Writing off purchases and accounting

[Charon]

Im just starting to take off on my own and do contracts on my own as a contractor. But the part I don't have a clue on is the accounting.

Where would I find out what the rules are on what purchases you can write off ? A $3000 laptop for a programmer is not something I want to let slide.

In addition, it bothers me that I don't feel comfortable doing my taxes anymore as it is more complicated and I don't know how much more. Are there any courses/classes/programs one can take to get on top of this ?

[ramminghard]

I think how it works with laptops is that you actually have to amortize them. Generally you only write off expenses incurred for items used up in the year. Laptops last more than one year.

[88 CRX]

Take accounting classes at Mount Royal or SAIT and Canadian Income Tax courses are good to have as well. I'm sure you can take them in the evening.

[Mckenzie]

Any assets purchases are considered to be Capital Additions and must be amortized using capital cost allowance (CCA).

The PC falls under class 12 and has a rate of 45% per year, with the exception that in the first year you can only take half of the amount.

Ex.

PC costs $1000
Rate: 45%

Allowable CCA deduction: $450
Adjustment for 1/2 yr rule:$225

Deductible amount for tax purposes: $225

All other expenses are deductible in the year they are incurred.

I'd suggest spending a couple hundred buck to talk with an accountant about how to organize your books and tax issues with a company...i'm not sure if you will get as much benefit out of taking courses as you want to spend time focussed on your business rather than school.

Hire a book-keeper would also be another suggestion to keep records in order. They are cheap and efficient.

[kaput]

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[Mckenzie]

^ Yeah professional fees are a write-off but so would a course for business purposes.

I would say for peice of mind, hire a book-keeper and an accountant to do taxes at year end. You will get professional advice and clean clean clean books and records which is very important.

[Charon]

I can see what you mean now by hiring a professional bookkeeper. Save lots of time and get it done right.
While I know I could pick it up. I have a feeling I will not enjoy doing it all that much. And the time commitment after some research seems a much greater cost then a book keeper. Esp since I don't have all that much time.

Thanks guys.

[Mckenzie]

Originally posted by Charon
I can see what you mean now by hiring a professional bookkeeper. Save lots of time and get it done right.
While I know I could pick it up. I have a feeling I will not enjoy doing it all that much. And the time commitment after some research seems a much greater cost then a book keeper. Esp since I don't have all that much time.

Thanks guys.

Trust me my full time job is public accounting- followed by a professional program called CASB which is all about public accounting. I also do the books and accounting for my own small business and at the end of the day I am accounting crazy and hate my life haha....dont bother yourself with such a useless duty that can be done by someone else.

I will say though, familiarize yourself with the different accounts and terminologies so that you can understand your business better.

[Team_BMW]

Heh I'm currently enrolled in the accounting program at MRC, and so far so good. I'm loving it, even though it can be boring at times but it seems pretty simple to me, and I'm pursuing a CA... and hopefully opening my own firm one day.

And so far with basic knowledge the PC can be amortized and it's just another word for depreciation if you didn't know. But we don't use that term anymore. Well atleast in the accounting world we don't. Umm goodluck with that, and Mckenzie pretty much explained it all!

I also would suggest for moneys' worth, you sit down with a tax consultant and talk to them about your problems.

[icecreamvan]

Ha guys! what's CCA rate for wife, and half year rule apply even tho she strated washing dish 2 days after fiscal year start? She make kis as cupcakes mean I can expense her?

[blinkme_210]

You can't just really take a course or two in accounting and then magically know how to run a small business. There are so many different ways of doing certain things, and it would easily confuse you. Heck it still confuses accounting grads. Accountants know how to do their job, and do it well through years of public practice - the only way possible.

So spend the money to hire an accountant, and he'll throw it to his monkeys to do the work for him. Much easier that way, and less hassle for you at the end of the day. Maybe go take an intro accounting course and see how you like it. If you like it and understand it well, you could maybe do parts of your own accounting.

[Mckenzie]

Originally posted by blinkme_210
You can't just really take a course or two in accounting and then magically know how to run a small business. There are so many different ways of doing certain things, and it would easily confuse you. Heck it still confuses accounting grads. Accountants know how to do their job, and do it well through years of public practice - the only way possible.

So spend the money to hire an accountant, and he'll throw it to his monkeys to do the work for him. Much easier that way, and less hassle for you at the end of the day. Maybe go take an intro accounting course and see how you like it. If you like it and understand it well, you could maybe do parts of your own accounting.

:werd:

I would suggest to take an intro accounting class or even personal financial management class to understand financial statements and the ins and outs of the accounts. I would not however burden yourself with doing the accounting- much more efficient if you do your thing and let a pro take care of the accounting.

[Mckenzie]

Originally posted by icecreamvan
Ha guys! what's CCA rate for wife, and half year rule apply even tho she strated washing dish 2 days after fiscal year start? She make kis as cupcakes mean I can expense her?

Tough call- 4-5% per year maybe? 1/2 yr still applies despite being used for almost entire year. Cupcakes you can expense as long as she is being used to generate some income. I'll stop there. :D :angel: