MikeWiddis No Comments

HSA Medical Expense Tax Deduction

As a small business owner, is there a way to save on tax using my family’s medical expenses? The short answer is, absolutely! There are a couple of different ways.

Eligible Medical Expense Claims for all Taxpayers

First, not only business owners, but every taxpayer has the right to claim eligible medical expenses on their personal tax return every April.  There are a couple of downfalls though.  The medical tax credit doesn’t kick in until you have more than 3% of your net income in expenses or $2,237 (whichever is less).  So, a taxpayer with an income of $75,000 would get no benefit from spending over $2000 on medical expenses.  Also, this is a credit, not a deduction, and deductions are always better!

HSA Deduction – Small Business Owner Benefit

One benefit of being a small business owner is that you can choose to have your business set up a Healthcare Spending Account (HSA) which is a deduction to your business income. Every dollar your business spends is eligible, no minimum like the tax credit. You get to choose the monthly amount that makes sense for your situation. When you have an eligible expense, you can submit the receipt and be reimbursed 100% from this account (up to the account balance). On top of that, this reimbursement usually only takes a couple of days! Moreover, even if your spouse has benefits from their employer, which may only cover a portion of the difference, can also be reimbursed from your HSA. It includes everything that you are out of pocket for yourself, your spouse, and all dependents.

There is a long list of eligible expenses on CRA’s website www.cra-arc.gc.ca/medical. Take a look, you may be surprised at the items that you may have missed taking advantage of in the past. Getting a HSA setup is just one way to maximize your hard earned dollars and save on tax. If you want to learn more about the HSA deduction and other benefits of being a small business owner, please contact us at (226) 214-3233 and we would be happy to chat!

Stacey Leonard No Comments

What is Bitcoin and the Blockchain?

Blockchain is the future of finance, and the future is right around the corner! With technology constantly advancing, it’s critical for your small business to keep up to date. Otherwise, you risk falling behind and getting lost in the past. To stay informed and learn more about Bitcoin and the blockchain, including its benefits, keep on reading!

What is Bitcoin and the Blockchain?

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” – Don & Alex Tapscott, authors of Blockchain Revolution

So what is Bitcoin and the Blockchain that everyone’s talking about? A blockchain is a public ledger of all Bitcoin transactions that have ever been carried out. The completed blocks are constantly added to the growing blockchain in a chronological order. More specifically, the blockchain contains the full history of the transactions, where you can think of the blocks as being individual bank statements. Thus, the blockchain creates a permanent and unalterable database of all Bitcoin transactions.  Also, since the blockchain is decentralized, you can carry out Bitcoin transactions directly, without any third-party intermediary. In sum, the blockchain’s mission is to create more a open, fair, and accessible financial future.

Benefits of Using Bitcoin

“As revolutionary as it sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.” – Ian Khan, TEDx Speaker

No Intermediaries

Wait, so we don’t have to wait for days for a transaction to clear the banks? That’s right! Bitcoin allows two users to make an exchange without the intermediation of a third party. As a result, Bitcoin transactions only take minutes to complete and are processed constantly. Hence, people around the world can now validate and transact immediately using Bitcoin. Moreover, by eliminating third party intermediaries, costly transaction fees will be minimized.

Decentralization

The blockchain consists of decentralized networks that are spread over millions of computers. Therefore, this eliminates the risk of a central point of failure or weakness. In effect, the blockchain is more resistant to malicious attacks since no centralized information exists for a hacker to exploit. The data is accessible to users all around the globe and is secured by encryption technology. Encryption technology is more secure because it uses randomly generated strings of numbers that can only be decrypted using a private key. This is much more effective in comparison to the common “Username” and “Password” security method.

Transparency

Any changes made to public blockchains can be viewed by all parties, which creates transparency. The data is public because it is embedded within the blockchain network as a whole. Furthermore, all Bitcoin transactions are immutable. This means that they cannot be altered or deleted, which minimizes fraudulent activity. Consequently, the transactions are internally audited through blockchain technology. In other words, small business owner’s won’t have to worry about keeping track of these transactions (say goodbye to hording receipts!). On top of that, the stress and pressures of an audit are reduced, since all of the transaction information is permanently stored.

