Finance 🚧

This document outlines finance and accounting practices of Hypha Worker Co-operative, including:

  • Listing of accounts at our financial institutions
  • Process for invoicing clients and accepted methods of bill payments
  • Process for payroll and expense reimbursement to Members
  • Tools and procedures for bookkeeping, accounting, and tax remittances

Financial Accounts

  • Financial institution: Desjardins
  • Account type: business chequing
  • Payment requirements from account:
    • <= CAD$200: sign-off by one signing member in the Finance WG
    • > CAD$200: sign-off by two signing members in the Finance WG

Hypha is expected to conduct business with clients from other countries and is ready to accept funds in CAD, USD, and EUR. We use TransferWise to minimize transaction and currency exchange fees. Our Transferwise account has local accounts in Canada, United States, and Europe, so we can bill clients as a local financial institution in their local currency. Our TransferWise account does not require multiple signatures, and the Finance WG is responsible for transfering money into our main Desjardins account when accumulated funds exceed a CAD 10,000 threshold.

Invoicing Clients

Hypha charges clients on a sliding scale, and projects may be billed hourly, weekly, monthly, or per project, depending on the specifics of each project. For all projects, regardless of how a customer is charged, Members log their hours using Clockify. For clients and billing models that require timesheets, Clockify is used to generate these timesheets to calculate the amount to invoice each period.

Generating Timesheets

  1. When a project begins, generate a team project report in Clockify and save with the name project_YYYYMM where YYYYMM indicates the first month the project is active (e.g. aether_201908)
  2. When a member joins a project, generate a personal project report in Clockify and save with the name project_YYYYMM_xx where YYYYMM indicates the first month the member is active on the project and xx is the initials of the member (e.g. aether_201908_bl and aether_201908_yj)
  3. To generate timesheets, open the team or personal project report and export as PDF for the applicable report period (to be sent to client, if applicable)
  4. Timesheet PDFs sent to clients or for internal payroll calculation should be archived in our shared drive

This process is done using the Clockify Summary Report. Saved reports are found under Saved Reports.

Generating Invoices

  1. Generate an invoice in Quickbooks Online based on the pricing structure (e.g. timesheet hours and project rate)
  2. Add operational cost line item, if applicable
  3. Add GST, if applicable

The general guidance is that the client is responsible for paying applicable GST and transaction costs charged by their financial institution, and Hypha absorbs the cost of receiving the money (e.g. cost of receiving a wire).

Invoices (and timesheets, if requested) are sent to clients and are payable in CAD, USD, or EUR. Invoices are due 14 days after the invoice date, after which a late fee may be charged for each additional week.

Member Payroll

Member wages are paid at the end of each pay period and vary from cycle to cycle depending on their billable hours of work. At the end of each cycle, each Member's entitled pay is calculated based on the projects and roles they participate in. After withholding taxes and other applicable deductions (e.g. CPP and EI), the net amount is electronically tranferred to the Member's bank account.

Expense reimbursements, which require photos uploaded to Quickbooks Online, are paid out at each cycle as non-taxable items in the paycheque.

Each Member is entitled to a public holiday pay and vacation pay, each one at approximately 4% of their total wages for the year. This amount will be calculated and added to the paycheque per pay period.

All payroll, expense reimbursements, and withheld taxes are managed using Quickbooks Online, which is linked to our main Desjardins account.

Calculating Member Wages

Each Member's pay from billable project work will have a percent-based portion taken from it to fund administrative costs and collective programs. Collective programs may include non-billable projects, member health benefits, CPP & EI, member & co-op development fund, "rainy days" reserve contributions, as well as and other collective expenses of the co-operative. The amount is calculated based on the invoiced amount before transaction costs. The exact percentage is the same across all projects during a period and can be revised as necessary by consensus.

Reporting & Remitting Taxes

Hypha has the following program accounts with the Canada Revenue Agency (CRA):

  • ☑️ RC0001 Corporate Income Tax (RC) is filed/reported and remitted/paid each tax year
  • ☑️ RP0001 Payroll Deduction (RP) is reported and paid each pay period
  • 🔜 RT0001 GST/HST (RT) is reported and paid each filing period (TBD)

As a non-profit organization, our co-operative should have tax-exempt status and pay no corporate income tax.

The Finance WG is responsible for bookkeeping and calculating wage deductions using Quickbooks Online, then reporting and remitting appropriate withheld wages to CRA each month.

At the end of each calendar year, Hypha's accountant will send a T4 to each Member and to CRA for personal income tax filings. The accountant will also file annual tax returns for each fiscal year-end, set on June 30, and coordinate with the Finance WG to facilitate filings and remittances.

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