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The Bookkeeper's Notes, Issue #018 Late Winter Issue
March 15, 2014

Welcome to this issue of The Bookkeeper's Notes newsletter which focuses on current news and good bookkeeping practices.

This newsletter and my site are my notes that I refer to regularly. I add to them as I learn more during courses, work on client files or keep current through my many newsletters and subscriptions. I often use the search box to find what I'm looking for throughout the day.

One of the things I promote is to take a 15 minute tea break with this site a few times a week ... even if you don't understand everything you are reading. Absorbing the information in small bits will help it sink in that brain of yours. In three to six months, you'll find you are starting to "get it".

I have a big favor to ask. I am trying to get feedback on if / how the site meets your needs. I'd be grateful if you considered taking a short survey to assist me in delivering content that meets your needs.

This issue is taking a quick peek at basic ratio analysis and how it can help you run your business.

If you use Facebook, you may want to subscribe to Bookkeeping-Essentials' Facebook newsfeed as a quick way to keep up-to-date. I post article links of interest to small business owners and bookkeepers there that don't necessarily make it onto my site.

Just remember, to see the Facebook feed on a regular basis, you will have to click on "like" or comment on a post occasionally if you want it to continue to show in your newsfeed. Sorry that's just the way Facebook works. :0(

With the end of winter approaching, I'm looking forward to kayaking again.

When the kayaking season ended I switched to aqua jogging classes in the Radium Hot Springs cool pool and yoga classes to take away the stiffness from sitting all day long at a desk. Of course I still walk the dog. I've also just tried my first zumba class.

Why am I telling you this? Because as bookkeepers, it's important to make daily exercise a part of your routine. I have posted some yoga poses you can do while sitting at your desk, the benefits of walking and other health stuff on Facebook. These quick yoga routines and other tips should help counteract the effects of sitting for long hours.

Not sure if you noticed but I've added Google Plus to the site. Please feel free to recommend a page you found helpful to Google. It will help the website rank better in the search engines.

If you are a regular site visitor, you know that is committed to educating and providing support to ... work from home business owners.

If you like this e-zine, feel free to forward it to a friend. You'd be doing me a huge, huge favor. If a friend did forward this to you and you like what you have read, please subscribe by visiting my site.

I want to thank all my subscribers for helping to keep Bookkeeping-Essentials a free resource. Alexa ranks the site in the top 1.1% of sites world wide. With your help, I'd like to have the site rank in the top 0.5% in the world. Please don't keep this resource a secret ... share it with your friends.

It is my sincere hope that the information I provide on, and in this newsletter, will help you learn good bookkeeping practices to manage your business finances easily and more efficiently.

Hope you all enjoy spring break!

Until next time,

Laura (aka Lake) :0)
Lakeshore Bookkeeping Services

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this e-zine or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using my site content for any reason whatsoever.

image of woman performing bookkeeping tasks on a computer courtesy of

In This Issue ...

  • Focus on Bookkeeping - Basic Ratio Analysis
  • Feature Product - Checklists and Procedures
  • New Pages, Additions and Revisions - Enjoy a cup of tea while you browse
  • Recent Canada Revenue Agency (CRA) News
  • Recent Internal Revenue Service (IRS) News
  • The Insider's Pass - The Current Password is Here
  • In the Forum - Ask a Free Bookkeeping Question

How To Boost
Your Business Cashflow

Discover the simple secrets for generating as much steady cash as you need,

... whenever you need it ...

in this report about how to create your own cash flow system.

It requires an affordable investment of only $17 USD, that's about the same as one small everything pizza!

Basic Ratio Analysis

Learning how to read your internal financial statements makes them a great tool for running your business. One of the ways to use your financial statements is to do a bit of ratio analysis.

Ratio analysis helps you discover the relationships between the numbers and how they affect your business. It can answer questions like:

- how liquid you are;

- how to quickly measure long term operating results;

- how efficiently your business runs;

- how solvent you are;

- how profitable your business is;

- how you waste your resources; and

- how accurate your reporting is.

