More Money Podcast - 397 Taxes, Write-Offs and Running a Small Business - CPA, Course Creator & Speaker, Jami Monte

Episode Date: April 17, 2024

If you're self-employed in Canada, listen up because this episode is for you! Since posting some videos about setting up a small business and figuring out income tax and sales tax on my YouTube channel years ago, I still get questions about write-offs, tax rules, and registering a business on the daily. But I'm not an accountant, so often I have to tell people to seek professional advice from a CPA. Enter my next guest Jami Monte who is a CPA and has a ton of great resources including a course all about how to set up your small business properly in Canada. In this episode, she shares some new tax updates if you haven't filed your 2023 taxes yet, but for the most part, we just do a deep dive on the most common questions I get from self-employed folks about bookkeeping, accounting and making sure they are doing everything right. Follow me: Instagram @jessicaimoorhouse Threads @jessicaimoorhouse TikTok @jessicaimoorhouse Facebook @jessicaimoorhouse YouTube @jessicamoorhouse LinkedIn - Jessica Moorhouse For full episode show notes and transcript visit jessicamoorhouse.com/397 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, and welcome back to the More Money Podcast. This is your host, Jessica Warhouse, and this is episode 397 of the show. And we are currently, if you're listening to this when it first drops, in tax season, full-on tax season. We're actually just a few weeks away from that personal income tax season deadline, so make sure to do your taxes. And to talk about that, but so much more. I have CPA Jamie Monti on the show. She is the founder of Chill Books. And you can find her at jamiemonti.com. I will link to it in the show notes. So don't worry about all of that. But I met her maybe a few months ago, there was kind of a get together with some local financial content creators. And we started chatting and I love talking about taxes and she really knows her

stuff, especially when it comes to if you have a small business, you're a solopreneur or sole proprietor. And I get questions like that all the time because I have some videos on my YouTube channel about being a sole proprietor and taxes and get little literally I get questions like that all the time because I have some videos on my YouTube channel about being a sole proprietor and taxes. Literally, I get questions about how to do it. Should I do sales tax? When do I have to register? How do I register a business? All this kind of stuff. I get questions every single day about it. And so I thought I would actually have an accountant come on the show and answer some of those really important questions that people have. And then also talk about what are some kind of updates that you should know about your personal income taxes. So we have lots to talk about. But also, I want to let you know she has and this is something that

I'm going to now tell people about because this is a great resource. And she has a lot of great free resources on her website. But she also has a course called Chill Books, which is literally something that would have helped me and I would have avoided a lot of expensive mistakes in my business if it existed when I started my business over seven years ago. And so if you wanted to enroll, all you have to do is go to jessicamorehouse.com slash chillbooks. And again, I will link to this in the show notes, and you can find the show notes at jessicamorehouse.com slash 397. But not only that, you can get a $50 off discount if you use my special code, Jessica, making it very easy for you to remember my name is Jessica. So again,

that's jessicamorehouse.com slash chill books. If you want to learn how to do your own bookkeeping and just get your business set up properly so you don't make any mistakes. With that, we have a lot to get through in this episode. So let's get to that interview. Welcome to the More Money Podcast, Jamie. I'm so excited to have you on the show. Thank you for having me. I'm excited to be here. Yes. So we met a little while ago when I found out what you did. I'm like, I need to have you on the show. And tell me a little bit about your background, though.

So you're a CPA. I know a lot of what you do, what you share online is very focused on obviously taxes, but specifically for small business owners, solo printers, things like that. How did you get into that? Yeah, I first started my career in corporate. So I was working on the back end in a lot of like marketing and media companies, helping them to kind of keep their numbers together and report on their profitability and stuff like that.

And then eventually I felt like I wanted some more flexibility in my life. And so that's when I decided to go off on my own. But I didn't really have a plan. So I'm a CPA, everybody asks me to file their taxes. So I'm going to start doing that since that seems to be in demand. So I started filing taxes. And I had a lot of self employed people coming to me for filing and I, because I had not come from the big four firms and I hadn't come from any, even a small firm filing, I was shocked at what people were bringing me come tax time. Like I thought, this is not what I learned in school. Like, what do you mean? Like you don't have a profit and loss statement to share

with me you don't have you don't know how much money you made last year like it was very because I just thought everybody that runs a business knows that they're supposed to be doing bookkeeping through the year and have financial reporting and so that was a moment for me where I was like there's something there's something missing here. And specifically solopreneurs, small businesses, they are, um, they're really getting left out of the mix because they're not hiring staff to do this for them. Um, but also they don't have the education they need. So that's when I started to focus on educating entrepreneurs on all of the things that they need to be doing year round, whether or not they have an accountant. And that's how I started my course, Chill Books,

which teaches bookkeeping and the financial foundation for entrepreneurs. Yeah, no, super helpful. And I want to really launch into that. But before, just because we are very much approaching kind of the personal income tax deadline. And you do a great job of sharing some really great tips and information on your Instagram that I love to follow now. Is there anything personal tax wise that people should be aware of any new updates and new things I get asked all the time? Is there any new credits? And I'm like, I don't know. I'm not an accountant. And so I do some googling, but I'm like, I don't know. I'm not an accountant. And so I do some Googling, but I'm like, I don't, this isn't my world. Well, I have some good news. And that is that

the tax brackets have increased. And yes. So what that means is by nature, when you're filing your taxes, you might find yourself in a lower tax bracket this year, just because them being increased might push you down into a lower bracket. So we love that. We also love that the federal basic personal amount has been increased as well. And what that means is that that's kind of like your tax free amount that you make in the year. So in Canada, the federal basic personal amount, so this for federal taxes is about 15,000. So again, these are things that you're going to naturally see when you file your taxes. You don't have to remember to do anything special.

