installment billing with quickbooks online qbo

QuickBooks Online (QBO) – Installment Billing

installment billing with quickbooks online qbo

I have a number of clients using QBO that have agreements or contracts where they offer their services over an extended period of time.  Even though the agreement might be for a year they don’t want to invoice and charge HST for the full year if they’re not being paid. This is where installment billing can be applied.

Who Benefits from Using Installment Billing?

Coaches, personal trainers and technical support services are an example of these types of businesses.  And one of their “selling features” is that they offer an affordable option to pay the total amount spread equally over a specified period of time. This is Installment billing and Installment payments, not to be confused with Progress billing.  Progress billing is generally associated with the construction industry with invoices generated for a percentage of work that is completed.  QBO does not currently offer the Progress invoicing feature.

Easily Setting Up Installment Billing in QuickBooks Online (QBO)

So how can you easily set-up Installment billings where you don’t have to remember to invoice your client monthly?  My suggestion is to do the following;

  1. Prepare your agreement or contract as an estimate. Estimates do not have an effect on your Sales or GST/HST accounts. Make sure to include the details of the equal monthly billings.  After you have the signed estimate in QBO, you can either leave it as is, or mark it rejected. Or you can prepare the proposal in your preferred software.  I personally like to keep everything in one place.
  2. Prepare the first equal billing invoice. At the bottom of the invoice, in the centre, is Make Recurring. This is a template and the default name will be your client’s name. Feel free to change the default name, which you would need to do if the same customer had additional recurring transactions.  Select “Scheduled along with Automatically Send Emails. Choose the other options that best suit your needs. i.e. start date of first invoice and last invoice date, or after so many occurrences. Then save the template.
  3. The invoices will now be automatically sent based on the invoice date you selected, or the number of days prior to the invoice date if chosen during the set-up.
  4. If you want QBO to automatically send you a copy of all sent invoices, go to Company Settings, Sales, Messages, then select Email Me a Copy
  5. Want to review your recurring transactions or make changes? Go to the Gear icon and under lists select Recurring Transactions. It is here that you can edit the body of the invoice, use, copy or delete.

Recurring transactions are only available in QuickBooks Essentials and QuickBooks Plus.

You have now established a process for ensuring your invoicing is sent on time, and no one is overlooked.  The amounts reported for GST/HST returns are based on actual and not future dollars.  Hopefully this will also help with your cash flow.

If you have another process you use with QBO and have questions about, I would like to hear from you, and possibly share with my readers.

You can connect with me by clicking the contact tab at the bottom of the screen if you are reading this post on the website. Or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

5 Tax Changes for 2016 That May Affect Your Tax Return

27504965 - tax word on money background

The Canada Revenue Agency (CRA) has many new services and changes in-store for us this coming tax season.

Here are 5 of the changes that might affect your 2016 personal tax return:

1. Income Splitting Tax Credit

In prior years the Family Tax Cut was a considerable benefit to spouses when one spouse had earned significantly more money than the other.  For 2016 and future years it has been eliminated.  Thankfully the ability to split pension income with your spouse or common-law partner is still available.

2. Children’s Fitness Tax Credit

The maximum amount of eligible fees in the year has been reduced from $1,000 per child to $500.  The amount for children eligible for the disability tax credit has not changed

3. Children’s Arts Tax Credit

This has also been reduced, this time from $500 to $250 per child.  The amount for children eligible for the disability tax credit has not changed

4. Home Accessibility Tax Credit (HATC)

Starting in 2016 you can claim a non-refundable tax credit for eligible expenses incurred for work performed or goods acquired for a qualifying renovation.  For an explanation and examples of what is eligible see CRA link here.

5. Principal Residence Rules

Effective January 1, 2016 you are required to report the basic information on your tax return when you sell your principal residence to claim the full principal residence exemption.  Basic information is; the date purchased, proceeds of the sale and the address. I wrote about this in a previous blog posted October 13th if you would like more details and the reasoning behind this new rule.

The CRA is also expanding its Community Volunteer Income Tax Program (CVITP).  This service helps Canadians with modest income and a simple tax situation complete their tax returns, while ensuring all eligible credits and benefits are received.  CRA is currently still recruiting more organizations and volunteers for participation.  Here is a link to determine if you might be eligible for this free service, and current locations near you.

And if your tax return is complicated, your circumstances have changed from prior years or you started a business, talk to a tax professional.  Contact us for a consultation to help determine eligible expenses to offset your income. You don’t want to give more money than necessary to the CRA!

