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.

Between the CA, my clients and me, it was determined that I would handle the audit to keep costs to a minimum. When the client received the CRA letter our first approach was to contact the auditor to let him know that I would be representing the client during the audit. I reviewed with him, his FIRST list of required documentation and established a meeting day and time. I then let the client know what they had to provide; i.e., Corporate Minute Book, mileage logs, insurance policy documents, copies of all capital assets purchased and disposed of during the year, loan agreements to and from the Shareholder, PLUS the Shareholder and Spouse Personal and Joint Accounts for the year. The Montana Group could supply the balance of the information since it was all recorded in QuickBooks; detailed general ledger, bank reconciliations, schedules of asset purchases and disposal, GST/HST returns, and the list goes on.

The first meeting went fairly smoothly, taking just over 4 hours. We reviewed everything that was requested and supplied, plus what was still outstanding, based on delays with the bank and lawyer. As the information was received from the client, I forwarded the documentation to the auditor. It seems the more we supplied the more additional information was required. The SECOND request was based on the detailed general ledger report in which the auditor highlighted various expenses he wanted to see the paid receipts for. The time required by my client to pull this information together took numerous hours, and to say the least was very stressful.

By early October the auditor was finally satisfied that we had answered all the questions, supplied him with all the required documentation and was ready to provide his supervisor with his report regarding the corporation. This was no quick and easy audit.

The THIRD report which needed to be completed was a Personal Expenditures Worksheet. The client had to think back 3 years and estimate what it cost to live weekly, monthly and annually. Some of the headings in which numbers had to be supplied were; food, shelter, healthcare, transportation, household operations, personal care, gifts and contributions, and that list goes on. As I said, those were only the headings. The details of each were numerous in each category.

Even though this was a corporate audit for 2011, it does not exempt the shareholder from having to supply all personal information as requested. And those are the details I will give you in my next blog. They are ugly.

Remember, there is a compelling reason why your bookkeeper or accountant tells you to save all your paperwork. We’ve been exposed to audits before and can anticipate what is required, but I and a number of accountants I’ve spoken to regarding this experience, have not seen an audit delved into this deeply – especially with a client that has never been late with filing and paying payroll liabilities, HST or corporate taxes. And we understand, this is just the beginning of the “new” audit procedures. Some individuals incorporate because they want to protect their personal assets and reduce their liability, but having a corporation will not protect your personal financial transactions from the eyes of a CRA audit.

Stay tuned for PART 2. I welcome your feedback. You can connect with me via email or telephone, leave a comment here on the site or click the contact tab at the bottom of the screen if you are reading this post on the website.

Until next time,


5 Tips & Tricks for QuickBooks Online (QBO)

QuickBooks Online Pro Advisor NewmarketIn the past month I’ve spent numerous hours training new and transitioning clients in QuickBooks desktop and QBO. While some are new to either version, I’ve found those transitioning from the desktop version to the online version experiencing a bit of a culture shock. To ease the transitioning hiccups, here are 5 tips and tricks for QBO to make the entering and retrieving of information go a little smoother.

1. In order for you to allocate the GST/HST in QBO you must first set-up Sales Tax. You do this by selecting the Sales Tax tab from the menu bar and follow the on screen guidelines. QBO then automatically adds two default accounts; GST/HST Payable and GST/HST Suspense. You cannot allocate a payment amount directly to the GST/HST Payable account. But, you can allocate it to the GST/HST Suspense account. If you can’t easily relate to the word Suspense you can rename it to something that will be more familiar to you i.e. Clearing.

2. Generating reports in QBO. There are not as many reports available in QBO as there are in the desktop version, but generating them is pretty straight forward. Balance Sheets and Profit and Loss statements are about the same, but other reports are significantly different. As an example; to inquire and generate the total amount you paid to a supplier is different. Go to:

  • Reports,
  • Expenses by Supplier Summary,
  • Select the Date Range and then
  • Customize. Remember, this shows the amount expensed without HST.