A lot of the COVID benefits are no more, which we love. COVID is a distant memory for most. I hope. I hope. I know some people are. I don't hope. Oh my gosh, I don't want to do that again but I mean anyways we just it doesn't have the same ring to it anymore so the government's like no

more with these uh tax credits so so the Ontario staycation credit is no more um the work from home flat rate I know a lot of people love that flat rate $500 deduction. Now, if you do want to claim work from home, because I know a lot of people are still working from home, you just need to go through a more detailed method of reporting and getting clear with your employer that you are, in fact, required to work from home. So those are some things to keep in mind. This I think because I think some people might have filed already, some people might not. But knowing that the for this year, the RSP cap has been increased as well. And the TFSA limits also. So that's some nice stuff just to think about in planning for 2024. I'm sure you've probably chatted about this on here.

Yeah, so we don't need to go too much into detail. But yeah, those are some of the major changes. And then something that people might start to see in 2024 is more CPP being deducted off their paychecks. So we like to think about that as money coming back to us at some point. Exactly. I've seen a lot of people talk about it online. And then when I looked into like, well, how much extra CPP is like very minimal, but how people are talking about it's like it's X thousands and thousands of dollars extra you're paying for years. Like it's really not. It's like

very minimal. So relax. And it's not. That's the thing I hate when people say, oh, the CPP tax, I'm like, it's not really a tax, you get a back, you know what I mean? Whereas a tax, you pay to the government, and we don't know what they're going to do with that. So it's coming back to you. Yes, I know. And I think like, we have been feeling the increase of CPP since 2019. The government has been increasing it every year because they're trying to make sure that we have enough money when we retire. And this is an amount that's meant to supplement our income when we do retire. So you're probably not going to feel it any more than you have in previous years, especially because the base amount didn't go up. It's that there's an additional

ceiling been added. But I know that my self-employed friends, which we can talk about this, they a lot of times it's a big surprise for them because they start they have to pay both the employee and the employer portion. And if it's your first year filing, then that can feel like a punch in the face. But yeah, just think of it as this isn't a bad thing because it wasn't it that, you know, with this enhancement, in the end, you'll end up with like a significantly, I'm going to get from CPP down the line, it's like this big, confusing rigmarole. I don't want to talk about it. No, because I feel but I think yeah, if you look it up, I there are some like stats out there that do show because we're increasing this, the CPP amount, you are going to see more when you retired, which is a really good thing. And the reason they're doing this is because in general, Canadians are very bad at saving on their own. So it's a bit of

for savings a little bit there. Okay, those are super helpful things for people to keep in mind. So now let's kind of talk more about being self employed. I over the past, like since I became self employed, which is now seven years ago, which is crazy. I made a few videos on my YouTube channel about this because I had no guidance either. I think it took me a good few years to maybe another, maybe after one year of doing it on my own. I'm like, oh, I can't do this. I need to hire. I need an accountant. But I was shocked at how little I knew about bookkeeping and all the reports that you need. And it was very hard to find the information or the information that was out there

was very hard to understand. And so I started kind of creating some pieces of content just based off my experience. And to this day, I have videos that are super old, like four plus years old. And I get comments every single day being like, hey, how does this work? Da, da, da, da, da.

And I'm like, if this many people are asking that just means how confusing it is. And I think part of it is, we've definitely seen an influx of people start a side hustle, start a small business become self employed, because they're unhappy with their career, and they want to try something new, which is great. There's so many people, I feel like especially on on social media, talking about like, work for yourself. And then the information stops it. But how do I actually do that in terms of making sure my business financials are set up properly? These people do not talk about that. And maybe it's because it's a bit intimidating or confusing. Or these people talking about how to make money from home, certainly are not accountants. So, you know,

if someone is thinking about becoming a sole proprietor, whether that's on the side of their day job or quitting their day job and doing this full time, what is one of the first things that they should know to make sure they set up that, you know, foundation like you mentioned? So the first thing that I would say is, I think that and I've made this mistake myself. And it's to take your business finances seriously from day one, even when you feel like it's just a little thing I'm doing. It's not a big deal. I don't know how the the thing is, is these things compound. So I'll, I'll tell you that in my first year of business as a CPA, I didn't have much direction. And actually my first year was

a partial year. Um, and I did a cons I had a consulting role. So I took on a consulting gig and I was working like three or three or four days a week with that for a few months. And so I had one client and I thought, I don't need to months. And so I had one client. Yeah. And I thought, I don't need to worry about bookkeeping and stuff, especially Yeah, you're like, what's my client? Yeah, right. I'm like, it's literally one client. I have like two write offs. Like it's just Yeah. And I'm a CPA. So I can wrap this stuff up quick time at the end of the year. And so I did what I tell everybody not to do is I went and I downloaded wave which is like a free bookkeeping software and that's where I did my invoicing