You can connect with me on Facebook, or by clicking the contact tab at the bottom of the screen if you are reading this post on the website. Or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

5 Questions to Consider Before Donating Time or Money

giving-hands

That time of year is quickly approaching; when we are inundated more frequently with pleas and requests for donations. While giving in and of itself can be rewarding, there are so many questions that can and should be asked. Is the organization reputable, when will I receive my tax receipt, where does the donation actually go?

Is there a way to know which questions you should be asking and who you should give your time or money to?

Here are the 5 questions I consider before donating my time or money

1. Is it recognized as a registered charitable organization?

The Canada Revenue Agency website (CRA) makes it easy to see not only if the organization is registered, but it also gives the effective date of registration, contact information and general activities.  Through this link you can also make an informal request for additional information, free of charge.  Some of the information you could receive is; a copy of the charity’s governing documents, a list of the charity’s directors/trustees and a copy of the public information from a charity’s annual information return with financial statements.

This can be a great eye-opener as to how much is being spent on advertising, third party fundraisers and general overhead when compared to funds spent on programs and clients.  I also use this link when preparing personal tax returns for clients when I don’t recognize the name of the charity. Buying tickets to a circus to benefit you is a good cause and a fundraiser, but is not recognized as a charitable donation for tax purposes even if you get a receipt.

2. Do I want to give my time or my money?

Over the years I have done both.  From a time perspective I’ve helped on committees with fundraisers and program development, been a board member, visiting volunteer, online and in-house counselor. At the beginning of each year I determine which charities I will donate funds to.  When I get phone calls asking for donations I ask them to send me either documentation, a link or website address.  Based on that information I will decide if I want to include them as a recipient of my donations next year.  And giving your charge card information based on an unsolicited phone call is not smart money management. And you shouldn’t have to make that kind of decision immediately.

3. How does it make me feel? This is just as important to me as any other questions I have regarding donating. Some charities pull on my heart-strings because of the help or education they have supplied to friends, family and associates. There are so many valuable charitable organizations in need of our hard earned money. But unless you’re in the top 1% of the population, you can’t give to all of them.  And it becomes more difficult to keep track of whether you’ve received all your donation receipts at tax time.

So donating to my selected charities each year makes me feel good.  I no longer feel guilty when going through a check-out and the cashier asks me if I would like to make a donation to the charity of the moment. I don’t feel pressured when my neighbour is knocking on my door asking for money. I feel educated and in control.

4. Do I donate locally or nationally?

I do both. The national charities I’ve chosen are based on support and research, as it relates to the impact they’ve had on family members.   Locally I’ve been involved with Doane House Hospice for over 20 years.  And in the past year I’ve been involved with a relatively new organization called 100 Women Who Care.  We vote on which local charitable organization will receive our financial support each quarter. This organization has a worldwide reach but is established to help organizations locally.  I’ve learned so much about local organizations that I didn’t even know existed until I became a member. And I feel like I’m really helping those in the community.

5. What impact does donating have on my personal tax return?

The simplified answer is that this is a non-refundable tax credit, which reduces your federal tax liability.  Depending on your income you could receive a credit of 15% for the first $200 donated and 29% credit on an amount greater than $200. It may be more beneficial to accumulate your donations over a number of years to get the 29% credit.  You can carry these forward for 5 years.  If you’re a first time donor there is a Donor’s Super Credit. For more information on eligible donations and gifts see CRA. And to calculate the impact donations could have on your tax return see the Charitable Donation Tax Credit Calculator.

After all I’ve shared, you need to know that I still donate to other organizations.  At this time of year I buy a number of poppies, since I seem to lose them within 24 hours.  And I donate to the charity of choice, in lieu of flowers, for funerals and celebrations of life.

If you’ve had a good or bad experience in donating your time or money I would like you to share that information with me.  It could just be a warning to others or encouraging all of us to give more as we enter the holiday season of giving.

You can  connect with me by clicking the contact tab at the bottom of the screen if you are reading this post on the website or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

Principle Residence Exemption – Reporting of Sale to CRA

Sold Home For Sale Sign in Front of New House

Last week Finance Minister Bill Morneau announced a number of changes in an effort to limit foreign money into Canadian real estate and ensure borrowers can afford the mortgages they want to take on.  One of these includes reporting the sale of residences to the CRA and including any capital gains.

The 3 most discussed changes are:

  • Effective October 17, 2016 there is a stress test used for approving high-ratio mortgages, that will be applied to all new insured mortgages
  • Effective November 30, 2016 new restrictions will be imposed in providing insurance for low-ratio mortgages
  • The launch of consultations regarding lender risk sharing

But I think the 4th item, also effective in 2016, is what everyone selling a home in Canada should be aware of:

  • Previously when selling your principal residence any financial gain was tax-free and it was not necessary to report the income on the sale. Now, the capital gains tax is still waived, but the sale of the primary residence must be reported to the CRA when filing your personal tax return.