3. Customizing transaction reports in QBO is much different in appearance and handling. i.e. Reviewing Bank transactions in the General Ledger. Until you save your customization, the debits and credits all appear in one column. I prefer to see the debits and credits in their own column, then the running balance in the last column. To do this go to:

  • Customize Transaction Report,
  • Change Columns, and then
  • Click on the accounts you want to Add or Remove.

Once you’ve selected the account columns you want on your report you can then determine the order you want to see them but clicking on the account name and to the right, there are arrows that you use to move the accounts up or down to display in the order that meets your needs.

4. Downloading your financial reports. This is one of the first items you want to set-up once you’ve established your company in QBO. Besides insuring that all your transactions are recorded, if not necessarily matched, the Home Page will indicate the discrepancy. Your bank account could show 2 difference values; one would be the actual bank balance when you downloaded the transactions, and the other will indicate the QuickBooks balance.

The closer those numbers are to each other indicates that your bookkeeping is up to date. The same is indicated with Credit Card accounts and Lines of Credit. It also indicates how many entries have been downloaded that hasn’t been matched to QuickBooks entries. It’s a great dashboard for information at a glance.

5. Uncategorized Income and Uncategorized Expenses. These are the account names that are used when you have downloaded your financial transactions and QuickBooks doesn’t know who the funds were paid to or received from. These are the gross amounts. You can access them by either going to your downloaded information and add the correct information to each line or go to the Profit & Loss reports, and each account and total will appear. You can click on one of them then drill down (every time you see a magnifying glass you can access more information by double clicking) and allocate accordingly. These amounts are the gross amounts, so don’t forget to apply the GST/HST where applicable.

If you’re overwhelmed on where to start with QBO, or handling of the day to day transactions contact a ProAdvisor Online Accountant. We can walk you through the process remotely and answer all your questions.  As always we are here to help. You can connect with us via email or telephone, leave a comment right here on the site, or click the contact tab at the bottom of the screen if you are reading this post on the website.

Until next time,


Time to Move from QuickBooks Desktop to QuickBooks Online (QBO)?

QuickBooks Pro Online Advisor NewmarketI don’t know whether it’s customers getting into the fall routine, and their business mindset from disappointing summer weather, or the marketing Intuit is doing, but I’ve received a lot of inquiries from new and current customers about QuickBooks in the cloud. The question being; is it time to move from QuickBooks desktop to QuickBooks Online (QBO)? Continue reading

Reducing Canadian Payroll Taxes with a Tax Waiver

reducing taxesIt makes a world of difference to all business owners in surrounding themselves with intelligent and professional associates. Carolyn Bogseth is one of my associates that I certainly respect for her intelligence and genuine desire to help those she meets. Whether they are her clients or someone that would like a general investment question answered she will take the time to assist those who contact her. Below is an excerpt from her recent newsletter outlining how reducing payroll taxes can help you. Continue reading

2 Great Accounting Software Deals for Businesses

cost savingsI’ve been in the accounting, tax preparation and training business for a number of years. And over those years, I’ve developed some great relationships with customers and vendors. So it has to be big for me to get excited about sharing these 2 great accounting software deals for businesses.

Whether our businesses are operated by a single person or 20 employees, we all have challenges. For the purpose of this blog I’m referring to great software at a good price and handing over the responsibility of payroll to a 3rd party provider.

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QuickBooks 2014 Payroll Update

quickbooks-basic-payrollI’ve received a number of emails lately regarding problems updating QuickBooks 2014 Payroll. Even though customers are registered for QuickBooks payroll, the automatic updates are not recognizing payroll which expires June 30, 2014. At our office some of the computers updated payroll automatically with an expiry of December 31, 2014 while others didn’t. We are all on the same Windows operating system.

When I contacted QuickBooks their only suggestion was to go to their website and manually download the update. No other explanation was supplied. Make sure your QuickBooks file is closed first! Here is the link for the manual update for various versions.

