Finance Resources for Small Businesses & Corporate Bookkeeping

 
 

Business Workflow Best Practice

Efficient workflow management is key to saving time, improving accuracy, and enhancing team collaboration.

Inconsistent data formatting can lead to sorting errors and unnecessary confusion.

Best Practice 1: Standardize Data Formatting
Always present month and day values as two digits to maintain consistency and prevent misordering.

Clear file naming conventions also improve navigation across busy drives and folders by establishing a consistent and dependable system for document organization.

 

What is direct cost?

What is a direct cost?

A direct cost is a cost you can clearly trace to a specific product, service, job, or project.

Examples:

  • Materials used to make a product

  • Wages for employees working directly on that product or job

  • Subcontractor costs tied to one client project

  • Shipping paid specifically for one order

Example:
If you build custom cabinets:

  • Wood, hinges, and handles for one cabinet job = direct costs

  • The carpenter’s labor for that job = direct cost

  • Office rent = not a direct cost, because it supports the business overall

Direct costs are different from indirect costs, which are general overhead expenses that cannot be tied to one specific job easily.

A simple test:
If you ask, “Would this cost exist only because of this specific sale or project?” and the answer is yes, it is usually a direct cost.

Payroll Responsibilities for Employers

As an employer, you need to withhold amounts from pay, and remit, and report these source deductions to the CRA. Source deductions include:

  • CPP contributions

  • additional CPP contributions (CPP2).

  • EI premiums,

  • and income tax from an employee's taxable, pensionable, and insurable income.

https://www.canada.ca/en/revenue-agency/news/cra-multimedia-library/businesses-video-gallery/payroll-responsibilities-employers.html

Automobile and Motor Vehicle Allowances

Tax administration is as complex as life itself. lets review Automobile & Motor Vehicle expenses.

Scenario – Under the Reasonable Rate

The CRA notes that collective agreements do not supersede the Income Tax Act. Allowances that are too low are taxable, and must be included as income on a T4 slip. However, Robert could claim his motor vehicle expenses on his tax return.

Link to a resource: https://www.canada.ca/en/revenue-agency/news/cra-multimedia-library/businesses-video-gallery/transcript-automobile-and-motor-vehicle-allowances.html