Canadian small businesses are going to experience substantial changes to year-end financial statements in December 2021.

This text will review the forthcoming changes along with important points for business owners to consider moving forward.

1. Who exactly do these changes affect?

The adjustments will affect a huge amount of Canadian small businesses.

Small Canadian business owners who appoint an accountant to prepare “Notice to Reader” financial statements. These are also called “NRTs”, “Compilation Engagements”, and “year-end financial statements”.  

If your year-end financial statements are not “Audited/Reviewed” by an accountants Mississauga, it can cause a negative impact to you and your business. 

2. What do you call these changes?

The “Notice to Reader” financial statements are going to be known as “Compilation Engagement” financial statements. The specific standard that many may be used to seeing is Canadian Standard on Related Services 4200 along with CSRS 4200.

3. When Do the Changes Take Effect?

These changes will be taken into effect for recorded financial statements for cycles ending by December 14, 2021 or after the resulting date.

4. Why are the guidelines of  financial statements changing?

Many factors are taken into consideration for changes to be made. The sole reasons are summarized below!

Standardizing the Amount of Work Put in by Accountants.

There is a broad range of work accountants do while preparing Notice to Reader Financial Statements.

As of now, your accountant is only entitled to get your financial information and put it onto financial statements. It can even mean bringing pieces together just for the compiling of an income statement and balance sheet. 

5. Who is entitled to utilize Financial Statements?

The existing “Notice to Reader” standard presumes that financial statements are just going to be used within business owners and their administration.  Though, in actuality banks and investors have access to these financial statements as well so that they can obtain loans and external investments.

To make sure Third Parties know what Compiled Financials imply.

Since there is such an array of the work accountants put in when preparing Notice of Reader financial statements, third parties such as a bank or investor might not know what they are staring at. 

In example, a prospective investor will find that the accountant that produced the Notice of Reader statement merged bank accounts and asked for the firm’s financial information. 

Even if that is not the case, the accountant might not even access any of that information which brings in a question of accuracy within the financial statements.

However, the new policy and standards will ensure what procedures the accountants are expected to follow when formulating Compiled Financial Statements. Which will also allow third party corporations to have more confidence with the accountants preparing accurate financial statements. 

To Ensure the Basis of Accounting by Businesses are the same. 

Reporting Standards today do not necessitate the basis of accounting procedure to be unveiled on financial statements.

Which makes things harder since there can be two different accounting procedures when looking at different businesses. 

Thankfully, the changes that are coming up will necessitate the basis of accounting to be stipulated on the financial statements.

6. What does this imply for business owners?

Do you think this will bring any change to you for being the owner of a business?

The accountant you are with will ask you a lot of questions.

Your accountant will get clear insight of your business which will help compile accurate statements. Questions such as

• Basis of Accounting- What Basis of accounting was in use? 
• Intended Users- Who will these financial statements go to? Who are the intended users that your business will share these files?
• Third parties such as investors and banks- Will any third-party users be able to get any more information? The accountants will ensure that they have approved based on accounting being in place.

• Consult with an accountant!

You have until December 2021 to ask any questions as the accounting firm will be preparing for the brand-new standards. 

If you have not heard anything from your accountant about this change, reach out to them now and examine how it will affect your business.

The most important factor responsible for running the business in a successful manner is to manage the financial records properly in an efficient manner. The failure and success of the business depends upon the financial aspect. It is very important to have a clear picture of all the financial transactions running in your organization so that you are able to take the financial decisions more confidentiality and in favor of business.

The major responsibility of keeping all the financial records in an organization is an accountant and bookkeeper. It is always advisable for the business owner to keep an eye on the financial conditions and matters of the organization himself rather than outsourcing it from accounting firms. It will even allow you to have more control on your financial consequences which will help you in moving ahead in long run. Record of all the financial matters will provide you the accurate information of all your business within the proper time frame effectively.

Benefits of Good record-keeping system to your business

There are large numbers of benefits of the Good record keeping system for the small as well as the midsized business. Some of them are discussed below so as to have a clear and well defined picture of all the benefits.

• Good record keeping system will provide you the details of all the financial history any time and as any place.
• It helps you to save income tax if prepared and managed by the organization properly.
• It helps you to prepare the financial statements in a lowest turnaround time.
• It provides the tailor made solution for your business requirements and needs whenever related with financial matters.
• One can keep the track record of the business. It will tell you from time to time whether your business is delivering the high performance or not.
• Good record keeping system allows you to identify the opportunities and weaknesses in the business which will motivate you to deliver high performance with maximum efficiency.
•  Good record keeping system even ensures the proper instructions one has to follow in all the financial aspects as given by the Government for any organization.

Criteria one has to follow in the Management of Business Records

There are large numbers of the factors responsible for the management of your business records. Businesses fulfilling such criteria will not only help them to achieve immense success but will also make them reputated worldwide.

• The record keeping system should be very much logical, simple and easy so that anyone can understand it properly.
• It should be accurate and thorough so that you can take any financial decision for your business organization.
• The system should be well defined and fully complete so that one never faces any problem in regard with the financial aspects.
• Record keeping system should be integrated into daily schedules so that you can keep an eye on your business matters.