for my one client and then I totally left the taxes to the last minute and because I wasn't taking it seriously I'm like oh it's gonna be so. I know what I'm doing. And until I found myself on vacation, well, actually, I was doing yoga teacher training. So I was in Bali for like a month and a half. And I realized, I'm going to be in Bali for the tax deadline. And I didn't do it yet. So I remember sitting like facing the jungle in Ubud and people are like lounging by the pool and I'm hunched over my laptop trying to add up all of my numbers for the year for my car because I used my car for work um for random subscriptions like searching for like where how did I pay Microsoft for my Microsoft word subscription um or like my my whatever the suite is that it's called. And oh, yeah, I think I actually bought this in February, I need to look. Yeah. And so I had

to download all of my statements for the year for my bank and credit card, look through them, then go to find the receipts. And then I and then filed last minute, literally like final day, while I was on a trip. And it was a disaster because I didn't have a system that was holding all the information in one place for me. And that was one client and a service based role. So please do not take, do not push your financial management to the side because also the easiest time to get on top of it is when you start so exactly yeah take it seriously get the education you need set up a system or hire a bookkeeper don't leave it to the end of the year because especially you know when when you're not a cpa and taxes are a bit of a mystery

to you then you have to go through that learning process while you're trying to do your bookkeeping for the whole year. So yeah, do you think it's a good idea for people to start doing their own bookkeeping first before hiring someone just so they start to understand how it works? Because I know even in just personal finance, you know, think about investing a lot of people like, Oh, I don't want to take the time to learn how to do this on my own. Can I just hand it off to someone? I'm like, sure, you can, but then you're not going to know if they're doing it right. And then years will go by and you're like, why am I return slow? I'm like, that's because you didn't know what they're investing your money in. Do you think it's a good thing to get some hands-on experience before hiring someone to help you? Absolutely. 150%. I really think that there's, there's also that piece of even when you do get to the point of

outsourcing it, you're not going to know what you're supposed to be looking at and what you're asking questions about. And so take time to understand the foundation yourself. Because one, it if you get the right education, then it might be actually a lot easier for you than outsourcing because a lot of times in the bookkeeping and financial management realm, when you're just starting out, you're already doing most of the bookkeeping yourself because you're the one invoicing your clients. You're the one spending the money on expenses. You know where your receipts are.

You are managing the bank accounts. You have all the tools for you to hand that to someone else and then they have questions and they come back to you for the questions you're like why don't you just interact directly with the system at that point right so so yeah it's going to it might actually save you save you time too at the start when early on and um and yeah, you're going to feel a lot more empowered, you care more about capturing all your write offs and any bookkeeper is going to care. Oh, yeah. It's the common challenge with being an entrepreneur, no one cares about your business as much as you do. And when it comes to your finances, same thing applies. When you have a bookkeeper,keeper their job if they're managing things for you

their job is to um is to get things in order from a compliance standpoint and just do it in the most efficient way possible so that they're not bugging you and so that can mean a lot of assumptions are made and things are missed and yeah inside one of my workshops last week somebody came to check on they they had hired a bookkeeper for the year and they were kind of like, I just want to check the numbers. And they found thousands of dollars, literally thousands of dollars of missing write-offs because they decided, I don't want to do this myself. I just want to hand it off. But again, no one cares as much as you do about your numbers. So learn, be empowered, and you might even you're gonna save

you might even save yourself some time and money in outsourcing i mean i've got to say i've been using a bookkeeper for the past like i did the majority of my own bookkeeping for maybe five years i think it's only in the past two maybe three years that i've had a bookkeeper number one it's not necessarily cheap so you've got you've got to think about the cost involved, right? But I, yeah, I've definitely become more passive. I used to be, I know every single dollar that was accounted for. And now I'm like, I probably should check my QuickBooks and really just, you know, see what's going on there before we file some of those returns, actually. Actually, I'm like, did we already file my corporate tax?

Maybe not. I'm gonna have to check. Look, I do have, did we already file my corporate tax? Maybe not. I'm gonna have to take a look. I do have an accountant and a bookkeeper. But yeah, that is one of those things where it's like, I kind of miss being as involved as I used to because I really knew what was going on. And now I still keep track of things. For instance, like even though I have QuickBooks and things connected and the system, I do also have a little spreadsheet for, you know, some of the campaigns that I work on and stuff. So I've got all that. But yeah, I have become a little bit passive. And I wonder

whether there's something missing. And that's the thing. It's like you got it. You still need to always be involved in your business finances, no matter if you're outsourcing or not. Talking about systems a little bit more, that is, I think, one of the hardest things for people to figure out. And for me, again, it's it was a lot of trial and error. I think I didn't use bookkeeping software for a year or two, I used a spreadsheet, and it worked for me at the time, and then it became really cumbersome. And so I think the first software I used was FreshBooks, which served me well as a solo or a sole proprietor. And then I switched to QuickBooks once I incorporated just because I needed something a little bit more comprehensive.

