Accounting For Business

Many business entrepreneurs are challenged when it comes to keeping proper records and paperwork.  It’s not unusual for an entrepreneur, successful in their industry, to be completely lost when it comes to maintaining proper accounting, bookkeeping, and income tax receipts.

We all have our strengths and weaknesses. If accounting is not your strength, then you need the expertise of those who have established a proven history in that field.

Tax Partners has built their reputation on partnering with businesses while helping them accurately understand the health of their business and more importantly assist them in developing plans to further enhance the wealth of their business.

Bookkeeping is a critical part of a successful business.  You need to know exactly how your business is performing in order to make informed business decisions. Without proper bookkeeping practices, you could find yourself making decisions that actually hinder your business, and find yourself in trouble with Canada Revenue Agency.

Tax Partners can take the worry and hassle of bookkeeping out of your hands and free up your time for what you do best – running your business.  You’ll have peace of mind knowing that your financial records are in order.  For as little as $150 a month you can drop off all your invoices paid cheques and bank statements to our office.  Our team will write up your accounting records, deal with the HST & PST returns, T4s, and Workers’ Comp issues and provide you with a detailed monthly financial statement that gives you an accurate picture of how your business is doing.

We tailor our Bookkeeping services to your needs. Our clients select the package of services that best suit them and we can even customize reports specifically for each client and their industry.

 Payroll

• Determination of payroll
• Preparation of payroll cheques
• Preparation of payroll reports
• Determination of remittances to Revenue Canada, etc.
• Determination of various payroll matters
• Preparation of T4 slips
• Preparation of T4 summaries
• Preparation of Record of Employment Forms

 Payables

• Bill payment
• Managing accounts payable

 Bank Balances

• Preparing bank reconciliations
• Providing cash balance reports
• Monitoring excess cash and short-term investment recommendations

 Receivables

• Invoicing your customers
• Posting collections
• Preparing monthly aged accounts receivable reports
• Other accounts receivable functions

 Journals & Ledgers

• Sales Journals
• Accounts Receivable
• Accounts Payable
• Payroll Register
• General Ledgers

 Monthly Reporting

• Balance Sheet
• Income Statements
• Comparatives to budget and year-to-date results
• Customized reporting for your industry

Our team works with each client to determine exactly what they require and what they will benefit most from.  They will set up a schedule to ensure the appropriate data is collected, recorded and handled on an efficient and timely basis – minimizing your cost, maximizing your time to work on your business.

You’ll likely save more than our services cost!  By outsourcing your bookkeeping your in-house staffing needs will be reduced, as will your employment costs (CPP, EI, WSIB etc.), staff training, holidays, equipment and software requirements. In addition, you don’t have to worry about your Bookkeeping staff leaving and the time and expense that goes with finding and training a replacement.

Best of all, your bookkeeping and accounting needs will all be taken care of by an experienced team of professionals and your reports will be presented in a manner that you can actually understand.

Call us today to talk about how we can help you with this administrative burden and free-up more time for you to devote to running your business.

Leverage our insights to bring clarity and focus to your corporate finances

As a business grows, it makes sense to continue nurturing its success by bringing in the strategic and guidance services of a professional Controller. Whether your needs are part-time, short-term or on-going, we can bring our professional accounting knowledge and experience to work for your business.

Part-Time Controller Services

At a point in your business growth, it makes sense to leverage the expertise and wisdom of a professional external resource.

We offer part-time controllership services for corporations that have an in-house finance team but are so busy running the day-to-day operations that they get overwhelmed when the period or year-end’s come.

As businesses grow their finances become more complex to manage and difficult to understand. Often, an in-house financial management team can lose focus on how the business is performing and has difficulty charting a course for the continued success of the corporation. Important business decisions become clouded with uncertainty and guesswork.

As a part-time controller, we bring the expertise and understanding of an accountant to the financial planning and guidance of your company, keeping you on track and pointed in the right direction!

Short-Term Controller Services

In addition to part-time controller services, we also offer short term services.

There can be several situations where this would benefit a corporation. If, because of unforeseen circumstances, you find yourself without a Controller, we can bridge the gap until you find a new one.

For corporations that find themselves dealing with a financial transaction – an audit, merger or acquisition – retaining the controller services of a trusted accountant can make the transaction a lot smoother and more efficient.

For businesses who need the guidance a Controller provides but without the cost of a full-time on-staff Controller, we can provide short-term services until you’re ready to carry that cost.

Business Registration

Planning to start a business? We can help you set up the right organizational structure based on your needs and help you acquire all the necessary official registration with the federal and provincial governments.

Forms of Business Organizations

Now that you have decided on starting your own business, you will have to determine what business structure or form of organization suits your needs. The structure of your business will depend on whether you want to run your business yourself or with a partner or associates. There are four types of business structures: sole proprietorship, partnerships, corporations and cooperatives.

