Accepting an honorarium

question50I recently took part as moderator for a couple of public events at an industry festival. I was approached to do the job through someone who knows me from my work in the industry. For doing the job, the festival organization gave me an honorarium of $200. Since the connection is work-related, how do I account for this as income?

B.W.

answer50
This would be considered part of your income, and should be accounted for on your personal income tax return. If your accountant manages both your business and personal returns, he/she can assist you accordingly.

When the going gets tough … the tough get scanning!

I’m really into technology and making it easier for clients to deal with me. One of the ways I do this is by going paperless. Now what I have noticed is that going paperless has meant I seem to have way more paper then I ever did before!

Way more paper? Well, that’s mainly to do with shredding everything I receive after I’ve scanned documents into my computer system. Over the years, for my own I paper I scan and shred right away, but for clients I give them back the documents that I needed to complete their work.

fujitsu-scansnapI’ve tried many scanners and the best one I have ever had is the Fujitsu ScanSnap. I have now been using them for over ten years and never had a problem. They are built for document scanning and I have noticed that now Shoppers Drug Mart uses them for prescriptions. One is always on my desk to scan anything I receive.

Now, you may be asking “but how does that help me when I don’t own a scanner?” Over the years I have upgraded to new models that are faster, have new features and so on, but the old one always ends up in my trunk so if I’m at a client I can scan anything I need right away and I don’t have to take anything away. Below you can see the scanner in my trunk and also set up at a clients so I can get the information I need.

On the go with my Fujitsu ScanSnap in the back of the car ...

On the go with my Fujitsu ScanSnap in the back of the car …

Arriving at a client's location with my Fujitsu ScanSnap ...

Arriving at a client’s location with my Fujitsu ScanSnap …

I'm putting my Fujitsu ScanSnap to good use in a client's office.

I’m putting my Fujitsu ScanSnap to good use in a client’s office.

7 year-end tax tips for small business

thebalance-logoThis article from The Balance caught our eye because it offers some simple, straightforward advice for small business owners about wrapping up the current year and preparing for the new year. What’s nice is that the advice is applicable to different types of businesses, and it is not specific to a given region or country necessarily. Of course, for advice more specific to your area of business, your part of the world and your requirements, that’s where a good accountant is your best resource.

The Balance advises that your year-end checklist should include:

  1. Review your reports.
  2. Defer income.
  3. Make purchases.
  4. Run an inventory check.
  5. Start or contribute to a retirement plan.
  6. Contribute to charity.
  7. Start preparing for next year now.

Click here to read the complete article.

What else would you include as a good year-end practice? Add your suggestions to the comments on this post. Thanks!

When Nevcon Accounting has something new and interesting to tell you …

… we’ll post it here, to our new blog. We’ll give you updates on new small business and tax-related news, changes and trends, and we’ll also provide perspectives and recommendations on products, services, practices and more. This blog will take the place of the “What’s New” page from our previous web site, and it will be a complement to our Twitter feed (www.twitter.com/NevconAccount). Let us know if there are subjects that you would like us to cover here.

Logging allowable business mileage

question50I would like to maintain an accurate log but am struggling with determining what qualifies as allowable business mileage.

I work mainly from my employer’s office but use my personal car to see customers and suppliers, but do not get compensation from my employer. If I see a customer/supplier on my way to the office in the morning, does that leg count as 100% business mileage or does the leg from the customer/supplier to the office? Or does it only count as business mileage if I go to the office first and then visit the customer/supplier and then return to the office?

Can you please advise?

R.S.

answer50Business mileage is sometimes not cut and dried. First, for you to be able to claim the mileage, your employer needs to complete the form T2200 Declaration of Conditions of Employment. Once this is completed, you are then able to claim your mileage.

Travelling from your home to the office is not considered business travel, but personal. But in saying that, if you go to a customer or supplier on the way to the office that would be considered business mileage. You have one of two ways to keep track of this: you can use the whole trip and then deduct the mileage used from office to home, or just use the mileage from the customer/supplier to the office (times 2 for a round trip – this one is easier to use, in my opinion).

When calculating the actual expenses deductible, remember to use all the expenses of the car for the full year, including, gas, maintenance, and parking if any, and then it is prorated between business and personal. Also, I would keep some sort of diary (either a planner in the car or electronic record) of the trip and who you went to see. Also, the proration is total km driven for business divided by total km driven in the year.

Expenses travelling from home to work

question50I live in Barrie, Ontario and work in Ajax. The drive is 130 kms one way – that’s 260 kms per day – 1300 kms/week and 5200 kms/month. I keep all my gas, maintenance and car insurance receipts. Should I claim the mileage rate or the exact amount of my expenses per year? Can I expense both? Also, I will be moving to Oshawa in the next four months. What expenses can I write off with the sale of my home and moving expenses that will reduce my drive to 40 kms per day?

B.B.W.

answer50Hi. Thanks for writing. The travel from your home to work is not deductible as it is considered a personal expense. For the moving expenses, it depends on whether this is a new job for the expenses to be deductible. If you are just moving closer to your current office, the moving expenses are not deductible. However, if you are moving to a new office (within your company) or for a new job, then the moving expenses become deductible.

Writing off vehicle depreciation

question50My employer pays for my personal vehicle including loan payment/gas/maintenance. The vehicle is in my name and is used for business and personal use (approximately 80/20). Can I write off vehicle depreciation or anything else on my tax return?

My employer adds this as income to my taxable income on my T4; as this my personal vehicle used for both business and personal use, should the entire loan payment amount be added as income?

S.B.

answer50Yes, if the reimbursement is added to your income, then the allowance you are getting is considered unreasonable (which is why it is taxable). If it is not to be taxable, the reimbursement would have to be based on a per km usage of your car. You can deduct all expenses of the car using the form T777 Employment Expenses, and you will need to get the form T2202 (Conditions of Employment) signed by your employer so that you are able to claim your auto expenses. Auto expenses include: gas, maintenance, insurance, parking, license plate and drivers license payments, depreciation, interest on car loan, or lease payments.