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3 Rs of Child Care – Rules, Receipts and Regulations

Day Care York RegionHere at The Montana Group, we do the bookkeeping for 2 large Child Care facilities located in York Region. Whenever I get an opportunity to discuss challenges of the industry with the Executive Directors, I’m surprised and impressed by the regulations in place to help protect the children. During tax season I regularly inform clients of the rules pertaining to claiming child care expenses and the receipts that are required. The following is a summary of my discussions regarding the 3 Rs of Child Care:

1) Rules

a) If you are the only person supporting the child, you can claim child care expenses you incurred while the eligible child was living with you
b) If you are in a relationship (marriage or common-law), the person with the lower net income is to claim the child care expenses
c) Employment Insurance is not considered earned income
d) The person with the higher net income can only claim the child care expenses if:

  • The other person attended school and was enrolled in a part-time educational program
  • The other person was confined to a prison or similar institution for a period of at least two weeks

For more exceptions and detailed information, please click here.

2) Receipts that Qualify

a) For caregivers providing child care services – your receipt will need to have the full name of the caregiver, address and social insurance number plus dates of care-giving services and name of child
b) Day nursery schools and daycare centres
c) Educational institutions, for the part of the fees that relate to child care services
d) Day camps and day sports schools where the primary goal of the camp is to care for children
e) Boarding schools, overnight sports schools, or camps where lodging is involved

3) Regulations

Accredited child care is governed in Ontario by the Ministry of Education. This link can help you determine which facility might be the best fit for your child. It not only tells you when the facility was first licensed but also indicates the total capacity, age groups of children it accepts, when it was last inspected and level of compliance, plus much more.

Child care receipts are some of the most commonly requested documents the Canada Revenue Agency (CRA) wants to see after personal tax returns are processed. You’ll need to respond within 30 days from the date of the letter requesting the receipts. In most cases they can be faxed to the auditor. And, they have a significant impact on determining your taxable income. Like all documentation pertaining to your personal tax returns, make sure everything is kept in a secure, dry location for 7 years.

As always, I welcome your feedback. You can connect with me via telephone or email, leave a comment here on the site or click the contact tab at the bottom of the screen if you are reading this post on the website.

Until next time,



The Montana Group – Offering Bookkeeping Services for Realtors

Newmarket bookkeeping services for realtorsAre you a Real Estate Agent in York Region? In this busy real estate season, do you struggle with filing your own paperwork on time to avoid government penalties? Do you have a solid handle on your financial position? Did you know The Montana Group offers excellent bookkeeping services for Realtors?

In a May 9, 2014 Financial Post article I was surprised to learn that in the first quarter of 2014 the number of people selling real estate reached 108,706 according to the Canadian Real Estate Association. That’s one realtor for every 245 Canadians over the age of 19! The article also mentioned that there were almost as many people selling houses as making them. So what else do I know about Realtors and Numbers?

From my customers that are real estate agents I know that;

  • They are frequently pressed for time,
  • Their own paperwork isn’t as big a concern as their buyers’ and sellers’ paperwork is to them, and
  • To those that haven’t been in the business very long, they hate the surprise of large amounts owing for personal tax and HST.

For some I do their bookkeeping quarterly, then calculate and netfile the HST for the same period. They receive Profit and Loss statements quarterly to review. This helps them keep an eye on their expenses and sometimes alerts them to some expenses that they didn’t submit receipts for, or are missing. It’s easier to request or print an online receipt within two or three months of purchasing, than twelve or fourteen months later. With the quarterly customers there are no surprises at year end. The tax returns are filed on time and the shock factor regarding the amount of HST due is kept to a minimum. For these Realtors, there is peace of mind.

For other real estate agents it’s a once a year project. With this currently being a sellers’ market the good agents are staying extremely busy and their paperwork is the least of their concerns. So if you’re a real estate agent what can you do to make the process smoother for yourself and the person that helps you with your HST calculation and personal tax return?