You will need to supply to CRA:

  • Date of purchase
  • Proceeds of disposition
  • Description of the property

Why the changes?

  • Ottawa is responding to extensive media reports indicating foreign investors are flipping homes in Canada and falsely claiming the primary residence exemption
  • Ensures families only claim an exemption on one home a year, and the home owners must live in the property
  • Certifies that if an individual was not a resident of Canada in the year they purchased the residence, and they disposed of that property after October 2, 2016, they are not eligible to claim the exemption for that year

This is also a fact and history-gathering move for Ottawa.  Did you sell a cottage during one of the years, and not pay tax on the capital gains, while you were claiming another address as your principle residence? It could be also be a way flagging a possible “lifestyle audit”.

Do you think this change will curtail foreign investment, or homeowners trying to claim more than one property as a personal residence? Or do you have other concerns regarding this change? I’m interested in hearing your thoughts.

You can  connect with me by clicking the contact tab at the bottom of the screen if you are reading this post on the website or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

Goal Setting – 3 Intention Words for 2016

Maureen Burleson

I was recently consulting with an associate and asked her if she made New Year’s resolutions. Her response was no that she didn’t actually make resolutions but usually came up with 2 or 3 keys words that spoke to her about how she wanted the next year to unfold. During that conversation I thought about my own challenges of keeping New Year’s resolutions and wondered if it was time for a different approach. Once I let go of my pre-conceived thoughts on “resolutions” I easily came up with 3 key intention words which I hope will guide me towards achieving my goals in 2016. Here they are: Read more

Buying a Franchise? – 4 Key Financial Considerations

bookkeeper newmarket

I currently have two customers that are at different stages in buying a Franchise. They have asked me for my opinion on the purchasing and financing of the businesses. One customer is buying a Franchise that has been in operation for almost two years, so they’re purchasing from the Franchisee. The second customer is buying the Franchise from the Franchisor. This involves determining the location, rental agreement, leasehold improvements, purchasing equipment, computers, software, hiring etc., before the doors are even opened. Despite the differences there are numerous issues in common that they need to consider. Buying a Franchise? Then read on to see these 4 key financial considerations. Read more

Career Focus – Contacting Service Canada, One Way or Another

bookkeeping services Newmarket

I recently had to contact Service Canada about a Career Focus grant one of my customers wanted to apply for. Since there was no telephone number on the online application to call regarding questions and clarification on some questions I had, I searched online for a number for Career Focus. No number was listed, but the website said I could get assistance at my local Service Canada storefront location. Now considering the government wants to eliminate cheques to us by only using direct deposit, email us for tax follow-up and allow us to search for our personal and business history with them online, the concept of traveling for information seems pretty old school to me. But I packed up my documentation and questions and drove to my closest Service Canada location. Read more

3 Questions to Ask a Prospective or Current Bookkeeping Provider

bookkeeping expert NewmarketThis is the time of year when many small and medium size business owners decide they need to get a better handle on their bookkeeping. Perhaps you want to get your 2014 bookkeeping up to date and you don’t want to do it yourself, or you want to start 2015 with a professional taking care of your bookkeeping needs so you can focus on your business. As you move forward into the New Year, here are 3 questions to ask a prospective or current bookkeeping provider:

1.  Do you offer fixed price invoicing?

Fixed pricing is an agreement between you and your provider which details what and when you the customer, will supply your provider with information. It also details what the service provider will do with that information. Whether it’s: Read more

Tax Audit from Hell? – Part 2

bookkeeper NewmarketA couple of weeks ago I thought this would be part two of a three part series, even though it was originally planned for two. But thankfully it appears we’re on the final leg of this very long and stressful journey. Let me take you back as to why this has been the tax audit from Hell.

In my previous blog, I finished with the auditor’s request for a 2011 personal breakdown of expenses and income. And, the income wasn’t just related to T4s and Child Tax Benefits. It related to every deposit made to all of their bank and investments accounts along with that of their children for all of 2011. The auditor wanted closing balances of all their accounts at 2010 and opening balances for 2012 which included but wasn’t limited to: Read more

Are you Prepared for an Audit from Hell? – Part ONE

bookkeeper NewmarketIn early May 2014 I received a call from a long-time client of mine. They just received a call from Canada Revenue Agency (CRA) saying they were being audited for the year 2011. My client is sharp. He didn’t panic or get angry, but simply asked “how do I know who you really are based on a telephone call?” And, “I want your request in a letter before I do anything further”. My client also contacted their CA as they weren’t sure who was to do what, and what was to happen next. Little did we know this would become the Audit from Hell for both my clients and me. Read more