COVID-19 Tax Implications

The team at Liu and Associates LLP want to assure you we are closely monitoring the COVID-19 situation and recognize it is truly a global crisis and is constantly changing. This is an unprecedented time for all of us, and we feel the need for everyone to work together to weather this storm.

We want you to know you have our commitment to continue providing you with the services you depend on, including up to date economic information.

You are not alone; we are in this together. So, how are we working together to support each other?

Health & Safety

First and foremost, our plan ensures the health and safety of our employees and our clients. We have implemented special protocols and continue to update them to support our team and to ensure we maintain our ability to serve you, for the long term.

We are being very cautious and have put in place precautionary measures to limit the potential spread of the virus including:

  • Frequent hand washing, supplying hand sanitizer, and masks if needed.
  • By requesting any staff member who has been out of the province to self-isolate for 14 days.
  • Maintaining social distancing within our office.
  • Working remotely wherever possible and using specific software as a unified communication and collaboration platform combining workplace chat, video meetings, file storage, and application integration.
  • Taking steps to limit our outside contact and discouraging in-person meetings as much as possible by asking our clients to provide us with their tax or financial information electronically, and if that isn’t possible, to please make an appointment in advance for an in-person meeting.
  • Materials physically coming into our office are being quarantined, and our intake staff are using precautionary measures.

Monitoring

Our senior leadership team remains vigilant and is monitoring the situation in real time and responding swiftly as conditions evolve.

Please view our most recent update on our COVID-19 protocols.

Tax Changes

We undertake to keep you up to date on changing tax deadlines or government directives, as follows:

You may already be aware of Canada Revenue Agency’s (CRA) announcement to extend the personal tax filing deadline. So instead of an April 30th filing deadline for the 2020 tax filing season, Canadians will have until June 1st to submit their income tax return to CRA. The deadline to pay off any outstanding balances interest-free will also be extended, this time, to July 31st.

Businesses will also have more time to pay their taxes. The CRA will allow all businesses to defer, until after August 31st, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020 including tax balances due, as well as required instalments, under Part 1 of the Income Tax Act.

No interest or penalties will accumulate on these amounts during this period. For more information, please see the statement from the Department of Finance. 

The CRA continues to monitor the evolving situation closely, in collaboration with other government departments and agencies as well as our provincial and territorial partners.

The Government of Canada is taking immediate, significant and decisive action to help Canadians facing hardship as a result of the COVID-19 outbreak. Today, March 18, 2020, the Prime Minister announced a new set of economic measures to help stabilize the economy during this challenging period.

These measures, delivered as part of the Government of Canada’s COVID-19 Economic Response Plan, will provide up to $27 billion in direct support to Canadian workers and businesses.

Moving Forward

We are following the guidance of major public health organizations, including the Public Health Agency of Canada, local health authorities, and the World Health Organization, and will continue to do so as the situation unfolds.

To protect ourselves and the communities around us, we can’t stress enough to please follow all the protocols for COVID-19 including frequently washing hands, regular cleaning of work surfaces, and avoiding public or crowded places whenever possible.

Best of health, be safe, and take care of yourselves.

Your trusted financial team at Liu and Associates LLP

When Do I Have to Submit My Corporate Taxes?

It’s a common questions among new business owners: How soon after my business’ year end do I have to file my corporate taxes? Read on for Liu and Associates breakdown of Canadian corporate tax filing deadlines.

Canadian Corporate Tax Returns

The basic rule when it comes to filing your Canadian corporate tax return is that you must submit your return no later than six months after the end of your business’ tax year. This means that each business’s T2 return date will differ depending on their fiscal year end.

Example
If your business’ year end is September 30, your Canadian corporate tax return would be due by March 30.

What Happens If My Year End Lands in the Middle of the Month?

If your year end falls on say, September 16, your due date would be March 16. The six month rule applies just the same.

My Filing Deadline Falls on a Saturday – Now What?!

If your filing deadline falls on a Saturday, Sunday or public holiday, as long as you send your claim on the first business day after the filing deadline you’ll be safe from any penalties!

Note: If you’re hoping to receive a tax refund, you must file your return no later than three years after the end of a tax year.