Now, in your mind, when someone is, again, starting their business, or maybe they've been doing business for a while, they're like, the system is not working because I have no system. What are some things that people should put in place to keep things organized? One thing that's really helped me is have a separate bank account, have a separate credit card, because when you co-mingle it with your personal stuff, it gets complicated. Yes, absolutely. And this is one of the like not taking things seriously is like, I don't have I'm just starting out. I don't need a separate account. If you do nothing else. Yeah, do that. Do that. Because then at least you have everything in one account and you'll you won't have to sort through e-transfers and think, oh, is this me transferring

my friend or was this me paying for a random expense that I forgot about? So have all of those business transactions in a separate business bank account. Um, and, and ideally a separate credit card. Um, it doesn't have to be your business credit card because maybe you can't get credit with your business yet. You can just use a personal credit card and designate that as your business credit card. That's still going to help you a ton, um, in terms of keeping things organized from a bookkeeping standpoint. And also on that note is remember that your bank accounts and your credit card statements don't count as documentation for writing off your business expenses. You need to keep receipts or some sort of documentation for anything that you're spending

money on in order to run your business. And yeah, that's going to make sure you're not getting yourself into trouble come tax time, which is why bookkeeping system, that's what part of what bookkeeping systems do. I think people don't realize it's like, yeah, we'll house those receipts for you. So if you're audited six years from now, you can just click a few buttons in your QuickBooks and then go back to see but no matter what, get those separate bank accounts and keep receipts for everything that you are spending money on. And remember, like some of those receipts are digital and some are paper based. And for the paper based ones, believe me, I've had receipts where I'm like, this is great.

And then it's like illegible. You cannot read it. Take a photo, take a photo because the CRA does not care that the ink has faded. Exactly. Yes, exactly. So get that, do that. And then a tip for the on the receiptsipts front i see this mistake a lot is meals and entertainment yeah so make sure that when you're going out to eat maybe you're taking a potential

client out that you're keeping both the itemized receipt which is shows like what you ordered and the tax that you paid and the credit card or debit receipt that shows the tip because those two together document the full cost of what of what you're claiming so if you just get the the debit or credit receipt that is not actually going to hold up in an audit because it doesn't have the information of what you purchased exactly and i guess speaking to that because i get a lot of questions about this if you are doing yeah like a meal with the client? Is there anything that cannot be included? Like is alcohol? That's one of those things that you're not allowed to include? Is that correct? Or you're absolutely allowed to include? Oh, are you? Good to know. A lot of us that come

from the corporate world might, might be mistaking rules about what you can write off for company rules yeah maybe that's maybe that's what i'm thinking when i used to work at one of our one of the media agencies i remember we had specific clients who we would bill back our meals to like if we were traveling on behalf of that client and they had a policy oh you can't write off drinks so then we'd be like okay whenever you're dining out under this client we can can't write off drinks so then we'd be like okay whenever you're dining out under this client we can't fill back the drinks so don't do it so maybe it's something i think that might be it yeah i was always like resistant to like ordering a drink when i was out with like some sort of business purpose because i was afraid i couldn't write it

off but that's probably where i got it confused um but yeah um but yeah speaking of write-offs it's another big question I get is, I mean, obviously, there's a huge list that is available publicly on a serial website that anyone could look at to get a sense of what you can and cannot write off. But I think again, people get very, it's an overwhelmingly long list. So is there anything that people should really just always remember in the back of their mind, you can write this off. Maybe make sure to keep that receipt. Yes. Okay. First of all, little plug. I do have a solopreneur write-off guide for that goes into a little bit more digestible than the CRA. Yeah, yeah, yeah. It's a ridiculous enumeration. So we can link that if you want to grab that. And first one that I see people miss a lot is in just because of random organization issues is their cell phone bill. So Oh, yeah, exactly. It's like you were most likely using

that for your business. Yeah, I actually almost forgot this year about that. Because I because it's not connected to my QuickBooks. But then you know, I'm using my account for my personal and corporate taxes. And I almost forgot about my cell phone bill. And I'm like, how could I, how could I have done that? I use it all the time and it's mainly for business. It's those mixed, it's the mixed business personal things that even when you have a solid system, it's like you need to make sure that you know what's living outside of that system.

So yeah, that's why cell phone gets missed a lot. And then in terms of home home office, that's another one that's mixed personal business. You're not going to be putting. Well, I don't teach my students to put their home office expenses into their QuickBooks because I'm like, it's going to throw off your numbers. You're not going to see if you're actually profitable and you don't like, it's confusing to put in the percentage. So just keep it outside. And so when, when it comes to home office expenses, I think ones that people sometimes miss are, um, claiming a portion of their mortgage interest. Yes. And not to be confused with the full mortgage payment. I wish we could write that off. Right? Yeah. It's ridiculous, the cost of living these days. So

but get that statement at the end of the year from your bank. Maybe it's sitting in your on your banking site right now in your PDF documents, and it will outline how much interest and then another one is either cleaning, cleaning staff or cleaning supplies, you got to clean your office. So that cleaning service coming in to clean your home once every two weeks, or you know, however often I'm not judging, then get the receipts for that because you can claim the percentage that relates to your home office. Me and my husband both work at home. I've never even thought, cause I'm like, oh man, wouldn't it be great if we could hire someone just a few times per year to do a little deep

clean and that we could potentially write off some of that. Oh my God. I'm going to tell him right now. That's exciting. Yeah. It's like, oh great. Now there's a little, I love a little tax, you know, credit or deduction that I can utilize for anything like that makes me so excited. Yeah. I absolutely. Why not? Right. And it may be, we just need that little extra knowing that it's a write-off to, to be able to put it in the budget. So. Yeah. Yeah. And even just the mortgage interest, I'm like, I'm going to, because I'm literally in the moment of the taxes right now with my account. And I'm like, I can't remember if I sent him that document. I'm going to have to triple check because that was a good chunk of change,

that mortgage interest, let me tell you. It's pretty much all interest right now. Mine too. That's exactly it. You see it, you're like, ick, but at least I'm getting it. Yeah, you're like, great, I'm gonna be paying this till I'm dead. But that's great. That's okay. So yeah, that's super helpful. And yeah, definitely, I think people should grab a copy of that guide. That's super, very, very helpful. One other question I get, so sort of related to taxes, but not income taxes. But this is where I feel like there's so much confusion, is sales tax. Sales tax, it trips people up. And it's like, even for me, I've been sharing this info for years. Even for me, I'm like, I get a question, like, let me Google that first.

