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 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, EUR, and GBP. 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 transferring money into our main Desjardins account when accumulated funds exceed a CAD 10,000 threshold, or earlier as deemed appropriate.
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. In order to create invoices and collect payments, there are three general steps that need to be performed in order.
For clients with billing models that require tracked work hours, Clockify is used to generate timesheets for determining the invoice amount each period, and often for calculating member wages.
These timesheets are archived in our shared drive under the
Timesheets directory and may be attached to invoices at client request.
Refer to the guides for Timesheets to generate and archive your project timesheets.
Refer to the guides for Invoices and generate an invoice in Quickbooks Online based on the project pricing structure (e.g. timesheet hours and project rate) and payment information. 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, with attached timesheets if requested, are sent to clients and are due 14 days after the invoice date, after which a late fee may be charged for each additional week.
After client payments are collected at our Desjardins or TransferWise accounts, we need to:
- Move money to the appropriate accounts at our financial institutions
- Record actual exchange rates and transaction costs
- Update our bookkeeping records in Quickbooks Online
- Finalize and archive invoices
Refer to the guides for Invoices to handle the settling of payments with someone from the Finance WG.
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 transferred to the Member's bank account using Wagepoint.
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 Wagepoint and Quickbooks Online, which are linked to our main Desjardins account.
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. This clip, currently set at 25%, is the same across all projects during a period and can be revised as necessary by consensus.
Hypha has the following program accounts with the Canada Revenue Agency (CRA):
RC0001Corporate Income Tax (RC) is filed/reported and remitted/paid each tax year
RP0001Payroll Deduction (RP) is reported and paid each pay period
RT0001GST/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.