Alberta Provincial Corporate Tax Returns

Alberta based businesses have to file a separate provincial corporate tax return because Alberta administers their own corporate tax collection. For more information, visit the Treasury Board and Finance website. While filing deadlines are similar to CRA requirements, it’s good to familiarize yourself with both systems to avoid any fines or penalties.

Don’t Leave It Up To Chance

If you are confused or have questions about your corporate tax filings, don’t wait to ask! The experts at Liu & Associates LLP offer corporate tax services to ensure everything is done right and on time. Call us today!

Top Three Things to Ask your Accountant When Setting Up a Business

If you are starting your own company, an accountant is an invaluable resource. Depending on how you set up and run your business, it can save you money and time when tax season rolls around. Read on for three important questions to bring up with your accountant to ensure you are setting your company up for success!  

1. what Structure is Best for my Company?

Depending on your start-ups circumstances and projected profitability, your accountant can recommend the best business structure. Whether you go with a sole trader, partnership or limited company, your accountant can advise you of any potential benefits or drawbacks to each structure.

Common Types of Business Structures

2. What Records do I Need to Keep?

Keeping up to date business records is sure to make your life easier when it comes to tax time or even worse – an audit. Some of the most common things you’ll need to keep track of include:

  • Business expenses
  • Bank & credit card statements
  • Tax filings
  • Payroll
  • Income
  • Invoices
  • Purchase orders
  • Inventory

Other common questions surrounding this topic usually include where should you store these records, and how long do you have to keep them for. Your accountant can give you answers to all these questions are more, as well as offer some tips on how to streamline your record keeping. Here at Liu & Associates, we offer bookkeeping services that can keep this kind of stuff off your plate entirely!

3. Do I Need to Register for a GST/HST Number?

If you provide a taxable property or service in Canada and you no longer qualify as a small supplier, you will need to register for a GST/HST number.

What Qualifies as a Small Supplier?

If you have sales under $30,000 in the current calendar quarter, as well as the last four calendar quarters, your business has small supplier status. This means that you do not have to collect and pay GST/HST. Once you exceed $30,000 in a single quarter, you lose small supplier status and must begin to collect and pay GST/HST.

Regardless of your business’ income, you can voluntarily register for a GST/HST number. A GST number will allow you to claim input tax credits. Your accountant can explain when the best time to register for a GST/HST number is depending on your business’ situation.

Contact an Accountant Today!

Regardless of what stage of business planning you are in, the expert team at Liu & Associates can help! Give us a call to book a consultation with one of our accountants today.

Personal Bankruptcy – What You Should Know

Personal BankruptcyIf you are suffering from overwhelming debt, you may find yourself considering bankruptcy. People generally start to consider filing for bankruptcy when they are no longer able to pay their bills on time and are starting to get buried in their debt. While bankruptcy is a viable solution for many, it should always be your last resort. If you’re in a situation where debt has taken over, make sure to talk to an advisor about what your options are. Read on as we dive deeper into the details of personal bankruptcy.

What is Personal Bankruptcy?

Personal bankruptcy is a legal process, that is governed by federal law. When you declare bankruptcy, you effectively surrender everything you own to a Licensed Insolvency Trustee in exchange for the elimination of your debts.

Pros of Declaring Personal Bankruptcy

Filing for bankruptcy, while an extreme measure, does offer a number of advantages:

  • protects you from collectors taking legal action
  • eliminated debts
  • can be filed relatively quickly

Cons of Declaring Personal Bankruptcy

Filing for bankruptcy shouldn’t be thought of as a quick and painless solution. It comes with its fair share of disadvantages, such as:

  • it’s hard on your credit score
  • it may require you to surrender some or all of your possessions to your trustee
  • it requires you to keep detailed records while you’re in bankruptcy

Alternatives to Personal Bankruptcy

As stated earlier, filing for bankruptcy should be your last resort. There are several alternatives that you should explore with a trusted advisor before you decide to declare bankruptcy. Some of the alternatives include:

  • a debt consolidation loan
  • credit counselling
  • a consumer proposal to creditors

How To Declare Personal Bankruptcy

If you are considering declaring personal bankruptcy, here are a few of the steps you’ll need to take:

  • Select a licensed trustee to help you handle your affairs. Look for a trustee who you are comfortable with and that is easily accessible. You’ll also want to confirm that they are licensed by the Office of the Superintendent of Bankruptcy Canada (OSB).
  • Discuss your options. Chat with your trustee to see if there are any other options out there to help you manage your debt.
  • File the paperwork. If you and your trustee have decided that filing for bankruptcy is the best option, it’s time to your file and process the required paperwork. Your trustee will submit this paperwork on your behalf.
  • Stay on track. During bankruptcy, you will be required to keep detailed reports of income, as well as attend credit counselling sessions.

Liu & Associates Can Help

If debt has taken over your life, talk to an expert at Liu & Associates. Our team can help discuss your debt management options and assist you in filing for bankruptcy if applicable.

Corporate Bankruptcy — What You Should Know

Person using a calculator while reviewing financial charts and reports on a desk

When a business can no longer pay its debts, the business owner’s may start to consider bankruptcy. Before you make any decisions, be sure to talk to a trusted advisor to see if there are any alternative solutions to your problem. Filing for bankruptcy should always be your last resort. Read on to learn a bit more about corporate bankruptcy, and how Liu & Associates can help.

Small Businesses

If your business is a sole proprietorship or a partnership, a corporate bankruptcy will essentially be a personal bankruptcy. This is because the assets of the business can not be held separately from your personal assets.

Sole Proprietorship

If you have a sole proprietorship and you file for bankruptcy, the business will be seen as a separate venture from the day the bankruptcy goes into effect. If you’d like to start another business, you’ll have to get a new business number and set up new accounts with the CRA.

Partnership

If you are part of a partnership with only two people and you file for bankruptcy, the original partnership will cease to exist. If there are more than two people in the partnership, business continues but some sort of deal must be reached to handle the bankruptcy.

Incorporated Businesses

If an incorporated business files for bankruptcy, it is considered to be an independent legal entity. Therefore, a business owner’s personal assets will be kept separate in most circumstances. When a corporation files for bankruptcy, it can no longer exist. The only way a corporation can keep running is if it pays all its debts when in the process of declaring bankruptcy.

How To Declare Corporate Bankruptcy

If you’ve talked to a licensed trustee, considered your options, and still feel that declaring bankruptcy is the best option, here are a few of the steps you’ll need to take:

  • Talk to your licensed trustee and fill out the proper paperwork. Your trustee will file these forms on your behalf.
  • Once the paperwork has gone through, your trustee will begin to sell any property, investments or assets.  
  • All institutions with which you carry a debt will be notified about the bankruptcy by your trustee.
  • You may need to meet with creditors to determine how they could receive payment for the debt owed to them.
  • The Office of the Superintendent of Bankruptcy Canada (OSB) may bring you in for questioning regarding your excessive business debt.
  • There will be some sessions with a debt counsellor to hopefully prevent future debt problems.  
  • Your trustee will create a summary of the actions your took during the bankruptcy and submit this to the OSB.
  • There may be a hearing to make your bankruptcy official.
  • Lastly, your debt that qualifies under your bankruptcy will be wiped away and legally discharged.

Liu & Associates Can Help

Business bankruptcies are complicated. If you are contemplating bankruptcy, or are looking for a licensed trustee, contact Liu & Associates. Our team is ready to help you get back on your feet.

3 Most Common Small Business Bookkeeping Mistakes and How to Avoid Them

Bookkeeping is a fundamental part of your small business; unfortunately, mistakes are inevitable and happen to the best of us. So how do you save yourself from becoming a bookkeeping disaster? Read on to learn Liu & Associate’s three most common bookkeeping mistakes, and how to avoid falling victim to them yourself.

1. Forgetting to Track Small, Reimbursable Expenses

Many small business owners will pay for business expenses with their personal credit card, and then forget to submit the expenses to the company for reimbursement. All transactions, no matter now small and insignificant they may seem, need to be tracked properly. By staying on top of small transactions, it becomes easier to manage the bigger ones.

How to Avoid This Mistake?

Get a process in place from the very beginning. While it may seem unnecessary when your company is only one or two people, it’ll set the groundwork for when your company grows and the number of transactions increases.