Sole proprietorship

With this type of business organization, you would be fully responsible for all debts and obligations related to your business and all profits would be yours alone to keep. As the sole owner of the business, a creditor can make a claim against your personal or business assets to pay off any debt.

Advantages:

• Easy and inexpensive to form a sole proprietorship (you will only need to register your business name provincially, except in Newfoundland and Labrador)
• Relatively low cost to start your business
• Lowest amount of regulatory burden
• Direct control of decision making
• Minimal working capital required to start-up
• Tax advantages if your business is not doing well, for example, deducting your losses from your personal income, lower tax bracket when profits are low, and so on
• All profits will go to you directly

Disadvantages:

• Unlimited liability (if you have business debts, personal assets would be used to pay off the debt)
• Income would be taxable at your personal rate and, if your business is profitable, this may put you in a higher tax bracket
• Lack of continuity for your business, if you need to be absent
• Difficulty raising capital on your own

 Partnerships

A partnership would be a good business structure if you want to carry on a business with a partner and you do not wish to incorporate your business. With a partnership, you would combine your financial resources with your partner into the business. You can establish the terms of your business with your partner and protect yourself in case of a disagreement or dissolution by drawing up a specific business agreement. As a partner, you would share in the profits of your business according to the terms of your agreement. You may also be interested in a limited liability partnership in the business. This means that you would not take part in the control or management of the business, but would be liable for debts to a specified extent only.

When establishing a partnership, you should have a partnership agreement drawn up with the assistance of a lawyer, to ensure that:

• You are protecting your interests
• That you have clearly established the terms of the partnership with regards to issues like profit sharing, dissolving the partnership, and more
• That you meet the legal requirements for a limited partnership (if applicable)

Advantages:

• Easy to start-up a partnership
• Start-up costs would be shared equally with you and your partner
• Equal share in the management, profits and assets
• Tax advantage, if income from the partnership is low or loses money (you and your partner include your share of the partnership in your individual tax return)

Disadvantages:

• Similar to sole proprietorship, as there is no legal difference between you and your business
• Unlimited liability (if you have business debts, personal assets would be used to pay off the debt)
• Hard to find a suitable partner
• Possible development of conflict between you and your partner
• You are held financially responsible for business decisions made by your partner (for example, contracts that are broken)

Corporations

Another business structure is to incorporate your business. This can be done at the federal or provincial level. When you incorporate your business, it is considered to be a legal entity that is separate from the owners and shareholders. As a shareholder of a corporation, you will not be personally liable for the debts, obligations or acts of the corporation.

Advantages:

• Limited liability
• Ownership is transferable
• Continuous existence
• Separate legal entity
• Easier to raise capital
• Possible tax advantage as taxes may be lower for an incorporated business

Disadvantages:

• A corporation is closely regulated
• More expensive to incorporate than a partnership or sole proprietorship
• Extensive corporate records required, including shareholder and director meetings, and documentation filed annually with the government
• Possible conflict between shareholders and directors

Possible problem with the residency of directors, if they are in another province or the majority are not Canadian

Business Registration

Planning to start a business? We can help you set up the right organizational structure based on your needs and help you acquire all the necessary official registration with the federal and provincial governments.

Forms of Business Organizations

Now that you have decided on starting your own business, you will have to determine what business structure or form of organization suits your needs. The structure of your business will depend on whether you want to run your business yourself or with a partner or associates. There are four types of business structures: sole proprietorship, partnerships, corporations and cooperatives.

Sole proprietorship

With this type of business organization, you would be fully responsible for all debts and obligations related to your business and all profits would be yours alone to keep. As the sole owner of the business, a creditor can make a claim against your personal or business assets to pay off any debt.

Advantages:

• Easy and inexpensive to form a sole proprietorship (you will only need to register your business name provincially, except in Newfoundland and Labrador)
• Relatively low cost to start your business
• Lowest amount of regulatory burden
• Direct control of decision making
• Minimal working capital required to start-up
• Tax advantages if your business is not doing well, for example, deducting your losses from your personal income, lower tax bracket when profits are low, and so on
• All profits will go to you directly

Disadvantages:

• Unlimited liability (if you have business debts, personal assets would be used to pay off the debt)
• Income would be taxable at your personal rate and, if your business is profitable, this may put you in a higher tax bracket
• Lack of continuity for your business, if you need to be absent
• Difficulty raising capital on your own

Partnerships

A partnership would be a good business structure if you want to carry on a business with a partner and you do not wish to incorporate your business. With a partnership, you would combine your financial resources with your partner into the business. You can establish the terms of your business with your partner and protect yourself in case of a disagreement or dissolution by drawing up a specific business agreement. As a partner, you would share in the profits of your business according to the terms of your agreement. You may also be interested in a limited liability partnership in the business. This means that you would not take part in the control or management of the business, but would be liable for debts to a specified extent only.