Generally there are four types of ratios:

1. Liquidity ratios calculate your resources available so you can pay your bills.

2. Operating ratios calculate how efficient you are at managing your capital.

3. Profitability ratios calculate your ability to control expenses and earn a return on your investment in the company.

4. Leverage / solvency ratios calculate suppliers' protection, whether you can take on more debt or the chance that you may go bankrupt.

Learn how to calculate these ratios here ...

Bookkeeping Checklists and Monthend Procedures

Two chats no longer available on the website are now available for purchase as eBooks.

They can be purchased individually or together at a discount. Multiple copies purchased at the same time are also discounted.

MonthEnd Procedures $20 CAD

Monthend bookkeeping procedures are often neglected by home based business owners. My simple eManual can help you figure out some, not all, of what you don't know.

The eManual is designed to assist small business owners and bookkeepers in:

- Learning a systematic approach to monthend bookkeeping;

- Learning what documents the government auditor wants so you have audit ready books; and

- Preparing accurate and timely internal financials … if you work through the manual.

Bookkeeping Checklists

My bookkeeping checklists for daily, weekly, monthly, quarterly, annual and year-end can purchased for $5 CAD. There is room for you to add your own notes.

Save 10% when you buy both eBooks.

Find more information or to purchase one or both of the eManuals here ...

New Pages, Additions and Revisions

I've been busy renovating my site the last few months. Many pages have been reorganized, consolidated and broken down into more than one webpage.

I'm also working at archiving past newsletters and publishing the feature articles on the site as well as retiring some visitor questions to enable me to revise / update the information.

I've introduced "What You'll Find in This Chat" on most pages so you can quickly see some of what the page contains. If the chat is part of a series, there will also be an image index on the page to other chats in the series. Some of the new web pages added recently are:

Common Audit Issues

Can You Shred Scanned Receipts?

Your Chart of Accounts

Living Out Allowances

Place of Supply Rules

Hey Where Did All My Cash Go?

Basic Cash Management

Recording Aggregrate Purchases In A Small Restaurant

Common Questions About T4 Preparation

Reimbursement of Employee Vehicle Expenses

Sales Tax Rates By Provinces

I was getting tired of searching for information I use and/or lookup on a regular basis ... so I added a new section to the site called "Quick References". The pages in this section are overviews with links to the various chats. Here's what I've done so far ...

- The current news covers 5 current news areas.

- Filing system options brings all the chats on receipt organization in one place.

- Bookkeeping entries index I think is self explanatory.

- Auto and business travel rate options covers both Canada and the U.S.

- Self employed rates - CPP in Canada ... FICA in the U.S.

- Employee payroll rates - CPP and EI in Canada ... SST in the U.S.

- Independent Contractors - T4A in Canada ... 1099MISC in the U.S.

- Compliance rates has links to different rates I often go looking for.

Please let me know if there are any other Quick References you would like me to create.

The last feature I added is a testimonial page. If you would like to leave a testimonial on how you use the site or if you've found it useful as a resource, it would be greatly appreciated.

Organizing Your Receipts

With the filing of 2013 tax returns just around the corner, many small business owners will be scrambling to organize their 2013 receipts (... and sometimes other years too) ... because they didn't systematically handle their paperwork throughout the year. It's the old … out of sight, out of mind syndrome.

If this describes your situation, be sure to check out my index for all the articles on how to organize your receipts to help you overcome this dreaded task. Feel free to check it out.

Pat Dutched's Bookkeeping in a Box is a proven method for receipt organization. It comes in a U.S. version and a Canadian version.

Remember, you really, Really, REALLY DO want to file your tax returns BEFORE CRA or IRS send a demand letter. Your life will go so much smoother if you do!

Recent CRA News ... and Other Government News

CRA is proposing to register all tax preparers in the near future. Read more here.

The simplified meal and vehicle travel mileage rates were quietly released by CRA early in January. These rates are used for medical expenses, moving expenses and the northern resident deductions on your income tax return. Find the 2013 rates here ...

CRA is advising people to be aware of scams and phishing. Here are their guidelines:

"NEVER requests information from a taxpayer about a passport, health card, or driver’s license.