2. Not Properly Classifying Employees

There are different rules and regulations come tax time for employees and non-employees. Many small business owners aren’t sure whether a consultant, contractor or freelancer are considered an employee or not. Misreporting employees results in reporting your business to the CRA inaccurately, and can cause you grief during an audit.

How to Avoid This Mistake?

Reach out to an accountant or advisor to learn what tax implications there are for each type of employee and non-employee, so you can accurately classify your workers.

3. Falling Behind on Entries & Reconciliation

One of the most fundamental aspects of bookkeeping is reconciling the books and bank statements each month. Reconciliation is a simple process – simply compare your books with your bank statement and make sure there are no discrepancies! If expenses aren’t being tracked, you’ll start to notice your books aren’t balancing, which means your reports are not up to date. Without current information, it’s next to impossible to make informed business decisions.

How to Avoid This Mistake?

Set aside a block of time each week to reconcile your accounts. If you catch mistakes the same month they were made, it makes correcting them a lot easier because they are likely to be more fresh in your mind.

Looking for Bookkeeping Help?

The easiest way to avoid making any bookkeeping mistakes is to let a professional handle your accounts! Liu & Associates offers flexible and comprehensive small business bookkeeping services that will make your business accounting a breeze. If you’d like to learn more about our small business accounting solutions, give our team a call today!

5 Small Business Bookkeeping Tips

Edmonton Bookkeeping TipsAs a small business owner, we know that you have a lot on your plate. Accounting may seem like a tedious task that is easy to push aside, but if you don’t keep a tight ship when it comes to your books it can make your life extremely difficult come tax time.

Read on to learn Liu & Associate’s five small business bookkeeping tips that will keep your life smooth and simple – even during tax season.

 
1. Find a Trusted Advisor

Having someone you can go to for sound advice is invaluable as a small business owner. Your advisor can make sure you are handling your finances properly, answer any questions and help you fix any mistakes that might have been made.

Have a small budget? Don’t worry! There are a ton of flexible options out there to make sure you get the advice you need at a price you can afford.

2. Plan for Major Expenses

Set aside some time and map out any major expenses that you foresee happening in the next three to five years. That way, you can plan accordingly and make sure you have the finances in place beforehand. This will save you from scrambling for a loan when these expenses become unavoidable. Be sure to acknowledge your busy and slow seasons, as this will affect how much money you have available to spend.

3. Track your Expenses

Write. Everything. Down. It doesn’t matter if you chose to carry around a notebook, make a note on your phone or write it on a napkin. Keeping track of every business expense ensures that you don’t miss out on any tax write-offs. An easy way to keep track of business expenses is to have one credit card that you use solely for business purposes. This ensures you have a digital copy of all business charges, and removes the stress of having to remember to write down a charge every time you use cash.

4. Keep an Eye on Your Accounts Receivables

When things get busy, it’s easy to forget to stay on top of your accounts receivables. Without receivables, income dwindles! Make sure you have a process (i.e. a monthly report), that lists any past due payments. You’ll also need to have a process for how to handle these accounts. It may be an email, a phone call or sending a second invoice; whatever it is it will ensure you are getting the monthly payments you are owed!

5. Schedule a Time Each Week to Review Your Books

Give yourself some time to sit down and go over your finances. Doing this quick overview once a week will allow you to ensure that everything is in order, and catch any mistakes in their early stages. It doesn’t need to be a big time-drain – 30 minutes/week is generally plenty!

BONUS TIP: Bring in the Experts

Liu & Associates offers flexible and comprehensive small business bookkeeping services that allow you to focus on what really matters – running your business. If you’d like to learn more about how our small business accounting solutions can help, give our team a call today!

Top 5 Will Writing Pitfalls

Older couple will planning with their accountantEstate planning can be an intense process for some, for others it might seem like just another hassle. As the top earning generation ages into retirement, it’s becoming essential for people to know what goes into writing a will. If you, your spouse or a loved one needs help with creating a legal and fiscally sound plans– consult Liu & Associates’ guide below! The following five tips are the most common oversights made when planning an estate.

