Tax planning, business compliance, and estate planning blog for British Columbia, Canada.

Why Should I Work with a CPA?

Mon, 05 Jul 2021 13:43:55 GMT

There are many options for filing your taxes. You can go with a DIY software, work with a CPA, or choose another kind of tax preparer.

If you want to ensure your taxes are filed correctly and accurately, hiring a CPA is the best course of action. A CPA is a chartered professional accountant who is licensed by the regional authority to practice accounting. As a result, CPAs have a considerable amount of education, training, and ongoing professional development specifically in tax-related areas, and that makes them the best qualified people to help you when it comes to taxes.

Baldip Moore, CPA, CGA, has heard countless horror stories from clients who decided too late to work with a CPA, and were not able to engage one in time to file their taxes. Unfortunately, those clients ended up owing thousands of dollars — in some cases hundreds of thousands of dollars — more than they would have if they had worked with a CPA to prepare their tax return.

Here are 4 reasons to consider a CPA next time you need help with your taxes.

CPAs must abide by a code of conduct

Every CPA has to follow a Code of Professional Conduct that is outlined by the Chartered Professional Accountants society. The code covers elements such as professional behavior, integrity and due care, objectivity, professional competency, and confidentiality. A CPA is bound by their code to ensure they take good care of clients and are qualified to do so.

CPAs are experts in tax preparation

A CPA will always ensure that clients have the information they need to make the right decisions for their tax return. CPAs are experts in tax preparation, and clients can trust that they will provide them with the right guidance. On everything from tax deductions to benefits and more, a CPA ensures that clients have the best possible outcome. For those that own a business, have a large amount of investments, own rental properties, or are being audited, a CPA is a valuable member to have on your team. They can offer advice on complex tax issues that may help you save on your tax return.

At Bridex, Baldip Moore, CPA, CGA is always providing his clients with helpful resources to ensure they have the right information when it comes to taxes. Knowledge is a core value at Bridex, and it’s vital to make sure clients are well informed. Take a look at these helpful blogs to learn more about how to get the best results for your tax return:

CPAs stay up to date with tax rules and regulations

Tax rules change frequently, and new laws and regulations are added on a regular basis. As part of the CPA accreditations, CPAs are required to take at least 40 hours of training each year to increase their knowledge. This means that CPAs are constantly learning about new tax rules and regulations and are always up-to-date on changes that the government has issued.

CPAs protect their clients

The reason a regulatory body like the CPA exists is twofold: It protects clients and it ensures there is a certain standard of practice. The Chartered Professional Accountants association ensures that all CPAs meet their standards, and this as a result protects the public. People can expect a certain level of quality across all CPAs because it is standardized by their association.

Don’t want to risk your money? It’s time to work with a CPA

When it comes to tax time, be sure to engage a CPA early on in the process so that you can have them help you file your tax return. Even though your tax filing deadline may not be until April, it’s best to start looking for CPAs several months ahead so you can book their time to work with you.

While a CPA will handle the heavy lifting of filing your tax return for you, there are a couple of things you can do on your end to streamline the process:

Gather all of your documentation for the tax year
Organize your paperwork by month or category
Be available to answer any questions from the CPA

This will ensure that the CPA has all of the information they need to complete your tax return, and that you’re not running around at the last minute gathering paperwork.

Get in touc h with Baldip Moore, CPA, CGA, today for a free 15-minute consultation . Learn about why working with a CPA is right for you and how you can take control of your financial future more effectively with a CPA on your side.

Ways to Reduce Financial Stress

Mon, 05 Jul 2021 13:41:26 GMT

If the last year hasn’t stressed you out, you probably have nerves of steel. However, if you’re like the rest of us, there have probably been a few moments in the last 12 months where you have felt stressed out.

What does stress look like? It differs from person to person, but it can include anything from insomnia, unexplained weight loss or gain, and brain fog, to heartburn, unusual food cravings, and lack of focus. While there are lots of ways to destress, such as exercising and spending quality time with loved ones, it’s also important to get to the core of the stressor — the thing that’s actually keeping you up at night.

For many Canadians, financial stress has increased over the past year, and will unfortunately continue to increase as the pandemic continues. However, it’s important to know that you have options when it comes to reducing your financial stress.

There are important things you can do — some that take as little as 15 minutes a day — to minimize your financial stress and help you relax again. This advice applies to both your personal and business financial stress, so let’s get down to it.

1. Make a budget so you can manage your financial stress

Photo by Dziana Hasanbekava .