1) Get in the habit of putting all your receipts in the same location – whether it’s an accordion file folder, or one desktop folder for online purchases or scanned receipts.
2) Separate your receipts by month. When separating you expenses and receipts by month you’ll be able to see if the monthly broker’s report is missing along with any other monthly charges.
3) When you get your bank or charge card statements highlight which ones are for your business and put them in the monthly folder.
4) Set aside time in your schedule to make sure you have the receipts for the expenses you’ve highlighted on the statements
5) Consider a quick training session in software like QuickBooks online or the free version of Wave. This is cloud based software.
6) You can enter receipts for anywhere, anytime. Pull them out of your wallet, glove compartment or purse and enter them while waiting to meet a client. And get a little stamp that you can mark when the receipt is entered. That way there is no confusion when you run across the paperwork again, or get interrupted, and don’t know whether you’ve entered it or not.
7) If you use software it can be shared with whoever does your personal tax return and HST remittance calculation. The availability of sharing makes it easier for everyone.

You want your numbers entered accurately and in a timely manner. There’s nothing worse than working the long hours for those commission cheques then paying penalty and interest because you didn’t file with Canada Revenue Agency on time, or you couldn’t locate the receipts and your taxable income was more than it should have been.

If you’re a real estate agent that has a system that works well for you I would love to hear from you. Or, if you are in need of help or find the process tedious and time consuming, we are here to help! You can reach us by phone or email, leave a comment right here on the site or click the contact tab at the bottom of the screen if you are reading this post on the website.

Until next time,


Canadian EI (Employment Insurance) and Family Members

Canadian EI rules for familyWith the T4s being processed by CRA (Canada Revenue Agency) and PIER (pensionable and insurable earnings review) reports now being mailed, this is the time of year when CRA questions if there is a conflict with EI and Family Members.

Last week a client of mine received a PIER report requesting that he pay the employee’s EI that wasn’t deducted on the earnings shown on the T4, and the employer portion of the EI. When preparing payroll in the summer of 2013 he didn’t deduct EI from his daughter’s earnings, but the T4 showed insurable earnings and no contribution.  His question to me once he received it was “Why do I have to pay EI on my daughter. She’s only 14 and I don’t have to pay it on my wife?”

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QuickBooks Tips and Shortcuts


Whether you’re trying to catch up on your 2013 bookkeeping in preparation for 2013 tax returns, or have decided this is the year to do the bookkeeping correctly, I thought sharing these QuickBooks tips & shortcuts might make your life easier.


General Key
Cancel ESC
Display information about QuickBooks F2
Close QuickBooks ALT + F4


Activity Key
Account list, display CTRL + A
Delete cheque, invoice, transaction, or item from list CTRL + D
Invoice, create CTRL + I
Use item list, CTRL + U
History of A/R or A/P CTRL + H
Memorized transaction list, display CTRL + T
New invoice, bill, cheque or list item CTRL + N
Memorize transaction or report CTRL + M
QuickReport on transaction or item list CTRL + Q
Go to register or transfer account CTRL + G


Moving around a window Key
Previous filed SHIFT + TAB
First item on list or previous month in register CTRL + PAGE UP
Last item on list or next month in register CTRL + PAGE DOWN
Close active window ESC or CTRL + F4
Beginning of current field HOME
Ending of current field END

On the weekend I was cleaning out some files and came across some QuickBooks correspondence. It seems I’ve been a QuickBooks ProAdvisor since August 2000.  I’ve seen some great improvements over the years, and some that I wish they had never touched.  So whether it’s an older version you’re working with or QuickBooks 2014, I’m hoping the tips and shortcuts make your recording of transactions a little easier.

As always, I’d love your feedback. Have questions or need help? I’d love to connect with you. You can reach me by phone or email, leave a comment right here on the site, or click the contact tab at the bottom of the screen if you are reading this post on the website.

Until next time,