Author Archives: Kaitlin Kirk

Steps After Incorporation

Step By Step

I am in the process of incorporating my company. I’ve also been talking to a few other clients about how it would be tax effective for them to incorporate their companies. The lawyers have been hired, the paperwork filed, so what’s next?

What needs to happen after you incorporate, and in what order, is top of mind for me and my clients in this same stage of their business adventure.

Step By Step

11 steps you need to take after incorporating your business:

1. Open a business bank account

As soon as I have my Articles of Incorporation, I need to go to the bank and open up a business bank account – even if I had a business bank account previously under the sole proprietorship.

This is my first step because I need to be able to pay for operating expenses and pay for them through the corporation immediately. Hopefully, they’ll give me a credit card as well.

2. Register your new corporation with the CRA

I’m going to register my new corporation with the CRA if it hasn’t already been done (if you incorporate federally it happens as part of the process). Note: I’ve already registered as a sole proprietor, that’s not useful for the corporation. I need to close my HST account and open a new one for the corporation.

I’m also going to register for a payroll account because I can put myself on the payroll along with a bookkeeper I employ. I want to be able to start paying us immediately.

3. Register with your applicable governing body

I need to register an accounting firm. This is a specific step for me as an accountant, but maybe you have to go and acquire a business license. Or perhaps you need to register with your own applicable governing body. This step to me comes after the CRA registration and the business bank account because I have to pay for this registration.

4. Buy insurance or switch insurance from Sole Proprietor to Corporation

Before I start operating this company, I need insurance. I have insurance currently for myself as a sole proprietor, but I need insurance specifically for the Corporation for liability. Because I’m an accountant, I have errors and omissions insurance; however, general business liability insurance is what I recommend immediately before you start operating your company.

5. Update your payment provider

I run all of my payments through Stripe because I have a monthly recurring business model. I charge clients’ credit cards every month. This eliminates having to send them an invoice and having them input their information every time. It just automatically charges through Stripe.

The contract that I signed with Stripe is with me as an individual and I need to make sure that I change the contract to be with the corporation. This is important because if later on I sell the company, the Stripe contract is with the company and not with me personally.

6. Update your supplier contracts with Corporation name

Along the same lines of changing contracts, I’m going to go through all of my current suppliers and make sure that I sign new contracts with them. This could be Microsoft because I have a subscription to Office 365 or Receipt Bank which allows me to upload and track all my expenses. I have a few others, but you get the idea.

7. Update your client contracts with Corporation name and have your clients sign

I have engagement letters that I send to new clients so that we understand the scope of work that’s going to happen. I have one for personal tax clients, one for corporate tax returns and one for a monthly relationship with a client like a retainer agreement. I need to rewrite these agreements and ensure they now state the Corporation’s name. I will also have a lawyer look over them just make sure they’re compliant, to protect both myself and my clients.

Then I will have to send a new agreement to each client and have them sign again. It will probably be the exact same agreement they signed before, but I need them to sign up with the Corporation because contracts need to be party to the entities that are actually in the contract.

8. Update your employee and subcontractor contract with the Corporation and have your employees / subcontractors sign

I need to redesign all of my contracts with my current employees and subcontractors. See my point above about contracts needing to be party to the most current people and entities.

9. Update your bookkeeping software with the new Corporation name and start a new file

I currently have a QuickBooks file for my sole proprietorship, but the corporation will be a completely separate entity. This means I need a new set of “books” for it.

This is the same whether you use QuickBooks, Wave, or another bookkeeping software.

10. Move your assets from Sole Proprietorship to the Corporation

I will need to move my assets into my Corporation. In my case, I only have a computer, so my assets aren’t significant. I’m going to have the Corporation buy it from me at the value it’s currently sitting on my books for.

If I had a large asset that I needed to roll into the Corporation, I would do what’s called a section 85 rollover. I’m not going to address it here in this blog as it’s dull for those that don’t study this kind of thing! However, if you need to do this, have your lawyer help you. It’s tricky.

11. New email address and website address if your company name has changed

Did you know, because I’m an accountant, I have to incorporate the URL of my business? This means I’ve incorporated Kirk CPA Professional Corporation even if I’m not thrilled about it. I had another name picked out I was really excited for, but sometimes you just do what you have to do. I’d much rather keep the URL I have then go with the name I chose.

For your business, if you are changing the name, don’t forget this might mean a new web address, a new email address, and changes to directories and/or social media profiles.