You’ve likely heard this advice before, but it needs to be said again and again: making a budget is a good idea, no matter what your budget is. Whether you’re just making a budget for yourself and your spouse or for your multi-million dollar business, it’s a vital part of reducing financial stress.

While it can seem daunting, making a budget only takes up an hour or two once a year. Once you have your budget set up, you can maintain it by reviewing the details and adding in your income and expenses on a weekly or monthly basis.

However, without a budget, you’re kind of just winging it without a plan — and that can be dangerous. A budget provides you with limits. It lets you know how much money you have coming in and how much of that money you can spend. Without a budget, you’re just guessing, and that can lead to overspending...which leads to financial stress.

2. Audit your spending and earning after major life changes

Photo by Timo Miroshnichenko

A big time of stress for many people is during major life changes. For example, when you have a baby, buy a new house, lose your job, or deal with a global pandemic. All of these experiences can cause you to lose some sleep. However, when it comes to your financial stress, it’s best to take stock of the changes asap.

During a moment of major change in your life, it’s likely your income and expenses will change too. Remember that budget you made? Well, you may have to alter it based on the changes you have just experienced. For example, if you just had a baby, you’ll likely need to add in monthly expenses for diapers, baby clothes, and daycare. During a global pandemic, you may be able to reduce your expenses for commuting and entertainment.

Either way, be sure to frequently audit your spending and earning and see how they compare to your original budget. If you’re going through a major life change, it’s likely your budget will have to change with it. By altering your budget accordingly, you can manage your financial stress and have more control over your money.

3. Start saving for retirement earlier so you can nip financial stress in the bud

Photo by Annie Spratt .

Can you imagine retiring as early as your 30s or 40s? Sounds crazy, right? Well, it is possible, with a retirement savings strategy called FIRE (Financial Independence Retire Early) . This is a people-driven approach to retirement which is more about living a satisfying life than it is about the numbers. It involves aggressive earning, saving, and investing, and isn’t right for everyone.

The most important aspect of FIRE is spending your money more consciously. You have to focus on your current financial health and think about what your future financial needs will be. Consider how much you spend every month and how much you actually need to spend every month. Think about what your retirement goals are and what they will cost you every month.

If FIRE isn’t right for you, keep in mind that there are multiple retirement savings strategies you can use. Check them out in this blog on investing for retirement .

4. Check your bank account daily

Photo by Ono Kosuko .

One of the best ways to manage your financial stress in a short amount of time is to spend 15 minutes each day checking your bank accounts — that’s all the time you need. Staying on top of your bank accounts will help you reduce risk for fraudulent activity because you’ll be able to catch it in time for a quick reversal.

Be sure to make a list of all of your recurring expenses and when they occur so you can see when the money is taken out of your account (and make sure you have enough in there to begin with).

These days, as most bill payments are automated, people have a lot less visibility into where their money is going. If you don’t check your bank accounts daily, you may forget how much money you have in the bank or how much money you have going out for payments.

5. Have a contingency fund

Photo b Fabian Blank .

Whether you’re an individual, small business or both, it’s important to have a rainy day fund in place. This can help you considerably reduce your financial stress because it’s like a safety net.

Building up a contingency fund doesn’t have to be overly complex, and can be based on your needs and income. For example, you can put as little as $20 away into the fund every paycheck or take a more complex approach and allocate a certain percentage of your income.

The key is to be consistent in putting money away on a regular basis, and not touching it in case of emergency. A contingency fund is not to use if you really want to buy that new pair of shoes. It’s for major purchases that affect the quality of your life such as a new air conditioner for your home or new furniture for your business.

6. Build a monthly financial process

Photo b Micheile Henderson.

One of the reasons for financial stress is late fees. If you don’t pay your bills on time, you may end up paying interest or have to deal with fines. These can add up quickly, especially if you owe a large balance. This is why you should build a monthly financial process where you assess what needs to be done and work it into your schedule.

Write down all of your bills and when they should be paid so you can ensure there is enough money in the account to meet those deadlines. Automate any payments where possible so you don’t forget, and add in reminders to your calendar for the ones which cannot be automated.

Want to kick financial stress to the curb and breathe a little easier?

Financial stress doesn’t have to be a part of your day-to-day life. Whether your annual taxes are stressing you out, you’re not sure if you have enough money in the bank to pay your business expenses, or you need help establishing a contingency fund, Bridex can help.

Get in touch with Baldip Moore, CPA, CGA, today for a free 15-minute consultation . Learn about why working with a CPA is right for you and how you can take control of your financial future more effectively with a CPA on your side.