But like, for example, I got a question from somebody being like, hey, I have a YouTube channel. I'm earning AdSense. Do I have to charge sales tax i'm like well number one there's no way to do that because they just pay you automatically and then but i had to do like a few years back did a deep dive and found out that you need to find out who like which branch or whatever is paying you if it's us base then you don't but But I looked recently, because I got a comment. I'm like, there was some... And then I had to look through my comments from years ago to find that reference. But otherwise, I went on Google. I couldn't find anything. So I'm like, jeez, how many YouTubers are out there? A lot. So they're like, do I have to charge sales tax?

I don't want to get in trouble. But I find sales tax specifically is very complicated for most people and the information out there is not easy to understand so anything you can share about how to get started right like when you should you register and then there's all the provincial ones and you're like which one do I do am I doing this right I'm so happy you brought this up because this is an area that exactly like you said there's so many so much confusion and so many mistakes being made and first off I just want to validate it is complex yeah um because like you said there are so many rules that are dependent on where you are where your client is where the product is, where in the product exchanges hands. It's a bit of a thing. So, but we're going to simplify it for some basic things to keep in mind is first and foremost

is when to register. And you register when you've made $30,000 or more. Well know you want to register when you when you break that thirty thousand dollar mark over four consecutive quarters so that could be like you know a typical calendar year but also it's a rolling four quarters so if you have a really great q1 and really great q2 and then it's like okay i hit the thirty mark, I need to start start collecting now. So that's first thing, keep an eye on your sales. And that is worldwide sales. So that's something that I think is not clear to some people like what if I'm selling part in the US and they're not paying tax? Yeah, and they're exempt. It doesn't count. And yeah, I find that's really confusing for people yes so when in doubt just make sure you register because uh even if you register and then you don't have to charge to

certain clients you're still going to have your bases covered to make sure you don't you don't want to you don't want to register late and then have to go back in time and charge to the people that you were supposed to charge or take a cut of your sales by just giving that money to the CRA. So check for that 30,000 mark. The other thing to keep in mind is once you're registered, it's your responsibility to check with every sale what you're supposed to be charging. That's what you're talking about with the YouTube I think you were talking about. Yeah. Yeah's what you're talking about with the YouTube. I think you were talking. Yeah. Yeah. Is it's like, sometimes we might think, oh, we're dealing with these big companies. They're going to know what to do. It's our responsibility to know what we're supposed to

be charging to who and when. And the basic thing I want you to keep in mind is if you don't know what you should be charging, charge your local rate. So if you're in Ontario, that's HST. If you're in BC, that would be GST. Default to the rate that is based in where you are, because that's the right, that's the rule when you don't know. Great rule. So if you're like, I don't know, I don't have time to figure this stuff out, Jamie, then default to your local rate because you're not going to get in trouble for doing that. And because the CRA just wants you to collect tax on their behalf. They are happy if you do your local rate. That's the rule too. If you don't know where your client is based, you default to the local rate. Now in Canada, GST and HST. So HST stands for harmonized sales tax and GST stands for, oh my God, now I'm going. You were saying that. I'm like, I don't remember.

Yeah. Now I'm like, what is it? I'm going to Google it. We're going to cut this out. Hold on. What does GST stand for? It's been too long. Goods and services tax. Yes. How did I? Okay, let's start that one again. I can remember. I'm like, I don't know.

I couldn't tell you. I'd fail that exam. So HST stands for harmonized sales tax and GST is goods and service tax. So harmonized sales tax means that you might be if your province has HST, it means that your provincial sales tax and the goods and service tax GST are combined. They're harmonized together. Yeah. So in Ontario, that looks like 13%. But then in some provinces, like I mentioned in BC, the the goods and service tax is separate from the provincial

sales tax. And why I'm bringing this up is, is that depending on where you're registered, you can think about GST or HST is kind of the same thing. Even though they seem different, they'll go on the same same return. And once you're registered in your province for either GST or HST is kind of the same thing. Even though they seem different, they'll go on the same return. And once you're registered in your province for either GST or HST, then you're able to collect GST or HST in the other provinces, depending on what their rates are. So don't think that, oh, I registered for HST, but what about when I sell to BC, Do I have to register for GST? No, you can

just charge your client in BC 5% if that's what you're supposed to be charging. But it gets complicated. I do have also a guide called what the HST am I doing? It's free. Oh, good. It goes into what rates to charge in what provinces, what rates to charge to your U.S. clients. And there's even a tracker to help you track your GST. I'm going to download that. That's really helpful. Oh, yeah. It took me forever to figure out that because I had, you know, some digital downloads and I did services across the country.

And then I'm like, wait, do I have to? And I did. I registered in every province. There's PST, QST, RST, and I just want to make sure I'm doing it right. But I'm like, this is way too complicated. This shouldn't be this difficult. And that's what most people feel like they're like, so just because I, you know, yeah, offer some service to people across Canada, I have to like, think about all these different provincial taxes and like, potentially, but that's also the other thing is figuring out, do I actually have to charge PST, what I tell people is to keep an eye on the volume of your sales in that province.

