4-A Professionals | Frequently Asked Questions for 4-A Professional Services Virtual CFO Team
Frequently Asked Questions for 4-A Professionals including growing your business, tax planning, financial and succession planning and bookkeeping services.
Incorporation, Business Growth, Corporate Bookkeeping, Tax Planning, Financial Planning, Personal Taxes, Financial Monitoring and Reporting
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FAQs

Quick Answers to Commonly Asked Questions

4-A Professional FAQs

4-A conducts regular presentations on these topics. Please email us if you’re interested.

  1. Incorporation
  2. Financial Growth
  3. Corporate Bookkeeping
  4. Tax Planning and Succession Planning
  5. Financial Monitoring and Reporting
  6. Personal Taxes

1. Incorporation

When Should I Incorporate My Business?

Incorporating a business should be considered when you need a tax plan (when you are not using all the cash) and to limit your exposure to risk and liabilities.

What Are the Costs Related to Incorporation?

Legal Fees

  • One-time setup costs
  • Annual filing fees

Accounting Fees

  • Annual Corporate Tax Return and Financials (not just a personal tax return)
Why Is It Important for my Business to be a Separate Entity?
  • Having your business separate from your personal financial situation is important for tax, income and liability purposes.
  • Incorporating means your business will have a separate bank account, credit cards and set of records.
What are the Benefits of Incorporation?

Incorporation of your business allows you to:

  • Properly plan to maximize profits and reduce risks
  • Tax savings
  • Possible elimination of CPP contribution
  • Income splitting (dividends versus salary for tax savings)

2. Financial Growth

What are the Options to Ensure I have Enough Cash Flow for my Business?
  • Consider Alternatives to having shareholders paying the bills
  • Use leverage to grow (LOC, leasing and term loans)
  • Look at options such as finance/lease vs. renting/purchasing with cash
  • Assess ratios related to: A/R turnover, Inventory turnover, Non utilized capital assets
Is it all about INCREASING Sales to grow my Business?

It’s not always about increasing sales to ensure financial growth. Other things to consider are:

  • Reducing the cost of sales to increase margins
  • Reducing wastage (increase billable/recoverable time)
  • Being efficient and watching margins and focusing on areas such as Gross profit / Net Profit / EBITDA
What about Banks? How can they help my Business Grow?

Banks are your friend. They can help your business by providing operating capital through:

  • Lines of Credit – 75% of A/R <90 days plus current inventory
  • Term loans – existing assets that are not financed
What About Tax Planning?
  • Tax planning is critical for ensuring your business is compliant with the government yet provides a possible tax savings to maximize benefits for the company (i.e. holding cash in company).
  • Another area that we can assist you with is planning for your retirement by the proper corporate structure.

3. Corporate Bookkeeping

Why do I need Corporate Bookkeeping?

As a separate entity your Corporation will need the following:

  • Monthly bank account reconciliations
  • Monthly credit card account reconciliations
  • A record of Personal expenses vs. Corporate expenses
How do I keep Track of my Books?

As a business owner you have a variety of ways to track your books. You can choose to do it yourself or hire a professional Bookkeeper. This depends on your time and your budget. It is highly recommended that you enlist the services of a professional bookkeeper however if you choose to do it on your own we recommend using recognized software programs to help you such as:

  • Simply Accounting
  • Quickbooks
  • Excel Spreadsheet Synoptic
What Items Need to be Recorded or Monitored
  • Accounts Receivables (remember to Invoice regularly)
  • Record Expenses
  • Accounts Payable (Note: Capital Assets are not a direct expense when purchased)
  • Monitor cash flow and profitability monthly and by project
  • Always be ready to make the hard decisions on customers/product lines.
What do I need for Year-end Preparation?
  • Provide what the accountant needs to reduce time and billing
  • Demonstration of year-end binder

4. Tax Planning and Succession Planning

What type of corporate structure do you have?
  • Operating Company
  • Holding / Investment Company
  • Family Trusts
Why a Holding / Investment Company is appropriate?
  • Tax free dividends from Opt. CO to invest
  • Reduced liability risk on company equity
  • Set-up for a retirement plan
Why and When to create a Family Trust?
  • Split income with family members.
  • Allocation of income to children under 18 (in compliance of rules)
  • Allocation of Capital Gains Exemption
When is succession planning important?
  • Transition to children
  • Sale of the Business
  • Significant Growth
  • The main word is PLANNING – no right answer, you just need to plan

5. Financial Monitoring and Reporting

Why is Financial Reporting Important?
  • Analyzing on a monthly or quarterly basis (NOT ANNUALLY)
  • Understanding the current financial position not just historically
  • Collection of accounts receivable and Cash flow
  • Knowing your margins and clients
  • Banking covenants and reporting requirements
  • BUDGETING and PROFITABILTY

6. Personal Taxes

What Information do I need to provide 4-A for my Personal Taxes?

Click here for a handy checklist to help you assemble your financial information for preparation of your income tax return. Keep this checklist handy. The checklist should be completed and returned to 4-A together with the financial information assembled.

Handy Checklist for Personal Taxes