6 Expert Bookkeeping Best Practices for Your Small Business

Fri, 21 May 2021 12:21:12 GMT

With decades of expertise supporting small businesses in British Columbia and managing their finances, Baldip Moore, CPA, CGA, has seen his fair share of “interesting” bookkeeping practices. From businesses keeping their receipts in a plastic bag to businesses not knowing where any of their invoices are, there is no shortage of unique stories from the field.

The problem with bad bookkeeping practices is that they are not just funny — they can cost businesses thousands of dollars. Not having a systematic bookkeeping process and not working with an accounting and bookkeeping expert can result in audits, fines, and other penalties — not to mention a lot of stress.

Here are 6 bookkeeping best practices to follow.

1. Maintain a filing system for your documents

Don’t be the business owner who stuffs invoices and receipts into a plastic bag. Instead, develop a filing system for your important paperwork, such as invoices, receipts, bank statements, and credit card statements. The most common method many businesses use is to organize them by month. This makes it easy to find what you need later on.

While many people consider filing paperwork an administrative activity, it actually has great financial value to your business. The onus is on the business owner to present documents if they are asked by Canada Revenue Agency (CRA). If you cannot produce those documents, then you cannot claim those expenses. This means those documents are worth actual money to your business.

Your documents are used to prepare year-end paperwork, optimize tax deductions, and improve your company’s bottom line. They can also come in handy during disputes, if you’re selling your business, or if you want to better understand your financial position. Once you have a document filing system in place, it will be easier to get your accountant and bookkeeper the files they need.

2. Establish a budget and stick to it

Many small businesses operate without a budget. This method of winging it results in large expenditures and subsequent business losses. It’s important to allocate a budget for your small business so you can more effectively control your spending. A budget also helps you reach specific goals and targets for your business growth and profitability.

There is also a psychological effect of setting a budget. If you have a formal budget, you are more likely to stick to it than if you just have a rough idea of how much you can spend. Creating a budget helps you more effectively understand your financial situation and the cash flow you have available to spend.

3. Plan for major expenses

Maintain a reserve for any large expenses your business may have, such as for equipment, vehicles, furniture, technology, and office space.

It is likely that you will need to pay for a major expense every two to three years, so build it into your business’ budget and put aside a certain amount of money into the reserve every month. If you will need financing for this major expense, have an arrangement in place with a bank or lender.

With business planning , you will know that you have cash flow available whenever you need it.

A common problem small businesses have is that they don’t have a reserve of funds. When they need to make a purchase, such as getting a new business vehicle or buying new furniture for their restaurant, they are not able to do it because they don’t have the funds. They put the purchase off for a few months or even a few years. This makes their business look outdated, which then costs them customers and revenue.

4. Separate your personal and business expenses to avoid tax issues

It’s common for small businesses to put their personal and business purchases on the same credit card. However, this can present audit challenges later on. Use a separate credit card for your business and personal expenses. If you commingle and combine your finances, you can create tax and liability issues for your business and personal finances.

With separate credit cards, you can keep a clean audit trail . This also saves your accounting and bookkeeping team time because they don’t have to manually separate your business and personal expenses. This can reduce the time spent on your year-end files and save you costs down the road.

5. Set money aside for taxes

Taxes should not come as a surprise — they need to be paid every year. Yet, many businesses do not set aside the funds for their taxes, and then are shocked come tax time that a payment needs to be made.

The best strategy to ensure you always set money aside for your business taxes is to use a separate bank account for them. Put a certain percentage of your income aside each month into that separate bank account.

Another strategy is to pay your taxes in instalments throughout the year. This way, you can make smaller, more frequent payments, rather than one large payment. For many business owners, this is more effective and results in less financial issues.

6. Work with a corporate lawyer to set up your business

There are many complex steps to setting up a corporation, including appointing directors, filing articles of incorporation, writing corporate bylaws, drafting a shareholders’ agreement, issuing shares, and much more. One of the biggest mistakes small businesses can make is not working with a lawyer to set up their corporation .

When corporate documents are not in order, it can result in major errors such as not issuing shares properly — which means there is no official owner of the business. In order to proceed with accounting and bookkeeping, the business needs to be set up correctly from the beginning.

Need bookkeeping and accounting assistance?

