–has had their data stolen while using cloud accounting.

Still, they’re not swayed. Not completely. And that’s when it’s time to break out (with apologies to Lennon/McCartney) the “Cloud Song.”

Baby, you’re up in the cloud, baby you’re up in the cloud, baby you’re up in the cloud too!
They keep alll your data on a big hard drive, up in the blue, what a thing to do!

But seriously, whether you like it or not, your data is already in the cloud. And if you think about it, you’ll see that it’s true. Almost all of your most personal information is already stored up there, somewhere in the cloud.

Never mind the obvious ones like Twitter or Facebook. Never mind the everyday ones like Gmail or Dropbox. Never mind all the stuff you stream or search like Google or Youtube or Netflix. And never mind all the website ads that you click or the Amazon purchases that you make, and never mind how all those sites track, in some way, your habits and your preferences.

Because those are all trivial–small potatoes in fact-when you consider all the other personal info that’s up there–in the cloud–without your input. Nor, perhaps, your knowledge.

Think of your medical records. If you’ve been to a doctor recently you may have noticed that all your aches and ailments are now getting inputted into a computer. And, If you bank or use a credit card just about anywhere, think of all your financial data (account balances, credit info, loan payments) that’s sitting right there, on your bank’s servers. And if you pay taxes, think of the goldmine of personal data that the tax agencies are siting on.

So you see? Without your active input, without your approval almost, you’ve already got a lot of you–a lot of the most important parts of you–up in the cloud. Yes, there’s a lot at stake here. And because of that, there’s also a lot of effort being put into protecting those parts of you from prying eyes.

So you’ve got two choices. And one of them is just about impossible.

The first choice is get off the grid. Don’t bank, don’t see a doctor, don’t use email, don’t get a smartphone and never use the internet. (Like I said; impossible).

Choice two is embrace the cloud. But be safe about it. Only use trusted service-providers; don’t visit doubtful sites. Setup multiple passwords and change them regularly. Use antivirus. Use strong spam filters. And please never, ever, click an official looking email from CRA, the IRS, or from your bank. If they want to contact you, don’t worry, they’ll call.

So yeah, be safe. Protect yourself. And join the millions of other small-business owners jumping onto cloud-accounting.

And if you do, don’t worry. I promise, I won’t sing.

Yeah but, I’m on a Mac

You’re an entrepreneur and you love your Mac. And, you’re an iPad or iPhone user too?
Then you know what you need?
You need this!

AE Desktop Splash

Why do you need that?

Well, that, my friends, is the missing link. AccountEdge is what you’ll install on your Mac (actually you can install it on your Windows computer too) to keep track of all your customers, your suppliers, your invoices, your inventory, your expenses–and a whole lot more.
But it gets better.

Once you install AccountEdge on your computer, you can then install—for free—this AccountEdge app on your iPhone or iPad.

AE Mobile Splash

And, all of a sudden, your data data is mobile.

And that means you can check your inventory,  view your customer lists, prepare a customer quote or send an invoice, all from your iPhone or iPad.

AE Sales Entry

To zoom in, click image

And no, you don’t need WiFi or 3G (or any other acronym) to use AccountEdge’s mobile apps.
However, once you do have access to the web, you can then go ahead and sync your data, from your iPhone, your iPad and your computer. And now all your devices are on the same—figurative—page.

There’s no fuss. No muss. And no missed opportunities.

It’s a no-brainer.

It’s easy.

And, if you do need help setting up AccountEdge. Call me. I’m mobile too!