Starting a Professional Bookkeeping Business

There is great demand for professional bookkeepers in today’s market. Small business has grown considerably over the past 10 years and represents over 23% of the GDP. According to a CIBC World Market report, self employment is rising the fastest amongst young Canadians age 15-24 and older Canadians age 55+. There is more continued strong growth among older self-employed Canadians. The number of small enterprises run by older Canadians has risen by an impressive 35% since 2001. These “Seniorpreneurs” currently account for a record one in four self employed and represent more than 30% of the total work force over the age of 55.

These statistics make starting a professional bookkeeping business very attractive. The accounting software for small business has come a long way since the early days of self employment. The bookkeeping packages are more versatile to business owners requirements and enable the professional bookkeeper more flexibility with time management and reporting.

Question: How do you start a professional bookkeeping business in today’s market?

Answer: There are many resources in each province in Canada and also with the Canada Revenue Agency that will guide any new entrepreneur through the “process” of getting any small business started.

1. Before you even contemplate starting your own professional bookkeeping business, you will need current written references about your work as a professional bookkeeper and you should have at least three years direct professional bookkeeping experience, with education, in a Canadian environment. Being a member of a professional organization will also assist with getting your business up and running.

2. Ensure your business idea is valid for the marketplace. In this case bookkeeping/accounting will always be a service that is needed.

3. Write a business plan. I like to call this your “architectural plan for your business”. The purpose of the business plan is to guide you through the first stages of building your business and act as a bench marker for your business goals. Suggest starting with a six month plan, first, and refer to it often. If you are going off track it will guide you back.

That should get you started. Having your own professional bookkeeping business is very hard work. It is also very rewarding work when you assist a small business owner in achieving their goals.

Lastly, a reminder that you are a “professional” bookkeeper. That is what differentiates you.

GST/HST – Place of Supply Rules

As of July 1, 2010, Ontario harmonized its retail sales tax (PST) with the GST to implement the HST at the rate of 13% and British Columbia harmonized its PST with the GST to implement the HST at the rate of 12%. Also, as of July 1, 2010, Nova Scotia increased its HST rate from 13% to 15%.

Almost everyone has to pay the GST/HST on purchases of taxable supplies of property and services. A limited number of sales or supplies are exempt from GST/HST or zero rated.

CRAs Bulletin # 103 (http://www.cra-arc.gc.ca/E/pub/gm/b-103/b-103-e.pdf) goes into a 53 page detail on the “Place of Supply” rules for GST/HST.

The following is a short interpretation of those Rules.

If the supply is made through a permanent estabishment in the province of purchase, such as a movie pass that is only applicable in Ontario, then Ontario will be the “Place of Supply” and the 13% HST will be used.

On the other hand, if a supplier, in Ontario, supplies software by way of licence to a company in Nova Scotia for use by its employees at its offices in Nova Scotia (HST rate 15%) and New Brunswick (HST rate 13%) and, in the ordinary course of business, the supplier (in Ontario) obtains the business address of the recipient in Nova Scotia which is also the billing address for the supply of products/services, “The Place of Supply”. Therefore, the supply is deemed to be made in Nova Scotia and is subject to the 15% HST.

If this same supplier, in Ontario (HST rate 13%), supplied software to a business in Alberta for use by its employees in offices in Alberta (GST 5%) and British Columbia (HST rate 12%), with the business billing address in Alberta, “The Place of Supply”, then the Ontario supplier would only charge the 5% GST rate with NO HST.

For more information on this, go to the link provided.

Top Ten Bookkeeping Mistakes Made by Small Business

The following are the top ten bookkeeping mistakes made by Small Business which makes qualified professional bookkeepers invaluable.

1.Doing the bookkeeping themselves. 2. Not saving receipts less than $50. 3. Forgetting to track reimburseable expenses. 4. Not properly classifying employees. 5. Lack of communication with the professional bookkeeper. 6. Not reconciling the bank statements and cc statements monthly. 7 No back ups (we all know what happens here). 8 Retailers forgeting to deduct sales tax or deducting the wrong rate of tax. 9. Petty cash nonchalance (every company should have a petty cash account). 10 Miscategorization or overcategorization. Expenses need to be categorized properly.

There are many more bookkeeping mistakes that Small Business owners make. This list is the most popular of the bunch.