If you start to make a high volume of sales, like if it's just one sale, let's not have to hire a tax accountant and register. It's when you start to have a high volume of sales. Or if you're particularly targeting that region with your marketing, then if down the line, somebody says, Hey, you should have been charging PST. You're like, I don't know. They're like, well, you've been advertising in this province for months now. So, so if you're specifically targeting a province that has PST, then start, then make sure to look into it right away. Otherwise, if you have a few sales here and there from different provinces, wait until you have some more volume and then you can look into like, should I do QST or PST? And I guess the other thing, too, is when you're thinking about, you know, whether it's a service or product you're selling, whatever checkout cart that you're using to make sure that it is also collecting that

sales tax. Because for years, I used this one for this course that I sold. And it's based in Vancouver, but they did not have a mechanism to charge sales tax. So I had to find a roundabout way to do it because they're like, oh, it's tax inclusive. I'm like, no, that just means that I'm making less money. Because you know, you're not going to charge like a weird you know number you want to have an even number and now they they do have that because the government's like you have to include this we want our sales tax uh because i think a lot of people probably weren't doing it right but that's the other thing when you're looking for a checkout card especially if it's like u.s based and they don't really account for canadian taxes you. It will just make your accounting so and your bookkeeping so much easier if it does that automatically.

Yes. Yes. And these huge brands like Kajabi, for example. I know people love Kajabi. Kajabi doesn't separate sales tax. Yeah. No, that's it. That's like I can't do that.

I can't. Right. Like you want your system if you're selling in volumes online, you want to have a system that takes your customers name legal name and address and then adds a tax based on that that's exactly and there's lots of great ones now like for years i used one that was like the only one i could find that existed called quaderno it's all right um but like shopify they do that thinkific now does that so yeah when you're searching for which platform should you use for whatever, find one that also makes your life easier when it comes to bookkeeping.

Because it's not fun trying to like separate those amounts. Oh my God, no. Yeah. The hours you'll be spending. No. I want to kind of move on and talk. Another bunch of questions I get is is how do I register for a business? Registering is also a complicated, I think, depending on if you want to, like,

for example, when I started, you know, doing some like freelance writing and stuff on top of my day job, I was just automatically is under my regular name. So proprietor didn't have to register for anything. But then I realized I actually don't want to use my personal name, I want to use my brand name, which is a different last name. So I had to register. But again, it depends on what province you live in. And yeah, if you want to have a different name, do you want to kind of speak to what is registering a business actually mean? So I will speak to it from a CPA standpoint, than a legal standpoint. Yeah, yeah, yeah. Is that and and what I've seen is, is there's, so when you first start your business, like if you're just starting out, and you're billing things under your own name, you're like, I don't know what what's going on,

I'm just collecting money for sales right now. And then from a tax standpoint, a CRA is like, great, cool. Do just make sure to tell us how much money you collected and put it on your personal tax return and you're good to go. But then what happens is if you're like, hey, my name is Jamie. And actually, I am collecting money under the name Chill Books, which is the name of my course. And I start to bill bill under that name, then I need to have a master

business license, which I can get in. So I'm familiar with the Ontario one, which like you can get it from the Ontario Service Ontario website, and, and just register the fact that I'm operating my sole proprietorship, we'll just say in this example, Jamie, Jamie Monty under a name chill books, which is not which is different from my legal name. So then once you incorporate your business, when you incorporate your business, then you actually pick a name for that incorporated business. So let's say I now incorporate my business, and it's Monty International Inc, but I still want to bill my clients as Chillbooks, then I need to make sure that I register that Chillbooks name still as a name that Monty International is doing business as. Now, I don't know the exact website or how

you would do it, but I know that you need to register doing business as so it's when your legal name is not matching the name that you're selling and doing business under because also not from not that i'm a lawyer but also you want to make sure your contracts are protecting the right entity if i my contract say chill books but yeah i don't even i don't have a business license for chill books and something happens like it's going to come to me not to to chill books and also there is no contract then because there's no legal entity doesn't exist but yeah it sounds so simple when you say it but most people are like i am so confused and yeah it's not i i think it's because it's also a little

bit different depending on what province um which is super annoying one resource that i always tell people because there's just a lot of great articles on it is owner and they make it easy to register yeah yeah it's a little bit of money like you could do it i guess you know for cheaper if you just go through the you know provincial web you know website and stuff like that but if you want something a little bit easier but again also they just have a lot of articles about province to province how things kind of differ So that might be a resource people want to check out. Now, we kind of touched on this a little bit, but for like small business owners who were just getting started, what are some big mistakes or little mistakes that you see quite often that people should try to avoid?

So the first one I would say is just to touch back on that GST, HST is register for sales tax. And then they don't realize that it's actually a separate filing from their personal. Yes, I've gotten that question. Like, so when do I file this with my income taxes? I'm like, you don't know, they're totally different. And I guess we should also clarify too, because I get this question often too, is it should not affect your bottom line, your revenue. And I think a lot of people are afraid, I don't want to register because I don't want to earn less money. That's not at all, right?

