Bookkeeping Services

Comments 12

1. Hello,

   I’m a small business owner debating between which accounting software to purchase. Can you please provide some guidance?

   Appreciate it!

   – Liza

   Reply

2. Hi Liza,

   In deciding on an accounting software, you should consider your business’s accounting requirements. If your operations are fairly straight forward and does not require any complex accounting, free softwares such as wave accounting and freshbooks. These softwares provide basic accounting and bookkeeping tools that will suffice for many small business.

   However, if your business is faced with uncommon accounting transactions you should look into more comprehensive softwares such as quickbooks and sage 50.

   Regards,
   Madan CA Team

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3. Hi, Just wondering what are the benefits of using tax depreciation methods vs. accounting depreciation methods to amortize business assets?

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4. Hi Sersi,

   For accounting purposes, you can choose to use accounting or tax depreciation. However, for tax purposes you must us Capital Cost Allowance (CCA) rates for depreciation. It may be more beneficial for small businesses to use tax depreciation as using different depreciation methods will only increase bookkeeping work.

   Larger businesses may benefit from different accounting depreciations to better reflect the useful life of the assets.

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5. Hi Allan,

   How do you account for the redemption of shares by a corporation?

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6. Hi Kyle,

   A redemption of shares triggers a deemed dividend for the shareholder. From the corporation’s perspective, you should book the following entry:
   DR. Common shares (redeemed shares) X
   DR. Deemed dividend X
   CR. Note Payable X

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7. Hi

   If a bonus is declared to an employee when and how should it be accounted for in the company’s books?

   Reply

8. Hi Suraj,

   When a bonus is declared, the company should accrue the expense even if the bonus is not paid. Note that the bonus must be paid within 180 days from the end of the tax year to be eligible as a deduction in the tax year.

   Further, the payroll remittances (i.e.: CPP, EI, and income taxes) must be withheld and remitted to the CRA by the next remittance date following the payment of the bonus. For example, if a bonus is declared on December 31 and the company’s year end is December 31, the bonus must be paid by June 30 of the following year. If the bonus is actually paid on June 25, the payroll remittances are due by July 15.

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9. How to account for disposal of depreciable assets?

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10. Hi Raz,

    On the sale of assets you should clear the asset and associated accumulated amortization and book the difference to gain/loss on disposal. For example, if you sold an asset for $25 that has a cost of $100 and accumulated depreciation of $50, you will enter the following entry:
    DR Cash 25
    DR Accum. Amort. – Asset 50
    DR Loss on disposal 25
    CR Asset 100

    Reply

11. Hi
    How do I record the issuance of shares in a new corporation?

    Reply

12. Hi Inder, at the inception, new shares are issued to the shareholders.

    The corporation should record this by booking the following entry:
    – DR shareholder receivable $100
    – CR common shares $100

    The value of the shares should be recorded at a nominal value equal to the amount the shareholder will exchange for the shares.

    Reply