Trades accountant in Vernon

Trades accounting for a Vernon corporation is usually $450–$650 a month for bookkeeping, payroll and the T2 together. The file covers the T2 with Schedule 50, the CCA schedule for vans and tools, T4 slips for apprentices and journeymen, input tax credits on the GST return, and the small business deduction.

Service calls and installs are different work

A furnace repair on East Hill and a full heat pump install in a new house at Middleton Mountain are both HVAC, but the accounting differs. Service calls are many small invoices, often paid by card on the spot. Installs are larger jobs with deposits, materials and sometimes a builder as the customer. Coding them to separate revenue accounts shows which side of the business carries the margin. It also shows whether the service van is paying for itself.

Card payments arrive net of processing fees, so the deposit in the bank is not the revenue. Recording the full sale and the fee separately keeps GST and income right. A clearing account for the card processor, which should return to nil each month, catches anything missing.

PST on parts, and when the customer pays it

BC PST depends on what you are working on. When a trade supplies and installs parts into a building, such as wiring, pipe, ductwork or a furnace, the trade is generally treated as the consumer of those parts. You pay 7% PST when you buy them and do not charge it to the homeowner. When you repair goods that are not part of a building, such as a portable appliance or equipment, the rules change and PST can apply to the labour and parts on the invoice. Mixing the two in one revenue account hides the difference. The BC PST guide covers registration.

Vans, trucks and tools

A work van with shelving and the company name on it is a different tax animal from a pickup that also does the school run. Each vehicle goes into a CCA class, and a log of business and personal kilometres is what supports the claim. Without the log, the CRA can reduce it. Tools follow their own rules: small tools below a set cost can be written off in full, while larger tools and equipment are capitalized. Our mileage and vehicle log makes the record easy, and vehicle deductions explains the rules.

Apprentices, journeymen and payroll

A growing trade adds an apprentice, then another, then a journeyman to supervise them. Each needs proper payroll: CPP, EI premiums and income tax withheld, remitted on schedule, and reported on T4 slips by the last day of February. BC vacation pay is 4% of wages, rising to 6% after five years. Apprentices may be away for trade school blocks, which raises record of employment questions. Payroll in Vernon covers the routine, and WorkSafeBC premiums are reported from the same payroll data.

Helpers paid as subcontractors are a common shortcut in small trades. If the helper works your hours, uses your tools and has no other customers, the CRA may see an employee, with unpaid CPP and EI owed by you. Subcontractor or employee lists the tests.

Roofers, landscapers and the weather

Some North Okanagan trades lose part of the year to snow. Roofing slows, landscaping and irrigation work stops, and some crews switch to snow clearing for the winter. That makes seasonal cash planning more important than in a trade that works indoors. GST collected in the busy months is still owed at the next filing date. Instalments are still due on their dates. A monthly view of the books shows how much of the summer has to carry the winter. See managing cash flow in a seasonal business.

When a trade should incorporate

A sole proprietor files a T2125 with the T1 and pays tax at personal rates on all the profit. A corporation pays 2% BC tax on active business income under the small business deduction, plus the federal rate, and the owner pays personal tax only on what is taken out. Incorporating starts to make sense when profit runs well past what the owner needs to live on. It also brings a T2, separate bank accounts and more bookkeeping, so the saving has to outweigh the cost. The incorporation calculator gives a first estimate, and incorporating in BC covers the decision.

Once incorporated, the owner chooses how to be paid. A salary runs through payroll, creates RRSP room and pays into CPP; dividends do neither but carry a dividend tax credit. Many trades owners take a steady salary and settle the rest with a dividend once the year’s profit is clear. The salary versus dividends calculator shows the trade-off for your numbers.

Remote, and there is no Vernon office

EverStone is a one-CPA firm based in Abbotsford, serving Vernon trades remotely. Receipts are photographed from the van and sent through a secure upload link, invoices and card data flow in electronically, and questions are answered by email. The same CPA keeps the books and prepares the return. For the provincial picture, see construction accounting in BC.