Correct. Absolutely. That's such a good, I hear this all the time too. I've heard people who specifically want to keep their sales under 30,000 because they don't want to register. And you're like, that doesn't make any sense. You should want to make as much money as your business can. Like, yeah, this is a real thing, though, because taxes are a mystery for a lot to a lot of people. And so they're just like,

I just don't want to complicate things. I know this is going to complicate things. And so definitely, if this is you grab the guide, because it's going to help you and give you you can kind of review it and really sink into what it means but tax like like you said you add it on top of what your sales is so if i'm selling something for a hundred dollars once i register for sales tax i'm in ontario my rate is 13 then i start charging my clients 113 instead of a hundred dollars so same 100 is coming to me and then then you give that $13 to the government, you don't get it, it's not extra revenue, but it's also not. So it's costing the customer something. Exactly. But yes, but customers are businesses that are registered for sales tax as well. Then on the flip side, they get that $13. In that example, they get to claim that as a credit at the end of the year if your clients are businesses.

And you're talking about input tax credits, which again is a big mystery to people. Yes, yes, exactly. I like to tell people that when you register for GST or HST, you're now acting as an agent on behalf of the CRA. And your job as an agent is to go around and collect your tax rate, whatever it is, I'm 13%. I'm going to collect 13% from every client that I sell a good or service to. And then what happens is because you're an agent, you also get agent benefits, which means you don't have to pay that 13% on your business expenses. If they're like, they are business expenses related to your business. So that means that say I were to go to Jessica and purchase something from Jessica and she charged me $113, 13 of that

being tax, then I get to go back to the CRA at the end of the year and say look I paid Jessica $13 but that was actually related to my business and I'm registered I'm acting as an agent on behalf of the CRA so I get that $13 back that's an input tax credit. The net of it is you you take however much sales tax you collected in the year and then you are supposed to give that back to the government but you also get credits for all the sales tax, the GST or HSU spent on your business. So you get to remove that from what you give back at the end. So another kind of incentive, like business expenses are great because there's the deductions. But then also on top of that, there's the input tax credit.

So do not forget about that. But again, another really great reason and important reason why you should be doing your bookkeeping, keeping those receipts so you can keep track of all the sales tax that you've been paying that you can maybe claim back and get back in your pocket. But again, it takes time. It takes time. But then once you understand the system and the rules, you're like, oh, this isn't so bad. This is manageable.

And it's nice to get some of that money back. Let me tell you. Yeah. And that's why we have systems is because we don't need to hold all this information in our brain. You basically need to understand it at one point in time while you're implementing your system. And then you just have your monthly rinse and repeat process that this is where I put my receipts. This is how I code things. This is what happens. And then you don't have to really think about it. Exactly. And just one thing that I want to clarify, because I don't think we touched on this when it comes to charging sales tax to customers, you did that to Canadian customers, not international customers. So if you have a US customer that's buying a product. And if you're selling a product,

there could be some things to keep in mind. So selling a service, then yes. So I will just speak to what I'm familiar with is when I'm selling a service to somebody in the US and this person or client in the US does not have an office in Canada. They don't have a Canadian location. Then I can say, I'm only going to charge them. I'm not going to charge them any tax. Yeah. Cause when you think about it, it's like, if I were to buy something or

service from someone who was U S based, why, you know, and they charge me like their state tax, I'd be like, why am I paying your state tax? I don't live there. I don't get it. There's no benefits for me. Yeah, but yeah, keep in mind. Yeah, it's complex. It's complex. Now, before I let you go, is there anything else, you know, any other kind of popular questions that you you get from people who are in this realm that you want to make sure people know about? Mm hmm. The the one thing that I want to, to make sure people know about? The one thing that I want to make sure people know about is installments. And the first year that you're filing your taxes, like... And we're talking about income tax installments and or GST, HST installments, corporate income tax, personal income tax, all the taxes, basically. What happens is when you have your first year of business,

a lot of people, they don't put their tax money aside, which you shouldn't be. And so they have to pay like a hefty amount at the end of the year that they kind of come up with. Well, in April, and then what happens is they're like, I'm not going to do that again. I got to start putting money aside. But also the CRA cra depending on how much you owe they might actually be like you know what you're not allowed to keep that money all year round we want that money in quarterly installments yeah because you're earning it year round why do you get to keep it until the end and earn that interest yeah yeah exactly so if you and this is, this is perfect timing for this conversation, because if in 2023, you may, you had to pay more than $3,000 in personal income tax related to your business

or in GST or HST or in corporate tax, corporate income tax, any of those buckets, then CRA is going to want you to pay installments starting this year because they know that you're going to owe more than $3,000 again next year. And so they want you to start paying them quarterly and they do not shout it from the rooftops. They often put it on like one little sentence on your notice of assessment. That's like, if you have more than 3000, you need to pay as installments i know i know this because i think it was my second year of business that i did not pay an installment and then i it's like oh you owe us interest because you didn't pay on time i'm like what are you talking about i thought i'd pay annually what do we what are we doing here and

it's because yeah i was expecting like a letter or some sort of notification but is it is typically the information like if you log into your like cram my account it will be there and even still like if people ask me that i'm like i can't remember i don't know if it's there yeah it's it's so they do put out reminders in your cram my account but what i they're like in the messages you're not you know it's like you expect to like a proper email but it's like no it's hidden in the messages that you never check yes exactly check your just do the do the numbers yourself check your notice of assessment which is the document that you receive after you're done filing so you'll receive a notice of assessment for your sales tax and for your your income tax check that see how much money you owed and then um and then be proactively