    1. Good intentions are one thing, but leaving major sums of money to a charity or non-profit organization in your will may not always be the best route. Tax benefits are limited and other methods of giving tend to be more beneficial. A charitable giving fund set up in your name means more money going towards the causes you support.

 

    1. Don’t take chances, ensure your will is kept up to date! Assuming that life changes and other conditions are accounted for can leave your loved ones unprotected. Divorces, new children, and plans for business assets– these all can have serious consequences if left unaddressed in an obsolete will.

 

    1. Wills cover most aspects of your estate planning, but not all. Insurance policies, pensions and registered accounts often have their own beneficiaries, separate from your will. These designations should be reviewed and updated every two to three years to ensure proper dispensation.

 

    1. If you share joint accounts with loved ones, you may want to add clauses to your will to ensure the remaining amounts return to the estate. If these amounts are overlooked, the other holder or holders of the account may be immediately entitled to the funds. This can cause disagreements resulting in litigation, which rarely leaves a family unscathed.

 

  1. An heirloom cottage has a nice ring to it, but keeping your vacation home in the family could cost your loved ones more than you expect. Taxes and maintenance costs can be startling to younger relatives, possibly putting them in financial risk. Agreements can be signed beforehand to ensure the property passes on to someone who is prepared for the responsibility.

The above list is only a summary of what can go wrong if you take shortcuts when planning an estate. For a full review and consultation of your needs, contact or visit Liu & Associates today. Our experienced staff will ensure your loved ones, properties, assets and businesses are protected for decades to come.

The Benefits of Taking a QuickBooks Training Course

Woman working on a laptop at a desk in a modern office setting

Your business may be small but, even if you don’t feel you need a CPA (Certified Public Accountant), you do need to keep accurate financial records.

This task can be overwhelming but it is vital to the success of your business.

Luckily, there is accounting software available to help small business owners manage their finances as well as many other aspects of business.

Liu & Associates understands the value of being able to take care of business matters. Because of this, they recommend and offer training for an amazing accounting program called QuickBooks.

Get Quickbooks Training

What is QuickBooks?

QuickBooks is accounting software geared toward small and medium sized businesses.

Some features of the software include:

  • Track income and expenses
  • Capture and organize receipts
  • Track mileage
  • Manage bills and payments
  • Send invoices
  • Maximize tax deductions
  • Accept payments
  • Track sales and sales tax
  • Payroll
  • Track inventory
  • Run reports
  • Send estimates

QuickBooks is designed to support multiple users as well as connect with third party apps.

Why Do So Many Small Businesses Use QuickBooks?

QuickBooks provides a do-it-yourself solution for small business accounting.

The interface is user-friendly and customer-oriented. With a QuickBooks training course, anyone can master this program.

The software also helps small businesses easily manage their taxes, which ensure that taxes are filed properly along with all the necessary information.

QuickBook’s integrated tools help businesses to increase their efficiency and productivity. They also regularly update and improve the software in order to keep the program up-to-date.

Most importantly, QuickBooks offers automated backup services, meaning that all of  the business’s information is safe from data loss.

What Are the Benefits of Taking a QuickBooks Training Course?

1. The Program Can Be Overwhelming

Because QuickBooks incorporates so many wonderful and helpful features, it can take some time to figure it all out. Even with a user-friendly interface, it can be a challenge to easily navigate the software upon first use.

A QuickBooks training course will guide you through using these features and help you gain the confidence to do so in a professional setting.

2. You’ll Learn its Full Capabilities

Even if you are able to grasp how to use QuickBooks, there are some features you may not be aware of. A QuickBooks training course will help you take full advantage of the program’s full capabilities.

QuickBooks’ full array of features are designed to increase the effectiveness of a small business’s accounting department. Understanding how to use them all is valuable knowledge.

3. It’ll Show You How to Apply Your Bookkeeping Skills

You may have plenty of experience as a bookkeeper but it may be difficult to transfer your practical skills to the QuickBooks software.

A QuickBooks training course can teach you how to combine your know-how with the program’s many features.

4. You’ll Make Yourself a Competitive Job Candidate

QuickBooks is quickly becoming the leading accounting software for small businesses. Knowing how to fully use the program is a valuable skill to add to your resume.