NEVER divulges taxpayer information to another person unless formal authorization is provided by the taxpayer.

NEVER leaves any personal information on an answering machine or asks taxpayers to leave a message with their personal information on an answering machine.

When in doubt, ask yourself the following:

Am I expecting additional money from the CRA?

Does this sound too good to be true?

Is the requester asking for information I would not include with my tax return?

Is the requester asking for information I know the CRA already has on file for me?

How did the requester get my email address or telephone number? Am I confident I know who is asking for the information?

Is there a reason that the CRA may be calling? Do I have a tax balance outstanding?"

Prescribed Interest Rates ...

CRA prescribed interest rates for the first quarter of 2014 decreased by 1%. You can find the updated interest rate tables here.

Nova Scotia announced in 2012 an intention to reduce the HST in 2014 to 14% and again in 2015 to 13%. However the Nova Scotia Finance Department announced it cannot afford to lose the revenue and will not be proceeding with the previous government's HST rate reductions. Read more here ...

Humour by Advice ... with Dr. Julia Chicken

Recent IRS News and Related News

I remind you again that there is a lot going on as a result of the Patient Protection and Affordable Care Act. Beginning in 2014, this act requires individuals to purchase health insurance or pay a penalty.

You can attend a free webinar by the SBA (U.S. Small Business Administration) on the Affordable Care Act to learn the basics and what it means for you as an employer. Go to to register.

The IRS would also like you to check out the small business health care credit on their website.

Some recent regulations issued:

- Final regulations were issued for shared responsibility payment - Section 5000A.

- Section 6055 (Reg-132455-11) requires providers of minimum essential health coverage to report information verifying the taxpayer is covered. Reporting for 2014 is voluntary.*

- Section 6056 (Reg-136630-12) provides requires large employers (over 50 employees that work 30 hours or more a week) are subject to reporting to the employees and IRS the coverage offered to full-time employees. Reporting for 2014 is voluntary.*

Large employers are required to provide health insurance to employees by 2014 with penalties of up to $3000 per worker kicking in in 2015 for non-compliance. has reported that companies affected by this regulation are beginning to decrease full time employees while increasing temporary and part-time workers.

IRS released the 2014 depreciation limits for vehicles in February. Read more here ...

The GSA made 2014 simplified per diem rates available.

IRS Notice 2013-59 gives advice on deducting real estate expenses placed in service between 2010 and 2013 under Section 179.

A reminder that effective January 2014, the IRS began classifying automatic tips on large groups in restaurants as service charges as they are not voluntary. This makes them regular wages to employees that are subject to payroll withholding taxes ... i.e. withholding of federal income taxes. Tip income, in contrast, is reported by the employee not the employer. Employers pay only medicare and social security tax on reported tip amounts and are eligible for an income tax credit.

Applicable Federal Rates are updated each month. The current AFR can be found here.

IRS interest rates for the first quarter of 2014 held steady. You'll find a current and updated interest rate tables here.

*Source: JOA September 6, 2013 Health coverage information reporting requirements guidance issued by Alistair M. Nevius

The Insider's Pass

The Insider's Pass gives you access to the pages in Bookkeeping Essentials that are available only to newsletter subscribers ... my way of saying thank you.

The "preview pages" for all but bookkeeping entries are no longer available.

Here's how it works. To view the article, you will need your Insider's Pass for access. The password will change with each newsletter … every two months. So if you ever forget, you will always find the most current password in your current issue of The Bookkeeper's Notes.

The current password is SpringFloods (it is case sensitive) ... may be happening soon. ;0)

You can find access to the insider pages here ...

In the Forum - Ask a Free Bookkeeping Question is Open

I want to thank all my site visitors for taking the time to use the customized search boxes found throughout the site to see if your question has been asked and answered previously.

This wraps up this issue of The Bookkeeper's Notes newsletter. I'll touch base with you again in May.

Comments? Ideas? Feedback? I'd love to hear from you. Just reply to this e-zine and tell me what you think!

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