Handling your business finances is a full-time job that requires expertise and experience. Here are just some of the ways Bridex Accounting can help your small business:

Ensuring your books are financially valid by recording and reconciling your transactions
Building a robust day-to-day bookkeeping process for your business so you have a place to gather, generate, and archive source documents
Keeping your general ledger, accounts receivable ledger, and accounts payable ledger
Improving your financial forecasting, business planning, and budgeting
Making accurate tax deductions for shared business expenses such as vehicles or mobile phones
Improving your position for qualifying for supplier credit, business loans, and investor funding
Ensuring you don't attract unwanted attention from the CRA

Ready to get your books in order? Get in touch with Baldip Moore, CPA, CGA, at Bridex Accounting.

3 Reasons Why You Should Consider Getting a Healthcare Spending Account (HCSA) for Your Small Business

Fri, 21 May 2021 11:57:16 GMT

In large corporations, having a Health Care Spending Account (HCSA) in British Columbia is a common occurrence. It’s usually part of a comprehensive healthcare benefits plan. However, many small and medium businesses often don’t offer healthcare spending accounts, which can be detrimental to both the business and its employees.

Many business owners think Health Care Spending Accounts are too costly and don’t provide enough coverage — however, this is actually not the case. A Health Care Spending Account (HCSA) can be a useful benefit for small and medium-sized businesses — not just large corporations.

What is a Health Care Spending Account in British Columbia?

In organizations that have a comprehensive healthcare benefits plan, a Health Care Spending Account (HCSA) provides supplemental coverage for items that are not covered by traditional group benefits programs. However, a Health Care Spending Account can also be offered in organizations that do not have a group health plan. Areas a healthcare spending account covers include:

Prescription medication
Professional services such as chiropractors or physiotherapists
Eyeglasses or contact lenses
Laser eye surgery
Hearing aids
Fertility treatments
Insulin and injection pens
Dental expenses
Dentures and dental implants
Cosmetic surgery
Home care
Home renovations when medically prescribed

The list is long, and varies between Health Care Spending Account providers in British Columbia. However, this example list shows that a Health Care Spending Account covers a wide range of medical expenses.

Why should your small business get a healthcare spending account?

1. Improve your personal financial situation

A Health Care Spending Account (HCSA) is a wise choice for your small business, even if you don’t have any employees. You can use a Health Care Spending Account just for yourself! It’s an opportunity to write off medical expenses for yourself which you cannot do with your personal tax return.

When you have a Health Care Spending Account (HCSA), you can deduct 100% of your medical expenses. Compare this to a personal tax return, where you can only deduct a portion of medical expenses.

The best way to determine whether a Health Care Spending Account can save you money on a personal level is to look at your annual healthcare costs over a few years. If those costs are typically covered by most healthcare spending accounts, this may be a good option for you. However, if your medical expenses are for items that are not covered, then you may have to look at other options.

2. Improve your employees’ financial situation

Employees do not pay tax on any contributions they make to the healthcare spending account or on any eligible expenses related to the healthcare spending account. This upfront tax savings makes the healthcare spending account a powerful financial tool for employees.

In order to see tax savings from using a HCSA, families typically need to have medical expenses above $2,302 (2018) or 3% of their income per year, and have a marginal tax rate greater than 20%.

By offering a healthcare spending account for employees, small businesses can showcase their commitment to the health and wellbeing of their team and their families. This can help attract top talent to the business, and increase employee retention and loyalty rates. This in turn can help the business save on recruiting, hiring, and onboarding costs if the employee turnover is low.

3. Improve your business’ financial situation

While the savings to the business owner and the employees can be significant with a healthcare spending account, they are also important to the business itself. Here are some of the financial benefits to the business:

The business receives a tax deduction on any contributions to the healthcare spending account.
The business has more clarity with a healthcare spending account because they can select the contribution amount. In addition, they can select the cap for employees. Once that cap has been reached, the healthcare spending account is maxed out. This is different from a traditional group health benefits plan where the claims and related costs can be unpredictable.
Premiums for traditional group health benefits vary based on usage. However, with a HCSA, this is not the case.
Businesses only pay for what the employer or the employees have actually used within the HCSA. With traditional group health benefits, businesses pay regardless of the use.

Is a healthcare spending account right for your business ?

Navigating the accounting and bookkeeping nuances of a healthcare spending account are complex and require a professional’s expertise. It’s important to make sure the tax and deductions considerations are done correctly at every step.

3 Personal Tax Changes You Don’t Want to Overlook for the 2020 Tax Year

Thu, 11 Mar 2021 14:28:52 GMT

It’s pretty clear that a lot has changed since this time last year.

Now, masks are a functional fashion accessory that everyone has several of. Social distancing has become the norm in most cities.