When establishing a partnership, you should have a partnership agreement drawn up with the assistance of a lawyer, to ensure that:

• You are protecting your interests
• That you have clearly established the terms of the partnership with regards to issues like profit sharing, dissolving the partnership, and more
• That you meet the legal requirements for a limited partnership (if applicable)

 

Advantages:

• Easy to start-up a partnership
• Start-up costs would be shared equally with you and your partner
• Equal share in the management, profits and assets
• Tax advantage, if income from the partnership is low or loses money (you and your partner include your share of the partnership in your individual tax return)

 Disadvantages:

• Similar to sole proprietorship, as there is no legal difference between you and your business
• Unlimited liability (if you have business debts, personal assets would be used to pay off the debt)
• Hard to find a suitable partner
• Possible development of conflict between you and your partner
• You are held financially responsible for business decisions made by your partner (for example, contracts that are broken)

Corporations

Another business structure is to incorporate your business. This can be done at the federal or provincial level. When you incorporate your business, it is considered to be a legal entity that is separate from the owners and shareholders. As a shareholder of a corporation, you will not be personally liable for the debts, obligations or acts of the corporation.

 Advantages:

• Limited liability
• Ownership is transferable
• Continuous existence
• Separate legal entity
• Easier to raise capital
• Possible tax advantage as taxes may be lower for an incorporated business

 Disadvantages:

• A corporation is closely regulated
• More expensive to incorporate than a partnership or sole proprietorship
• Extensive corporate records required, including shareholder and director meetings, and documentation filed annually with the government
• Possible conflict between shareholders and directors

Possible problem with the residency of directors, if they are in another province or the majority are not Canadian

What is Due Diligence?

Due diligence is used to investigate and evaluate a business opportunity. The term due diligence describes a general duty to exercise care in any transaction. As such, it spans investigation into all relevant aspects of the past, present, and predictable future of the business of a target company. Due diligence sounds impressive but ultimately it translates into basic commonsense success factors such as “thinking things through” and “doing your homework”.

What TAX PARTNERS offers

To maximize the value of every transaction, Tax Partners employs a bespoke methodology to rapidly identify and understand potential deal breakers, value drivers, and other areas of specific interest to our clients.

Tax Partners bring extensive experience with clients providing commercial/market diligence, financial accounting due diligence, operational due diligence, valuation services, and tax due diligence in a unique integrated approach. Our Tax Partners Team assists you in buying or selling scenarios.

Focus Areas in the Due Diligence Exercise

1. Commercial Due diligence
2. Financial accounting due diligence
3. Operational due diligence
4. Valuation services
5. Tax Due diligence

Commercial Due Diligence

When making an acquisition, investors often ponder critical questions such as: Do significant value creation opportunities exist? Is the industry fundamentally attractive? Does the company have a healthy position in the industry?

Tax Partners brings an approach to commercial due diligence that generates insights on specific targets or selected industries, and guides professionals in their investment evaluation and underwriting process. Our commercial due diligence program considers these four questions by evaluating:

 

Value Creation Opportunities: Tax Partners focuses on ways to enhance revenue and reduce cost, opportunities for consolidation or realignment in the industry, and implementing operational improvements.

Industry Attractiveness: Tax Partners considers the size of the identified market for the company/product; the growth drivers and projections in the addressable market; and the fundamental profitability drivers of the market. We then often build our own detailed market models with projections for the upcoming years.

The positioning of the Target Company: Tax Partners analyzes the drivers of value creation in the industry, differentiating factors for the company and its sustainability.

Tax Partners’ Commercial Due Diligence program is customized to each client’s individual needs and level of intensity. Our commercial due diligence assignments can last anywhere from a few days to several weeks and are generally driven by the potential closing dates or the complexity of a target company.

Financial Accounting Due Diligence

Our Financial Accounting Due Diligence services include:

• Assess the target’s quality of earnings, including the identification of overly aggressive accounting policies and the assessment of the adequacy of judgmental accounts, as well as GAAP accounting and SEC reporting compliance
• Analyze cash flows (e.g., working capital changes, capital expenditures, etc.)
• Review on and off-balance sheet assets and liabilities
• Identify key business drivers, trends in profitability and significant concentrations of risk
• Evaluate management’s forecast
• Conduct comprehensive discussions with management and their advisors
• Perform both buy-side and sell-side due diligence

Operational Due Diligence

Tax Partners professionals assist our clients in analyzing functional and departmental processes, including manufacturing operations, supply chain and distribution channels, procurement and supply, information technology, and back-office operations such as finance, accounting, and human resources.  From our thorough fact-based analysis, we identify and quantify potential EBITDA adjustments and working capital risks and opportunities to create Day One and First 100 Day plans followed by hands-on performance improvement.  Our integrated Operational and Financial Due Diligence teams work seamlessly to construct a holistic view of the transaction opportunity.