looking into making sure you're making the installments that you have to make um but know that this is why year two of business can feel very challenging is if you didn't put money aside for first year you're basically paying double the second year because you basically paid last year's 20 right now you could pay 2023 stuff and then you have to start paying 2024 stuff and you're like what the heck last year i just paid so just yeah raising the flag now do your best um knowing that there's going to be some cash flow management maybe you're not going to be able to pay your installments in time and you might pay a little bit of interest but but better to know. Exactly, exactly. Well, there's clearly so much for people to know. But you mentioned you have a couple of great resources

on your website, where can people find more information about you and some of the great kind of downloadables and courses that you have? Yes. So I'm very active on Instagram at jamie.monty. So that's where and Jamie is spelled without an E at the end. And that's where you can see a lot of day-to-day stuff and lots of educational, like, bite-sized pieces of information. So if this was a lot for you and you want to keep the learning experience up, definitely just hang out with me on my page and we'll remind you of things.

And then HST guide, what the HST am I doing? Definitely get that. Even if, like, you know, Jessica said she might download it. Yeah, I want to, what the HST am I doing? Definitely get that. Even if like, you know, Jessica said she might download it. It's like, let's just make sure I'm doing it right. You know, you could always look, there's always more to learn, you know? Yes. And just to validate. Cause yeah, you're like, good. I'm doing it right. It's like nice to know one last thing to stress. Yeah. And, uh, and then I've got that soloreneur write off guide. If you're just starting out and you want to know what kind of things you can write off, that's free as well. But if you're listening to this, and you're like, holy crap, there is a lot to keep in mind. And

we've just scratched the surface here. And you're just starting out or maybe you've just kind of ignored this part of your business for a little bit, but you want to finally get it in order, then highly recommend checking out ChillBooks. This is the course that will set you up for success. It'll set up your bookkeeping foundation. I teach you exactly what you need to do from A to Z, from setting up those bank accounts, to looking at your financial statements, to digitizing your receipts, to categorizing, separating separating your sales tax all of that in like a chill way that's why we call it so definitely check out chill books because it is going to walk you through everything you need to know in a way that's not going to be overwhelming for you amazing i wish that was around when i started my business let me tell you would have made

a lot less mistakes well thank you so much so much, Jamie, for joining me. It was so great having you on. I think you're going to give a lot of people peace of mind and just a great foundation to get started. So thank you so much for joining me. Thank you for having me. Really appreciate it. And that was episode 397 with Jamie Monti.

Make sure to check her out at her website, jamiemonti.com. That's J-A-M-I-M-O-N-T-E.com. You can also follow her on Instagram. She shares a lot of great stuff on her page at jamie.monty. And again, I will link to her YouTube channel, her LinkedIn, her TikTok, everything in the show notes for this episode. jessicamorehouse.com slash 397 is where you can find all of that, including some of the great downloadables and her course. So you can check that out later. And just a reminder, if you did want to learn more and sign up for her course called Chill Books, all you have to do is go to JessicaMorehouse.com slash Chill Books and use my code Jessica to get $50 off. Another thing I want to bring up just because we were

talking about it after I recorded the episode, she's like, oh, she mentioned this just in case anyone wants to learn more about sales tax or just doesn't understand or whatever, because it is a very complex thing. And she was like, you know, when I was starting out, I was trying to find an accountant to just talk to me about sales tax. and some of them would be charging crazy fees like $800 an hour. So there is actually a resource called the GST HST rulings. And it's a phone number for kind of technical inquiries. And it is just 1-800-959-8287. But pretty sure it'll just come up if you Google GST HST rulings, but that is a direct line to the CRA. So you can talk to them and ask your questions about sales tax specifically. So for next week, I've got a very special episode for you. No guest, it's just me and I have not done a solo episode in a very long

time, at least a year, if not more. And I'm going to do just audio only for this one. And I'm very excited. I'm just gathering all the questions that have been submitted via Instagram, my newsletter, YouTube, wherever. I've been getting a lot of great and specific questions. So you can look forward to that next week. But I'm going to tease who's going to be up the following week. I'm very excited because big fan over here. I've got Brian Preston on the show. You may be familiar with him already. He is the host of The Money Guy Show. He's got a YouTube channel, amazing podcast. He's been doing it for many, many, many, many years. And I think the reason I like him is he really is just like no BS, basically, is how I would say,

but in a nice, friendly way, not some of those other experts out there that are no BS, basically, is how I would say it, but in a nice, friendly way. Not some of those other experts out there that are no BS and they're just kind of mean. He is so knowledgeable and he has a book coming out, which I will be giving away. Also, I should remind you in case you're new to the show or you just forgot, I'm giving away a ton of books that are featured on this season of the show. So if you want to enter to win, just go to jessicamorehouse.com slash contest to do that. But that is who is going to be on the show, not next week, but the week after. And then I've got a bunch of other amazing guests to kind of wrap up this season by June 5th, which is very, very exciting. And then it can take a little bit of summer break. But then that also freaks me out that summer is coming too quickly. I'm not ready for that. I'm not ready for

that. But anyways, that's what's going on. And I just want to say a big thank you for listening, as always, and supporting this podcast. And as always, a big thank you to my podcast team, Video Edit by Justice Carrar and produced by mrabcanada.com. So with that, I will leave you. Thank you so much for listening. And I'm going to see you back here. I mean, just me for a fresh new episode of the More Money Podcast. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.