This is my current list of steps to take after incorporation, but it certainly isn’t exhaustive. It sounds like a lot of paperwork (it is, I won’t sugar coat it), but it will be worth it in the long run as my business grows.

Have you recently incorporated your business? What steps did you take after you received your Articles of Incorporation? What challenges did you have? Let’s share our experience to make it easier for entrepreneurs walking the same path. Feel free to share and join me online at www.facebook.com/kaitlinkirkcpa

(In)efficient Apartment Hunting

Last week I went apartment hunting. Like full-on camo, survival gear, deep in the jungle hunting. I got a little obsessive about it. Looking back on that stressful week, I learned something about efficiency.

From the day we decided to move, I was neck deep in it. Our first apartment search after arriving in Ottawa was a frantic rush to get the first okay place. This time I was going to find our Goldilocks apartment. Just right in every way.

My home is also my office, where I spend a good part of every day, so it needs to be a good fit. Enough space, natural light, parking, and (surprisingly challenging) no creaky floors! On top of that I’m looking for the right place, in the right location, at the right price.

It is a big game of balancing trade-offs and I began searching day and night, looking through listings, hoping the next one would be the ideal apartment. 

Of course I never found the perfect listing, but I spent seven days trying.

Animals in the window

Surely there is a perfect home for me!

Monday: This Is Great

Apartment hunting? I got this! I’m good at this! This is my jam! It’s a game of listing criteria, sifting through data from multiple sources, and shortlisting the ideal candidates. It’s well suited to my accountant skill set.

I hop online, check out hundreds of listings, and send off a handful of requests for viewings. I’m feeling really good about taking action on this process, and feeling confident that one of those places will be our next home.

Done deal. Right?

Tuesday: Just To Be Safe

I wake up the next day and think I better check to see if there are any new apartment listings I haven’t seen. Just to be safe.

There isn’t anything new, so instead I take a second look at some I passed by yesterday. Just to be safe.

I end up spending the entire day doing this. Considering different areas in the city, widening the net, and submitting a few more viewing requests. You know… just to be safe.

Wednesday to Friday: This Is War

I wake up, I check on my phone for any new listings. I get to my desk and search deeper for apartment options. I’m questioning my search filters, what am I missing?

My partner and I begin going to showings. This one is a 30 minute walk to the nearest anything, that one has old wooden floors which makes our every step scream with the anguished souls of a thousand demons.

I feel like each day means the good places are getting stolen away, snatched up off the market. I respond by trying harder, looking at ever more listings.

On Friday we finally see an apartment that feels right. We like it, it feels like it could be our home. We submit our application, and we are told they will get back to us Monday or Tuesday. *crossed fingers*

One more showing late Friday only reinforces that the other place is the right fit for us.

Saturday and Sunday: Everything is Terrible

What if we don’t get approved for the place? I better keep looking.

At this point in the game, more than ever, it’s about compromises. What am I willing to give up to widen my search? Less walkable neighbourhoods? Fewer bedrooms?

I’m feeling ever more desperate, feeling like the next place I find will surely be the obvious solution, and that compels me to continue the hunt morning to night.

Monday Morning: Put Me Out Of My Misery

I wake up knowing I have three apartment viewings scheduled today. I reach for my phone to continue the daily ritual and… hold up… what’s this?

APPROVED!

In a rush of relief, I see we have been approved for that great place we saw on Friday.

With gleeful speed, I cancel the showings scheduled for the rest of the week, remove apartment apps from my phone, and close a whole lot of browser tabs.

It is over.

Testing the width of the room.

The Calm Without The Storm

The place we signed with was one of the very first picks, from day one. I had a brief feeling of peace thinking one of those would be our next home. I was right, in hindsight, but still spent the rest of the week trying to bury the anxiety with the busywork of digging through listings and scheduling more appointments.

As an accountant I’m always keeping an eye on efficiency, and this turned out to be a big fail in that department. A full week of my effort accomplished no extra benefit or result. I felt like I was racing against time, but without any feedback or results. How was I to know when I had done enough?

It turned out I spent 10% of my time on doing the thing, and 90% of my time on an unnecessary back-up plan. By that math I could have tried and failed nine times over and been equally well off.

All that wasted effort was responding to the worry that I was feeling, not on actual feedback. I could have booked those first few viewings, and then just waited to see them. I could have submitted the application, and just waited to hear the result.

