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.

Is it Better Cold?

I love this place. I love le Vieux Québec.

I’m here for two days. Two nights and two days. Teaching QuickBooks Online. Got here early evening Tuesday, leaving Thursday night. After checking in yesterday, I walked around. Walked down La rue St-Louis, down to where you’ll find Le Chateau Frontenac. I took the funicular down to basse-ville. Walked past places I’d been before, Le Lapin Sauté, l’église Notre Dame des Victoires. It was all so evocative of earlier visits. Pleasant visits.

This morning I woke up promptly, walked in the early morning, pre-dawn light, down to la Rue St-Jean, got to Boulangerie Paillard at 7:00 AM. It had just opened.

There’s something about this city. It just feels right. It always feels right. But this time, if felt even better. It felt more whimsical, more expressive, more romantic.

After teaching QuickBooks all day, it was dusk. The sun was going down, the landmarks–those romantic gates cut in old stone walls–were lit up. Buildings too, they were all lit up. Light, playful light, shone on churches. Light shone on old homes converted into hotels (like the Manoir d’Auteil where I was staying), light shone on statues, carvings, walkways.

And the air too. It was crisp, it was cold. Not uncomfortably so, nothing distressing.

And that’s when it hit me. As much as I love Québec, can it even be better when it’s cold? Is it better when the sun sets in the early evening, and rises later in the day? Is Québec more memorable in the late fall when everything is lit up and there’s a nip in the air? Is it better at this time of year because (let’s face it) there are less people walking its beautiful, historic streets?

You know what? I think it is. I think Québec is better when it’s cold.

You walk quickly–you want to warm up. But you can’t help but pause and admire this old house, that beautiful church. Everything lit up.

There’s some kind of va et viens. There’s an anomaly, a contradiction in terms. It’s cold, you want to hurry and get indoors. But it’s too beautiful and you linger a little bit, talking in the sights. And when you finally do get inside, a cosy little restaurant, and you sip that single malt–pour me réchauffer–you tell the waiter, well even that first sip is made more vivid.

Hmm, maybe it’s true, maybe it really is so. Yeah, I do think it’s true. Québec is better when it’s cold.

Great News if You’re an Accountant

Journal Entries. We accountants, we love our journal entries, right? Love them so much there’s even an accountant’s credo. There’s nothing that can’t be fixed with a neat and tidy journal entry. Yeah, journal entries, they’re the WD40 of number crunching; the duct tape of data entry.

And yet, for accountants, there’s always been a bit of a problem–a perfect storm of frustration–that would come crashing down whenever three particular elements converged all at once. And those three elements were:

  • QuickBooks Online
  • Journal Entries
  • Sales Tax Accounts

You know what I’m talking about right? I have certainly written about it before. Even offered a nifty workaround.

But now (well, as of mere weeks ago actually) it’s all good. If you’re an accountant, and you want to record a journal entry in QuickBooks Online, and you want–in that journal entry–to debit or credit a sales tax account. Well, go ahead. Knock yourself out. It’ll all work out. You won’t mess anything up and everything will remain in sync and in balance. All thanks to a new feature that adds a Sales Tax column in the journal entry window, a column that  now allows you to pick a destination line number on the corresponding sales tax return.

Which means, with this new feature, the GL and the sales tax report will always be in sync. No more out-of-balance reports. No more head scratching. No more adjustments. Which also means that your clients will, once again, view you–the fearless accountant–as the rock star that you truly are.



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.



Alive and Well

Invest Ottawa Logo

Thanks to the good folks at Invest Ottawa, who host my small business seminars, I am lucky enough to get a front row seat to this town’s entrepreneurial spirit.

What I mean is I deliver, roughly every quarter, two information sessions. One, called Cash Rules, illustrates the importance of proper capitalization and cash flow management. The other, named Cloud VS Desktop, discusses the various billing and accounting software tools available to today’s entrepreneur.

Just yesterday we delivered another round of these sessions. And from the people in attendance–people running brand-new businesses, people about to launch their businesses and people doing their due diligence, researching their planned businesses–the state of entrepreneurship is indeed a healthy one. It’s strong. It’s blossoming. And–to my eyes–that is an encouraging sign. We need entrepreneurship. We need dreamers and risk-takers and people who are willing to follow through on the What If’s.

And so let me just take a moment to wish all those newly-minted entrepreneurs in attendance yesterday the best of luck in their ventures. It will be a challenge, I’m sure. But I’m equally sure it will be a wonderful learning experience, a ready and steady growth path and, best of all, one hell of a blast!