Plus, talking about vaccines has become equivalent to talking about the new Netflix show.

While 2020 has been really challenging for many people, there have been some good things to come out of it, too. For example, we’ve had more time to spend with our families at home, getting to know each other on a deeper level.

We’ve focused more of our efforts on supporting small businesses in the community, too. And, going for a walk and enjoying the fresh air is now as exciting as going out for a night with your friends.

Just like there have been changes in our lives, 2020 has brought some interesting changes when it comes to your personal taxes as well.

N ow with the tax deadline approaching, it’s important to be aware of the personal tax changes that can help you keep more of your money in the bank.

Here are 3 things you must consider before filing your 2020 taxes.

1. COVID-19 payments from the government are taxable income

The federal government has provided a number of COVID-19 support payments to people during 2020. These include:

CERB (Canada Emergency Response Benefit),
Canada Recovery Benefit,
Canada Recovery Caregiving Benefit,
Canada Recovery Sickness Benefit,
Canada Emergency Student Benefit.

If you have received any of these benefits, note that they have to be reported as taxable income on your 2020 personal tax return.

It is true that there was some confusion in the messaging around who was eligible for these benefits. This was specifically around whether self-employed individuals could receive Canada Emergency Response Benefit (CERB) based on their required minimum income (which had to be $5,000 in the last 12 months prior to applying).

The confusion was surrounding whether that $5,000 was for gross or net income. In February 2021, the federal government cleared up the issue and specified that if any self-employed individuals qualified based on their gross income (not net income), they would not have to repay the benefit — as long as they met all other eligibility criteria.

I f you have already paid back the benefit amount, then the Canada Revenue Agency ( CRA) will actually return the amount back to you.

If you received any of these benefits, especially Canada Emergency Response Benefit (CERB) as a self-employed individual, it’s best to speak with a CPA firm like Bridex to ensure that all of your personal tax paperwork is in order — and you’re reporting the correct amount of taxable income. Bridex can also help you determine whether you’re eligible for any of the COVID-19 benefits.

2. The enhanced basic personal amount is increasing

The basic personal amount (BPA), is a non-refundable tax credit that every person filing personal taxes is eligible to take. It enables those who have an income of less than the basic personal amount to gain relief from any provincial taxes.

If you make more than the basic personal amount, there are some changes to be aware of for the 2020 tax year:

In 2019, the basic personal amount was $12,069. This was the same for all taxpayers regardless of income. However, this has changed in 2020 and is based on your income.
If your net income was $214,368 or more in 2020, you can claim a basic personal amount of $12,298 on your personal tax return.
If your net income was $150,473 or less in 2020, you can claim an enhanced basic personal amount of $13,229.
If your net income was between $150,473 and $214,368, you can claim a prorated basic personal amount.
This enhanced basic personal amount system applies to maximum spousal and common-law partner amounts, in addition to maximum amount for eligible dependents.
Any graduated tax brackets and non-refundable credit amounts have increased by 1.9% in 2020 to account for inflation.

If you’re eligible to claim the enhanced basic personal amount, contact Bridex to ensure you’re taking advantage of the tax credit correctly on your personal tax return.

3. There is a brand new training credit you may be eligible for

Training costs can add up when you are trying to further your career or enter a new one with additional certifications and experience. To help those who are between 26 and 65 with the costs of training, the government of Canada is introducing a new refundable tax credit for the 2020 year.

The new Canada Training Credit (CTC) enables you to accumulate $250 towards the Canada Training Credit Limit (CTCL) account. To be eligible for this credit, you must:

Have a 2019 working income of at least $10,000. This may include self-employment income, employment income, grants, scholarships and bursaries, and maternity and paternity EI benefits.
Have a 2019 net come of $147,667 or less.

If you meet the eligibility criteria, then your Canada Training Credit Limit (CTCL) account accumulates up until a maximum of $5,000 is reached.

In order to use this credit, you need to be enrolled in a training program or course, and can apply 50% of the costs of the program towards the balance of the account during the same year you have paid your tuition. A CPA firm like Bridex can help you figure out whether the remaining 50% of your tuition is eligible for tax credits as well.

If you have any unused credits in your Canada Training Credit Limit (CTCL) account, they will expire when you turn 65. This gives many people a long time to use these credits towards the various training and courses they may take over the course of their careers.

The personal tax filing deadline is fast approaching, so make sure you have all of your paperwork in order. Get in touch with Baldip Moore, CPA, CGA , today to learn more about how he can help you file your personal taxes accurately and on time — to ensure you keep more of your money in the bank.