I was driven by a fear of missing out, from a sense of scarcity that was mostly generated internally. Even if some apartments were getting “snatched up” there were an equal amount just becoming available.

Pareto Principle and Efficient Action

The Pareto principle tells us that 80% of the result comes from 20% of the cause, and it is certainly true of this story.

The tricky part is that you don’t really know which is the magical 20% that will yield the big return until after it’s all done. However, in most cases you don’t need to know.

What if you always did just enough to get by? Does that sound to you like a lazy attitude? Like it will lead to a sub-standard result?

Here’s the thing. If you do just enough to get by, and it turns out to be not enough to actually get by, then you can give it a second round of effort. Very few things have a hard deadline, or are stuck in their “finished” state. You can almost always fix it, or improve it, as needed.

The alternative is over-planning, over-thinking, and trying to fix things before they are broken – they likely don’t need fixing in the first place!

I’m super excited about moving into my new home, and I’m sure it won’t be perfect. However, I’ll be able to adjust what I can, and if all else fails I can hunt for a new apartment next year. It’s certainly good enough for now!

Kaitlin

Learn the 7 Accounting Mistakes Small Business Owners Make and Quick Fixes to Stay Out of Trouble!

Download my PDF report to help you identify potential issues, figure out why they happen, and learn quick action steps to keep your business growing forward.

For The Love of Taxes

This morning I went to drop off some tax papers to a client. She had some great questions, so I spent 40 minutes explaining how her tax return worked, and going over some of her previous year’s returns. She was trying to get an idea of how the various pieces of a year of her life could be summed up in a bunch of numbers grouped together on far too much paper.

She’s a very smart person, but was never taught how all this works, and that seems to be the case with most people.

That’s really sad. Partly because it’s a life skill we should all learn as teenagers, and partly because I love it and I want other people to experience the same joy when they do their taxes. Ok, maybe joy is pushing it, but if we strive for joy and land on something a little more positive than dread, that’s a win.

I like to think of taxes as that scary kid in class with the mohawk. The one that most kids were a little afraid of, but once you got to know them they weren’t so bad.

Love of Taxes: The Origin Story

When I was 15 my Dad showed me how to do my taxes. At the time we were doing them by hand, so I had my pencil and my calculator out, and we would go through every line. My return was very simple at that point because I only had one T4, but it was so fun. How could get as much back as possible? How can I play the government’s game and win? (without cheating though, ’cause I’m not in to that).

Then one day I was hanging out with my group of friends and I noticed one of them had “T4” written on his hand. I asked him “hey, are you doing your taxes?” He said I was the only person who knew what that meant. I jumped on the chance. “You want help?!”

By the time I was 16 I was doing all my friend’s taxes… by hand.

I don’t do them by hand anymore, but I’m still doing my friend’s taxes. Every now and again they’ll get a Notice of Assessment from the CRA (Canada Revenue Agency) asking for proof of expenses, like child care receipts for example, and it’s presumed the tax return was filed incorrectly until they see and approve those receipts. (The CRA doesn’t believe in innocent until proven guilty, you’re wrong until you can prove otherwise).

Surprise bills are never fun, but it seems to be so much worse when they come from the CRA. It feels like those bills are written in some kind of code, and you have no idea what they’re asking for. So frustrating.

These stress-inducing letters are exactly why I think we should starting learning about taxes as teenagers. Guess what though, it’s not too late to learn!

As adults we can learn how our taxes work, and remove the uncertainty and stress that comes with them. Even if we never want to actually prepare our own taxes, we can still have a better understanding of how it all works, and be able to have more informed discussions with our tax professionals.

This is especially true for sole proprietors. Our business taxes and our personal taxes are one and the same, so having an understanding of the system is part of doing business. How much should I set aside from every sale? What expenses can I deduct? Do I need to charge sales tax? How does that work?

As your business becomes more complex, so do your taxes.

The first step to reducing tax stress is to be organized with your paperwork, Don’t think of taxes as a once a year event, think of them as something you maintain. It’s like oral hygiene. If you only brush your teeth once a year, things are going to get gross.

The best results come from healthy tax habits like regular receipt management and bookkeeping.

Kaitlin

Learn the 7 Accounting Mistakes Small Business Owners Make and Quick Fixes to Stay Out of Trouble!

Download my PDF report to help you identify potential issues, figure out why they happen, and learn quick action steps to keep your business growing forward.