Having experience and training with QuickBooks can open the door to jobs in a variety of organizations, including:

  • Small businesses
  • Not-for-profit organizations
  • Government agencies

Businesses appreciate efficiency and productivity, which you can offer with your knowledge of using QuickBooks.

Ready to Step Up Your Business’ Accounting Game?

Liu & Associates is happy to offer comprehensive QuickBooks training!

Whether you are looking to introduce your staff to accounting, or train a new employee, Liu & Associates can tailor a QuickBooks training program to suit your needs. We offer one-on-one or group training sessions.

We work with your schedule to accommodate your QuickBooks training.

Contact us today for more information!

What Do I Do After Declaring Personal Bankruptcy?

Did you know that the average Canadian household owes close to $1.78 for every dollar earned?

It’s no wonder debt is a financial issue for Canadians, with many of them facing owing amounts so high that there is no hope of paying it off.

If you find yourself in this type of financial crisis, bankruptcy is an option for clearing your debts. However, it comes with certain obligations you are expected to fulfill.

What is Bankruptcy?

Bankruptcy is a legal process for individuals who seek relief from some or all debts when they cannot repay these debts to creditors.

Filing for bankruptcy requires a licensed insolvency trustee, who files the bankruptcy and sends a notice of bankruptcy to the creditors.

The creditors then cannot proceed with any lawsuits, garnishes or payment requests.

After filing for bankruptcy, you are eligible for discharge from the trustees after 9 months. However, the bankruptcy itself remains on your credit report for at least 6 years.

What Happens After My Bankruptcy is Filed?

Once the bankruptcy is filed, you are required to fulfill a few obligations with the trustee.

Your responsibility during the bankruptcy includes:

  • Sending your trustee proof of your income and a monthly budget once a month.
  • Notifying your trustee of any changes with your work or income.
  • Attending 2 credit counselling sessions. During these sessions, a credit counsellor will guide you through budgeting and money management techniques.
  • Making monthly bankruptcy payments to the trustee.

During this time, you can expect to no longer have to deal with creditor calls. When your bankruptcy is filed by the trustee, an “automatic stay” is forwarded to the creditors.

An automatic stay indicates to the creditors that they are not allowed to take collection action against you.

What Should I Do After I File Bankruptcy?

Once your bankruptcy is discharged, you will no longer be required to deal with the trustees.

However, although your obligations to the trustee are compete, there are measures you can take to protect yourself from future bankruptcy and rebuild credit.

1. Check Your Credit Reports

Even though filing for bankruptcy clears your debts, you want to make sure nothing was missed on your credit report before beginning to reestablish credit.

About 3 to 6 months after your discharge from bankruptcy, you should check your credit report.

This is not the same as checking your credit score, which you can do for free now through most bank’s websites and apps.

According to Canada.ca, you can order a copy of your credit report through Equifax Canada and Transunion Canada without affecting your credit score.

2. Start a Budget

The reason bankruptcy proceedings require you to attend credit counseling is to try to prevent a bankruptcy from happening in the future.

You should continue what you learned from the credit counseling even after your bankruptcy is discharged.

Additionally, before you begin to build credit again, you want to make sure you can afford payments on a credit card.

Healthy financial habits will help you avoid a future bankruptcy as well as help you rebuild your credit quickly.

3. Build New Credit

Although the bankruptcy remains on your credit report for a minimum of 6 years, you can begin to build credit again immediately after your discharge.

While some financial institutions will deny you credit due to your bankruptcy, many lenders will look at you as if you have never had credit before, since bankruptcy essentially clears your credit status.

In order to reestablish credit, you should begin with a low limit secured credit card. Secured credit cards, as opposed to prepaid cards, offers you revolving credit.

This means that you can borrow against the card as long as you keep the balanced paid. Secured credit cards require a security deposit.

Be sure to use the card responsibly and only spend what you can afford to pay off each month.

Is Bankruptcy the Right Option For You?

Whether bankruptcy is the right choice for you or there is another viable option to help with your debt, you should speak with a professional accountant to ensure you are heading down the right financial path.

Contact our experts at Liu & Associates for more information about bankruptcy and other debt-solving options.