Investing for Retirement: Theories and Real-World Strategies That Will Help You Save and Invest for Your Future

Thu, 11 Mar 2021 14:28:50 GMT

If you file your personal taxes on time, you’ll soon be receiving your tax refund in a few short weeks. For many people, getting a refund means they have more money to save and invest for the future.

Do you know what you’re going to do with your tax refund this year?

It can be tempting to splurge on a few treats for your family, but be sure to put some of it aside to help you out on a rainy day or down the line in the future during your retirement.

When it comes to investing and saving for the future, there is a lot of confusion surrounding how much you need to save, and how you should invest it. Baldip Moore, CPA, CGA , offers a few guidelines you should look at when considering how to save for your retirement.

Follow one of these basic retirement planning theories

There are no hard-and-fast rules when it comes to saving for your retirement. What one family needs will differ from their neighbours and friends — it all depends on your lifestyle, expenses, savings, and so much more. While there are countless factors to consider when deciding how much to save, there are 3 retirement planning theories that offer you a good starting point.

The 70% Rule

This is a common rule that financial planners recommend to people who are figuring out how much to save for their retirement. It suggests that you need to save around 70% of your pre-retirement income for your retirement.

For example, if your pre-retirement annual income is $100,000, then you’ll need to save approximately $70,000 for each year of your retirement.

The reasoning behind this rule is that your lifestyle changes when you retire and you have less expenses for things like commuting, clothing, and other items. While 70% is the name of the rule, it really depends on your lifestyle. The amount you need to save will depend on:

Whether your mortgage is paid off,
Whether you still have dependants to support,
Whether you plan to travel and take vacations,
Whether you will be spending more time doing hobbies.

These factors can increase or decrease that 70% number, so it’s best to carefully think about what you want your retirement to look like in order to find out what percentage of your pre-retirement income you should save.

The 4% Rule

This rule is a bit more complex than the 70% rule, and depends on the size and diversity of your investment portfolio.

The 4% rule states that you can withdraw 4% from your investment portfolio comfortably without negatively impacting it. As a result, you can count on that 4% of income during retirement.

However, for this rule to be effective, it assumes you have a sizable investment portfolio. In addition, the study behind this theory uses a sample portfolio which is made up of a split between U.S. common stocks and intermediate-term treasury bills.

Your portfolio will likely have a different makeup, and as a result the percentage you can withdraw each year will change as well. Keep in mind that the 4% is a guideline, not a strict rule or recommendation.

The 100-Minus-Your-Age Rule

This rule is all about your risk tolerance. Ideally, the older you get, the more risk-averse you should be when it comes to your investments — since your portfolio has less time to recover from a downfall if it occurs.

This rule helps you figure out which proportion of your investments should be invested in equities versus safe, fixed-income assets.

For example, if you’re 30 years old, then you can invest 70% of your portfolio in equities, while only 30% need to be invested in fixed-income assets. If you’re 65, then only 35% of your portfolio should be invested in equities, and so on.

Keep in mind that since the life expectancy has increased over the years, and since there is a low return on fixed-income investments, you may want to use the 110-years-minus-your-age rule instead. Keep in mind that this is only a guideline.

Know how much risk you can afford to take

In addition to figuring out how much money you need to save for your retirement, and how you should save and invest it, it’s important to consider your tolerance for risk. Keep in mind that risk is not stationary — it changes during the course of your life. While you are young, you may have a higher tolerance for risk compared to when you’re older.

So how do you figure out your risk tolerance at any given point in time? It depends on two key factors: Your ability to take risk (how financially secure you are), and your willingness to take risk (how you feel about losses).

Once you know what your risk tolerance is, you can look into various investment vehicles for your retirement income. These include:

Stocks (equities): High-risk investments
Bonds (fixed income): Medium-risk investments
Cash equivalents: Low-risk investments
Life insurance: Low-risk investments

Figuring out how to invest for your retirement will depend on how much money you need to save, how much time you have to save it, and what your risk tolerance is. No two situations are alike, so it’s best to meet with a CPA firm like Bridex to figure out how to structure your retirement plan and your investments to ensure you’re on the right track.

It’s never too early or too late to start planning for your retirement

A major part of planning for your retirement, in addition to ensuring you have a steady income, is figuring out your estate plan . Be sure to connect with Baldip Moore, CPA, CGA , to learn more about how to structure your investments so that your retirement is tax efficient and stress free.

No matter which savings theory you’re following or what kind of investments you have, it’s important to know that your portfolio is built on a tax efficiency framework — so you and your loved ones don’t end up paying more tax than you need to on your estate.