Financing and accounting services:

Dealing with tax and sales to improve your financial state is not an easy task. Hence to make an audit controlled and tax efficient documents to ensure a stable and lucrative status of your business we arrange financing, accounting and Audit Defense in Mississauga. For business loans we arrange several facilities like developing and documenting the whole business plan, making representations for different kinds of lenders, according to their need and current status of their business are done by us. Now we have experiences in the fields of arranging loans for Accountants for several kinds of business persons and we can relate your situation best to manage, as we have a huge range of versatile experience.

Bookkeeping to get organized:

Not only accounting but we take care of setting up your business plans and bookkeeping irrespective of the size of your business.

• Proper application software will be provided to you. Our staffs are there to train you and your employees about the software operations for Bookkeepers in Mississauga. Your journals and ledgers will be prepared in improved versions after you learn how to use this concept of bookkeeping.
• Bookkeeping by traditional method is also done by our workers so that some works that can’t be resolved by application software can be directly handled by us. Monthly or quarterly payment is required for that. The journal and ledger preparation and compliance of schedules and reports are done by us in that case.
  

Defending tax by audit defense:

• While doing compliance works for Bookkeepers, we also assure our customers to have the facility of setting up an affordable cost so that tax payment becomes easier to them. Audit control board is there for Audit Defense so that tax planning on behalf of you can be done within lesser time.
•  Business owners and investors would be happy by this defense in which not only their tax would be minimized but also the risk of damage which is caused by the inadequate trails of audit would be mitigated by this scheme. Keeping the record of your each and every transaction in details, designing your whole accounting system is done. We provide literature support for saving your taxes which is a very crucial thing to be noticed.
• Audit defense in Mississauga carried out by the Accountants, is often prepared on the basis of customer review. Tax assessment by substantial penalties and interest are also there that reduce and eliminate the risks by appealing to the appropriate department.
  

Benefits to improve your financial statement:

Beyond these kinds of services, we provide other crucial facilities like tax saving plans, business wind up and start up planning advises, profit enhancement technique assistance, cash flow oriented solutions and there are innumerable kinds of programs that will be very much helpful for improving your financial statements and aid in running your business smoothly. Special SPP and ELIT skills are being developed by us and our employees are well trained to produce accurate statements so that loss of records for day to day transaction cannot harm you in any case.

Knowing when the return is due, and more importantly when the tax is payable is important to avoid costly interest and penalties.

Be aware that the due date for filing is different than the day the corporation must pay it’s outstanding tax bill.

Corporate Filing Due Date

The due date to file your corporate income tax return is six (6) months following your corporation’s year end.

For example, if you have a

• December 31st year-end –> Return is due June 30th.
• March 31st year-end –> Return is due September 30th.

When Corporate Taxes Must be Paid

Existing corporations are required to pay tax by installments throughout the year if their income tax bill is more than $3,000. New corporations are exempt from the installment requirements in their first year.

If you have a new corporation, or if you will have a balance owing, knowing your due date will help ensure you avoid costly penalties.

Due Date for CCPC

The due date for a Canadian controlled private corporation, claiming the small business deduction and whose taxable income is less than $500,000, is three months following the corporations’ year-end.

• December 31st year-end –> Balance is payable by March 31st.
• June 30th year-end –> Balance is payable September 30th.

For all other corporations, the due date is two months following their year-end.

Penalties

The penalty for remitting taxes late is 5% of the unpaid amount and 1% per month on any past due amounts.

A tax bill of $10,000 can result in a penalty of $500 if remitted late.

When To Meet With Your Accountant

It’s important to plan filing your corporate tax return before the end of the corporation’s fiscal year.

If you have a fiscal year-end that does not fall on December 31, you should meet with your accountant around December 31st to ensure that your annual tax slips are prepared and filed on time.

Our Services

If you’re looking for help filing your corporate tax returns and related tax-slips, please give us a call at 905-858-0775 to get started. We can help you reduce the amount of tax you will pay by taking full advantage of the corporate structure.

The Honourable Gail Shea, Minister of National Revenue, today highlighted that Canadians who have been affected by devastating weather conditions can apply for relief from the Canada Revenue Agency (CRA) if they are having difficulty meeting their tax obligations because of extreme weather events.

“Our Government understands that severe weather events can prevent Canadians from meeting their tax obligations. Recently, Canadians from several regions, including British Columbia, the Yukon, and Saskatchewan, have had to rebuild because of events such as flooding and severe wind,” said Minister Shea. “The taxpayer relief provisions ensure that all Canadians receive fair tax treatment, while they are recovering from the damage resulting from natural catastrophes.”

All Canadians have access to the CRA’s taxpayer relief measures and will be considered for relief if they miss a payment or filing deadline because their lives were disrupted by uncontrollable weather events, including forest fires caused by lightning strikes, tornadoes, flooding, landslides and hurricanes.

The taxpayer relief provisions use a balanced approach to help taxpayers to resolve tax issues that arise through no fault of their own. Under these provisions, any taxpayer can apply to the CRA to have interest and/or penalties waived or cancelled in situations where they are unable to file a tax return and/or make a payment on time due to a natural disaster or other extraordinary circumstances beyond their control.. The CRA will consider these requests on a case-by-case basis.

This is an interesting quick read on some myths that you have probably heard from friends/colleagues in regard to taxes and Canada Revenue Agency:

We at handt accounting would be pleased to assist you mull through some of these myths, so let us know how we can help!