Our Operational Due Diligence services include:

• Business Plan Review
• Operational and Financial Planning
• Working Capital Assessment
• Manufacturing and Operations Evaluation
• Supply Chain Operations Diligence
• Procurement and Supply Review
• Technology Capability, Risk and Spend Planning
• Sales & Marketing Effectiveness Assessment
• Merger and Acquisition Planning
• Divestiture (Carve-Out) Planning
• Human Resources Assessment

This comprehensive operational due diligence methodology and toolkit provides deep insight into the following investment considerations:

• Gaining a comprehensive understanding of a target’s operations and its risks, including the cost base and CapEx requirements
• Identifying performance gaps and potential improvement opportunities (e.g., cost reduction and/or revenue enhancement)
• Assessing potential carve-out issues and associated costs
• Identifying and/or challenging potential synergies
• Providing insights on key deal issues – including quantifying key opportunities and risks

Valuation Services

The complexity of fair value measurement increases as fair value takes root in financial reporting and contractual arrangements among buyers, sellers, customers, vendors, and employees. Routine business transactions often now require the computation of fair value as do strategic investment decisions.

Our professionals come from large accounting firms and independent valuation firms of national repute. They each have a background in a specialist area, as well as a deep grounding in core valuation concepts. They are known for their thoughts on complex topics and support of the valuation industry in a variety of leadership roles. We draw from extensive experience across a wide range of industries, building on Tax Partners industry-focused groups. When our clients are valuing a business or other transaction, Tax Partners brings all of this to the table for them and more. We are supported by a technical accounting team with experience from the national offices of large accounting firms, who monitor changes in the accounting standards and regulations with valuation implications.

Tax Due Diligence

Our professionals have significant experience on both the buy and sell side of transactions across all industries including healthcare, financial institutions, energy, environmental services, technology, and education.

Our Tax Due Diligence services include:

• Review target’s historic tax profile, planning, tax examination, acquisition/disposition, and filing history to assess potential risks and opportunities
• Review and evaluate significant tax attributes, credits and incentives
• Review and evaluate executive compensation matters
• Review and comment on purchase agreement and disclosure schedules
• Evaluate potential acquisition structures
• Model transaction scenarios
• Identify matters to be addressed post-closing, including integration related risks and opportunities

FAQ’s

Q. Why should I conduct due diligence?  Why should I hire someone to do it for me?
A.

• Confirmation that the business is what it appears to be
• Identify potential “deal killer” defects in the target and avoid a bad business transaction
• Gain information that will be useful for valuing assets, defining representations and warranties, and/or  negotiating price concessions and
• Verification that the transaction complies with investment or acquisition criteria

1. When should it be done and by whom?
   A. When it should be done:

• Confirmation that the business is what it appears to be
• Identify potential “deal killer” defects in the target and avoid a bad business transaction
• Gain information that will be useful for valuing assets, defining representations and warranties, and/or  negotiating price concessions and
• Verification that the transaction complies with investment or acquisition criteria

1. By Whom

Lead and co-investors, corporate development staff, attorneys, accountants, investment bankers, loan officers and other professionals involved in a transaction may have a need or an obligation to conduct independent due diligence. Target management typically assists these parties in obtaining due diligence information but because it is unwise to totally rely on management third-party consultants such as Tax Partners are often brought in to conduct due diligence.

1. What are the steps involved?
   A. The parties conducting due diligence generally create a checklist of needed information. Management of the target company prepares some of the information. Financial statements, business plans, and other documents are reviewed. In addition, interviews and site visits are conducted. Finally, thorough research is conducted with external sources — including customers, suppliers, industry experts, trade organizations, market research firms, and others.

1. How much due diligence needs to be conducted?
   A. There is no correct answer to this question. The amount of due diligence you conduct is based on many factors, including prior experiences, the size of the transaction, the likelihood of closing a transaction, tolerance for risk, time constraints, cost factors, and resource availability. It is impossible to learn everything about a business but it is important to learn enough such that you lower your risks to the appropriate level and make good, informed business decisions.

1. How Much Does Due Diligence Cost? Who Pays for It?
   A. Due diligence costs are based on the scope and duration of the effort, which in turn are dependent on the complexity of the target business and other factors. Costs are typically viewed as an essential expense far outweighed by the anticipated benefits and the downside risks of failing to conduct adequate due diligence. The involved parties determine who will bear due diligence expense.

Q. How Much Does Due Diligence Cost? Who Pays for It?
A. Due diligence costs are based on the scope and duration of the effort, which in turn are dependent on the complexity of the target business and other factors. Costs are typically viewed as an essential expense far outweighed by the anticipated benefits and the downside risks of failing to conduct adequate due diligence. The involved parties determine who will bear due diligence expense.