5 Tips You Need to Know When Filing Your Personal Taxes in 2021

Wed, 17 Feb 2021 13:54:11 GMT

Taxes. It’s probably one of the most feared words in the English language.

The problem is that most people don’t fully understand tax and that lack of knowledge feels scary and threatening.

That’s why it’s important to trust the experts when you’re filing taxes — especially if you feel you don’t have a solid grasp of all of the details. Baldip Moore, CPA, CGA , has been helping small businesses and professional services effectively file their personal and business tax returns for decades, and has a deep understanding of the rules and regulations. As a result, his clients don’t pay any more taxes than they need to while seeing efficient savings in the long run.

When it comes to the basics of filing taxes, here are 5 key tips you should know before you begin:

1. Get your documents organized

There is a lot of paperwork that needs to be collected before you begin filing your taxes. It’s not like you can just open up your tax software and plug in the numbers — you will need to do a little bit of homework.

Whether you’re planning on working with a professional accounting firm like Bridex or you want to attempt filing your own taxes, you will need to gather these documents:

T-slips such as T4, T4A, T5. You can download these from the CRA.
RRSP documents
T2202A, if you are a student and pay tuition. You can download this from your university website.

2. Find your RRSP slips for the relevant tax year

One of the biggest mistakes Baldip Moore sees at Bridex when it comes to personal taxes is clients bringing in Registered Retirement Savings Plan (RRSP) slips for the wrong tax year. Many people think that for RRSPs, the tax year is January 1st to December 31st.

Here’s where it starts to get tricky: When filing your taxes, you actually need to provide RRSP slips for any contributions made between last March to this March. For example, for your 2020 tax return, your Registered Retirement Savings Plan (RRSP) slips will need to be from March 1, 2020 to March 1, 2021.

3. Don’t overlook your receipts

If you run a business or have a professional services practice, you can write off a number of expenses — meaning you don’t have to pay income tax on the money you paid for those expenses.

If you had medical procedures or expenses, such as buying a new pair of glasses or going to the dentist, those should also be accounted for in your personal tax filing. Plus, if you made any donations this year, such as to your child’s soccer team or to a worldwide charitable organization, keep your donation receipts to save on your taxes.

4. Set up your CRA My Account

Even if you’re working with a professional accounting firm like Bridex, setting up your Canada Revenue Agency (CRA) My Account is a good idea. This way, you have more visibility into what is happening with your tax return.

Just a few of the things you can do when you have this account set up include:

Tracking your refund
Checking your benefits
Applying for benefits programs such as the Canada Child Benefits or Canada Emergency Response Benefit (CERB)
Viewing your Registered Retirement Savings Plan (RRSP) and Tax Free Savings Account ( TFSA) contribution room limits

Some of the most common questions tax accountants get have to do with contribution room limits and refund tracking. Having your Canada Revenue Agency (CRA) My Account set up provides you all of this information at your fingertips. While accountants can have some authorization to access your account, they do not have full visibility.

5. Meet the tax filing deadline

When it comes to deadlines and taxes — you’ve got to make it in on time. If you don’t, you can end up facing costly penalties if you owe taxes, and no one wants to pay more than they need to.

In 2020, the Canada Revenue Agency allowed more time for the personal tax filing deadline. However, no extension has been announced in 2021. This means that your individual tax filing is April 30th. If you’re self employed, the filing deadline is June 15th. Note that income taxes owing for individuals are due by April 30th, even though the filing for self-employed people is June 15th.

Don’t fear the tax man

Taxes don’t have to feel like a ball of anxiety every year. When you understand the rules and regulations and work with an expert — filing your taxes is simple. All you have to do is gather the right forms and receipts, and your accountant works their magic for you.

4 Ways to Get Your Finances and Taxes in Order While in Lockdown

Tue, 16 Feb 2021 13:54:27 GMT

Let’s face it — the last 12 or so months have been difficult to say the least.

For many of us, our lives have been completely upended. We’ve had to figure out how to do our jobs from home, or we’ve had to go into work while wearing a whole lot of Property, Plant and Equipment (PPE).

Either way, we’ve all had to face a number of changes along the way and learn how to adapt to them.

One positive that has come out of the current situation is time. For a lot of people, they now have more time than they ever did because, well, there is not much to do. You can’t go out and have dinner with your friends. You can’t visit your family. You can’t take your kids to soccer practice. As a result, you have a lot more time on your hands.

