ca4it

Video Blog - Week 2 - Minimize taxes by maximizing expenses

Check out week 2 of my video blog — Minimize taxes by maximizing expenses.

Transcript:

Hi, my name is Andrew Wall, and I am the vice President of Chartered Accountants 4 Information Technologists. In today’s video I would like to discuss some strategies to help increase your bottom line without changing your spending or your billing.  In almost every review meeting I conduct I am able to find hundreds if not thousands of dollars worth of unclaimed expenses.  Before we, as accountants, even consider any tax planning strategies it is paramount that we maximize all eligible deductions.  Every dollar that can be expensed is dollar that for the most part will not be taxed.  Therefore any expense that can be converted from non deductible to deductible will reduce your taxes and increase your bottom line. There are three common reasons for under allocated expenses:

1. Lack of knowledge of what is deductable
2. Poor record keeping  or
3. Fear of Revenue Canada.

To combat these common pitfalls ca4it has developed some unique proprietor tools.  In particular

* Our benchmarking tool.
* Our online bookkeeping tool, and
* Our audit representation protection.

These tools which will be featured in their own videos help our clients to understand what their peers are deducting; help them to keep track of every dollar they are spending quickly and efficiently and finally to provide them with the comfort and knowledge that if they are audited they will be represented by us at no additional cost.

In addition to these un-paralleled tools ca4it goes above and beyond for its clients by providing what we refer to as “full option accounting”. With full option accounting we layout all the options from conservative to aggressive, along with the risks and allow you the client to make the final decision.  While some other firms believe it is their responsibility to play the role of CRA and tell you what you can’t deduct, we are the complete opposite.  We encourage our clients to deduct every dollar they are entitled to deduct and to challenge their own notions of what a deductible expense is.

The income tax act is a very lengthy and complex document that can be simplified into two very basic guidelines that every layman should know.

1. If expenses are specifically disallowed by the income act you cannot deduct it no matter how legitimate you believe them to be.  Examples include golf green fees, club memberships, life insurance and your primary home telephone line.
2. If the items are not specifically disallowed and they were incurred with the intent to earn income in the future the expense is deductable. This is exceptionally vague (as most of the act is) and offers a lot of room for interpretation.

Often time clients (who have usually come from full time positions) believe that if they were incurring an expense as employee that is not deductible, that there is no way that same expense could be deductible as a contractor.  This is simply not the case.  Examples of such deductible expenses include

* home office
* automobile
* internet
* and business promotion

While home office and automobile are usually the largest of these expenses the most commonly overlooked is business promotion. At CA4IT we believe that most meals eaten with colleagues friends and family members are deductable business promotion expenses.  Many people are shocked by this interpretation until we provide them with our “six degrees of separation philosophy”.  This philosophy asserts that as an independent contractor you get your contracts by building relationship and networks and not by advertising on billboards or  in magazines.  Therefore, we believe that by spending the time to network with their friend’s colleagues and co-workers, contractors are increasing their potential to get a contract and earn income in the future. 

At ca4it we believe that most clients leave a lot of money on the table by narrowly interpreting what is deductable and we want to help them to increase their bottom line by simply challenging their interpretation.  As a client your account manager will use our Benchmarking tool to identify and analyze every expenses category to pinpoint areas where you may be using a narrow interpretation.    If you are not already a client please contact our customer service department for a free no obligation consultation.
I’m Andrew Wall and I look forward to meeting you personally!