High Quality Data

Lastly, Bitcoin transactions provide high quality data that is complete, accurate, timely, and universally available. Since blockchain technology records every Bitcoin transaction ever executed, it can also provide historical insight. 

Hopefully, after reading this you have gained some insight about Bitcoin and its benefits. In brief, the blockchain and Bitcoin provide endless opportunities to those around the world, such as secure cost- and time-saving benefits. At UpSide Accounting, we are now accepting the digital currency, Bitcoin! If you’re a small business that currently operates using digital currency, phone us today at (226) 214-3233 and we would love to see if UpSide is a good fit for you. 

Stacey Leonard No Comments

Small Business 201: Find Me the Money!

Congratulations, you got your small business off the ground and running! Where are you going? You know the basics now, like strong bookkeeping, the importance of an accountant, and the pros and cons between sole proprietorship and incorporation. As you continue to streamline, your services get a little fancier with your business practices. We’ve got some great tips to help you find the money to do so.

Begin with Budgeting

Balancing your books is only part of the battle to business success. Realistic and emergency budgeting is at least as vital to making it past 5 years. Your budget should include the things you expect like overhead, wages (including yours!), benefits (also including yours!), taxes, and marketing. It should also include things you don’t expect, like downtime and emergencies. Ideally you should reinvest up to 50% of your capital back into the business. After taxes, of course. If your business is growing at the speed of light, it’s not crazy to go ahead and reinvest 100% after taxes.

You might like to set aside a few hundred dollars to support local community events or join the local chamber of commerce. This will help get your name out there and build your professional network. We also advise that you tuck something away to pay for professional development opportunities, either for yourself or employees. And a little something more for awards – if you’re fortunate enough to be nominated for a business award, there’s a very good chance you’ll need to pay for your own dinner at the event ceremony itself.

Then Look at Financing

Those first few years of a new business are astronomically stressful because oftentimes you’re starting from scratch. No office, no equipment, no employees, no street cred, no customers, not even any Facebook followers. Before you bleed your savings dry, look into the many forms of financing available to get you started.

Bank loans are a main staple. Plus you’ve got the Canada Small Business Financing Program, angel investors, and crowdfunding. Both bank loans and the Canada Small Business Financing Program are handled by financial institutions. Angel investors are trickier to attract. However, with some solid online sleuthing, networking, and a solid business model and product, you may find what you’re looking for.

If you’re business is in Waterloo Region, you’re in luck! Check out the Golden Triangle Angel Network. We also recommend watching Dragon’s Den for pointers if you’re brand new to business. Finally, crowdfunding could be exactly what you’re after. Platforms to launch crowdfunding include rewards, donations, equity, and debt-coverage.

Tax Incentives and Grants are Reliable

Although retroactive, there’s no reason why you shouldn’t scope out available tax credits and plan ahead to capitalize on them. In particular, the Scientific Research and Experimental Development tax credit (a.k.a SR&ED pronounced “shred”) is designed to help businesses recoup a percentage of materials and time lost during product development. It’s open to all kinds of manufacturing, as well as some digital industries. Talk to your accountant for advice on how to track your time and materials in preparation.

Applying for grants requires serious budgeting and forward-thinking but the rewards are worthwhile. Government grants change regularly. Although, they’re generally available for expansion, hiring, professional development, capital investment, and research and development. There are consultants for hire to help you apply for grants. The government agencies themselves also tend to provide excellent support so you can apply on your own. However, beware that grants cannot be retroactively applied and often take upwards of 6 months to win approval.

Upside Accounting supports your business beyond the books. Our consulting services cover a wide range of industries and business needs from budgeting, best practices, and customized growth strategy planning. Contact us to find out how we can help your business by calling (226) 214-3233.