Tax Time and HST

Problem

As tax time is here I have been thinking about my method of accounting. I am very organized, and keep EVERYTHING but I know there is room for improvement.  Things are getting a bit more complicated now that I have a sole proprietorship, a partnership and income from my part-time work as a fitness instructor. I am often tempted to hire a book-keeper or accountant - but that costs money! Besides, I like to learn new things and I want to understand it all, despite the elevated stress levels that comes with it!

Solution

One of the things I am doing to make things easier for myself – and for our Cent$ible Students business - is to switch to the Quick Method of Accounting. I always assume these tasks are complicated. But guess what! It was a simple one-page form that I filled out and mailed to the Tax Services Office.  I could have also have done this online, but that would have meant looking up my tax information from my 2011 return as this information was necessary to register for an online account. Do I know where this is? Yes of course! However sometimes I like the old paper method as I can keep a copy in my files and take a quick walk to the mailbox for some fresh air. For those that want to do this online, here is the link:

http://www.cra-arc.gc.ca/mybusinessaccount/

Result – Savings?

Do I know how much money this will save me this year?  

Since I don’t know how much I will earn this year, I cannot calculate the actual savings. Ultimately I will not have to remit the full amount of HST I collect using this method.  Instead of paying the full 13% I only have to pay 7.8% on the first $30,000 of income and 8.8% on income above that amount. So, if I made $30,000 then I would pay $2,340 instead of $4,500! That is a savings of $2,160!

So, I will be a little smarter, AND richer next year! 

For a copy of the Quick Method of Accounting guide, click here!

http://www.cra-arc.gc.ca/E/pub/gp/rc4058/rc4058-e.html#P100_5211

Being Grateful

Update

It has been a busy month! I am still trying to calculate some savings to share with you around my HST and my phone bill, but I haven't finished adding it all up yet! Actually, I need some advice from an accountant and they are rather busy this time of year. I also have had a hard time arranging a phone call in order to permit a company to negotiate my phone bill for me - not their fault - mine! (It involves my husband who is hard to schedule.) So, I apologize for the delay.

Book review

In the meantime, I read an interesting book that I wanted to share with you called, "Green With Envy: Why Keeping Up with the Joneses is Keeping Us in Debt," by Shira Boss. 

Despite my work in financial literacy, I, like most Canadians, stress about finances. There never seems to be enough money and just when I think I am getting ahead, can plan a bit for the future, the car breaks down, the tap starts dripping, a child needs glasses, braces or hockey registration! Ca-ching! The money flows so freely OUT, I wonder why others seem to have oodles of it flowing IN to pay for their expenses – and their vacations! As Boss says in her book, “We go by appearances: Others seem to be doing fine, so they must be doing fine.”

Issues with Money

Without giving you a full book review, the premise of this book is to de-mystify what goes on behind our neighbours’ closed doors. It looks at couples without children, families with young children, boomers, politicians and the rich and famous. It reveals that no matter what socio-economic sphere we inhabit, most of us have issues with money. Many of us are preoccupied with money and the security and comfort it represents to us. It is truly complicated!

By the end of the book, I was comforted to know that most people have “money issues” of some sort, but that there are strategies one can take to find financial well-being.

Gratitude Strategy

One of the ideas that resonated with me is gratitude. I do some work with organizations that serve low income Canadians and recently taught Financial Basics to a group from Toronto Community Housing.  How can I complain or even grumble about my money woes when I have a roof over my head and food on the table? Some of these individuals, although housed, struggle on a daily basis to make ends meet.  I remind myself to be grateful and consider the situations many others face on a daily basis.

Inspiration

Some of the messages from this book have re-inspired my work with young children because I am reminded how emotional money is and how we develop our values and attitudes around money at a young age. If children are taught that what you wear is more important than who you are, or that having more makes you popular or special (or whatever messages seem to be driving our societal need for consumption), than our message to Save, Spend (Sensibly) and to Share, needs to be taught early and repeated often!

 Plan for the Future

The “living for the moment” mentality and “sense of entitlement” needs to be counteracted with planning for the future, and living more conservatively. In some ways it goes hand and hand with a more environmental lifestyle as well. Less consumption, more “reduce, reuse, recycle,” helps the pocket book as well!

Can I put a dollar amount to what I “saved” in this blog? Compared to my other entries, there is not a determinable amount. However, I have saved myself some angst, some frustration as I reflect on my OWN financial situation and stop comparing myself to others – “the Joneses.”  I can make changes in my own situation; earn more, spend less, save more. I can also be more grateful.