While watching the latest episode of your favourite show on Netflix is a great way to spend your extra time, there are a couple of other things you can do.

At Bridex Accounting Services , founder Baldip Moore, CPA, CGA , recommends spending some time reviewing your finances and taxes .

Why not take a few minutes each day to get your finances in order so that you’re better prepared for the year ahead — and can keep more of your money in the bank along the way.

Here are the top 4 things you need to look at:

1. Look at how much cash you have on hand and review your savings

This is a great time to re-evaluate your budget, spending, savings, and cash flow. It’s likely your budget has changed over the last year because of the differences in your lifestyle.

For example, are you still spending money on commuting to work or your business, or is your commute now just a walk down the hall?

Similarly, are you still spending money on entertaining clients and friends, or has that money moved into your grocery bill? Do your kids still go to their after school program, or are they spending more time at home?

Figure out what your financial needs are vs. your financial wants.

Take a closer look at your monthly living costs now and how they compare to your “normal life”. It’s likely there are some changes — both positive and negative — you can make to your budget.

Once you know how much money you’re spending, think about how much you should be saving. Most people save around 5% of their earnings. While a good start, it’s simply not going to be enough should you have a life emergency.

It’s best to save at least 10% of your earnings on a monthly basis.

This will provide you with a solid rainy day fund you can use when times get tough and you need a little extra help.

2. Consider life insurance as a savings strategy

There are many ways to more effectively save your money and grow your net worth. A low-risk but high-benefit option is to use life insurance as a savings strategy.

L ife insurance policies vary by provider and plan, but the base concept is the same: you put money aside each month — which grows with the investment component — towards a sum that your family can access when you’re gone. Essentially, it’s a fancy savings account with certain benefits.

While it’s certainly a good idea to put money aside for your family to rely on should you pass away, your life insurance can actually help you in the present, not just in the future. When you’re putting money into your life insurance plan, you’re saving it — not spending it.

Depending on your plan and whether it has a cash value, you may also be able to access those life insurance funds before you pass away. This means that if you're planning on making a big purchase or investment, like buying a new house or car for example, you could potentially use those funds for this purpose.

A life insurance policy offers you tax-sheltered growth, because you don’t have to pay taxes on your investment earned until you withdraw the money. You can access the funds now or leave them for your family for later. Regardless, you have a nice sum of money in the bank that steadily grows your net worth.

3. Update your estate plan

Have you thought about what would happen to your business, your practice, or your finances if you were to pass away? The current health crisis has forced a lot of people to take a long, hard look at their finances. While life insurance is a good option to grow your savings, you also need to consider setting up or updating your estate plan.

How would your family carry on if you became injured, ill, or passed away? You have worked your entire life to build your estate. Ensure there is a plan for it for after you're gone so that your investments and business are protected.

An estate plan is a way to manage, arrange, and organize your net worth and finances for after you pass away. With an estate plan, you can distribute your assets as you intend — instead of your estate going to the government. Plus, there are significant tax advantages with an estate plan.

You can ensure that your loved ones have to pay minimal estate taxes and probate fees if you plan your estate in advance, ensuring your family keeps your hard-earned money with them — instead of having to part with it during a difficult time.

4. File your taxes to date

This is a big one that everyone needs to look at: make sure you file your tax return — and file it on time.

In addition to following the law, there are many benefits to filing your tax return:

You can avoid late filing penalties if you have taxes owing. These can add up each year.
Even if your income is $0, you can grow your contribution room for your Tax-Free Savings Account (TFSA). This is a great way to save your earnings tax-free each year.
If you earned an income, then you can grow your Registered Retirement Savings Plan (RRSP) contribution room, helping you save tax-deferred for your future.
If you have paid taxes which are withheld, you could be eligible for a tax refund. Even a few hundred dollars can be a big help. Plus, you could be able to get a Goods and Services Tax (GST) / Harmonized Sales Tax (HST) credit for low and modest income earning individuals or families.
If you have children, you can apply for the Canada Child Benefit, which is available in non-taxable monthly payments.

And if these benefits aren’t enough, you also get peace of mind that your taxes are filed and out of the way — and you don’t have to think about them again till next year.

Need a hand managing your finances and taxes?

It’s a lot to take in — but you don’t have to make sure your finances and taxes are in order on your own. Get in touch with Bridex Accounting Services. Baldip Moore, CPA, CGA , has decades of expertise helping small business owners and those in professional services take care of their money.

Whether you want to file your personal or business taxes, get a ssistance with bookkeeping, or start an estate plan , Bridex is here to help.