Oh and, if you’d like to learn more about my information sessions, just click here.


Tax Tips Made Fun



This is cool.

The folk over at Freshbooks just put up a page. One that helps small business owners get ready for tax time. Updated regularly, their webpage, amusingly called Tax Time Learnatorium, serves up practical advice on everything from finding a good accountant to making sure you’ve got all your stuff ready.

And, unlike most tax-advice sites, the Freshbooks website is anything but boring. There’s some kick-in-the-butt motivational pep-talk, there’s some get-your-act-in-gear music riffs; there’s a ton of stuff! All of it hip, fun and cool.

But what else would you expect from Freshbooks? It’s the company I like to call “the surfer dudes of accounting.”

So if you’re lolly-gagging around your tax return. Check out Tax Time Learnatorium. ‘Cause, you know, those surfer dudes can make anything seem like fun.


Big Tax

BigTaxEventI just got back. From something called The Big Tax Event. Sponsored by Intuit Canada, it was like a numerical Woodstock; three days of financial frolicking and a peaceful love of number-crunching.

I was there to train accountants and tax-preparers on Intuit’s ProFile tax software. That was on Day 1. But Day 2, though, well Day 2 saw me sitting in the crowd, learning from some very heavy-hitters. Advanced tax professionals talking about advanced tax stuff.

You’re probably shaking your head, wondering why anyone would enjoy something like that.

And if that’s what you’re thinking, well that’s okay. Like I mentioned elsewhere on this site, it’s all because you don’t have the T gene.  And T” stands for tax. Just about every accountant, you know, has the T gene.

If you’re an entrepreneur, or a manager, or if you’re self-employed in sales and marketing, then you don’t have the T gene. But you don’t need it–don’t need the T gene at all. Just make sure you’ve got someone on your team that does, and you’ll be fine. Because, if there’s one The Big Tax Event reinforced. it’s that tax is complicated. It’s tricky.

But there was other stuff happening at that Big Tax Event. Cool stuff, interesting stuff. All of it designed to making your professional life–at least from a numbers perspective–a little easier, a little less complicated, and a lot more efficient.

Stuff like QuickBooks Online–a cloud program that lets you do every day stuff, like send an invoice, from any web-enabled computer, or just about any mobile device. There were other cool folk there too. Like Receipt Bank and HubDoc. Think of them as your own personal automated financial assistants that take over that tedious task of data entry. These apps will track your costs, your business expenses, your receipts–all without you needing to lift a finger. Well, just about.

Method CRM was there too. Contact management; calendar sharing; relationship building. Keeping your customers happy. That’s the kind of stuff Method CRM does.

And I’m only describing the folk I stopped to talk to. Yeah, there were other software vendors there. And I’m sorry I didn’t have time to approach them all.

Why not?

Well, you know, there was a tax seminar happening and I just had to sit in on that. Because, T gene.

Can you really?

Speed LimitThink of your local highway.
What’s the speed limit? 80 K? 100 maybe?
Ever drive above that? 110, maybe 120 K?
Yeah, we all do.

Know anyone who always exceeds the limit, maybe drives 130 or 140K?
Know anyone who does that yet never gets caught speeding? Not even once?
So does that make driving above the speed limit OK? Does it mean we’re all actually allowed to drive above the limit?
The answer, of course, is “No.”

Okay, now think about your tax return.
If anyone says to you, “Yeah I deduct my golf club membership, been doing it for years.
Does that mean you’re allowed to?
If someone tells you, “Yep, I put some advertising on the side of my car, and then deduct all of the operating costs, CRA never said anything.
Does that mean you can too?
If someone advises you, “Sure take the family out for dinner, claim it as a business expense, I always do it.
Should you do it too?

Same answer as before, right?

Speeding or claiming bogus expenses, they’re the same thing.
If someone does it all the time, it doesn’t mean they’re allowed to. It just means they haven’t been caught.

I tell people CRA is like a sleeping shark.
You can swim right by it, a bunch of times. You can wave your hands in front of it. You can do somersaults before its closed eyes. And, if you’re brave enough, you might even try poking it. Just a little.
And, maybe—just maybe—it’ll be okay. The shark won’t even open its eyes.

But if it ever does wake up.
And if it sees you doing things you shouldn’t be doing.
Ain’t no one going to be bragging about anything anymore.

Take my advice. Don’t listen to those sure-I-do-it-all-the-time people.
Don’t wake up the shark.