Paying Your 2017 Taxes Owing

By Randall Orser | Personal Income Tax

Tax time is once again upon us, and the chore of preparing and paying your taxes is nigh. Remember that the due date for paying your taxes is April 30th. If you don’t file by then, you will get a penalty of 5% plus 1% per month (up to 12 months) you don’t file. Sadly, many people don’t pay because they think they are going to owe, and that’s a big mistake. You’re much better to file your taxes and then work out a payment plan with Canada Revenue Agency (CRA). When filing your return, you may have a balance owing on line 485. Generally, if this amount is $2 or less for 2017, you do not have to make a payment.

Ways to Pay Your Taxes

You can pay in various ways to CRA: 

  • You can wait for your notice of assessment and then pay at your bank. 
  • You can pay using online banking (your SIN is your account number). Note many banks date the payment for the next day if it’s after 3 pm EST).
    • You can also post-date your payment to April 30th or any other date before that.
  • You can us My Account and pay that way and date the payment for anytime before April 30th.
  • You can pay at a Canada Post outlet, though payment make take a couple of days to be processed.
  • If you’re using a tax preparer, they can setup auto withdrawal and you pick the date (before April 30th) for the payment to come out.

What If I Can’t Pay in Full

If you cannot pay the full amount you owe now, take action by contacting the Canada Revenue Agency (CRA) right away. Ignoring your debt does not make it go away. In fact, waiting may make any financial or legal consequences more serious. The CRA may also charge interest compounded daily at the prescribed rate on any amount owing until your balance is paid in full. The CRA will work with you to resolve your tax debt or other government programs debt, though they could change their minds and demand payment in full at any time. 

A payment arrangement is an agreement you make with the CRA. It allows you to make smaller payments over time until you have paid your entire debt including applicable interest. Before you make a payment arrangement, you may need to show that you have tried to pay your debt in full by borrowing money or reducing your expenses. To figure out your ability to pay, we may ask you to provide proof of your income, expenses, assets, and liabilities. You may have to do this by telephone or by completing a financial questionnaire. The Payment Arrangement Calculator lets you calculate payment options and it includes the prescribed Canada Revenue Agency interest rates. The Income and Expense Worksheet will help you to calculate your available net income to pay your debt.

Financial hardship provisions

If your debt repayment makes it difficult for you to pay for housing, food, utilities and other necessities of life, you may qualify for help under the financial hardship provisions.

It is your responsibility to contact the CRA if repaying your debt is causing you financial hardship. The CRA will take your situation into account when reviewing your request.

For more information and to see if you qualify, call 1-866-864-5823

Insolvency or bankruptcy

If you feel you are insolvent or are considering bankruptcy, visit the Office of the Superintendent of Bankruptcy for more information.

Taxpayer relief provisions for individuals

In some circumstances, you may be able to ask for relief from penalties and interest charges and reduce the overall amount you or your business owes. For more information, and to see if your situation qualifies, see Taxpayer relief provisions.


In the end, you need to file your taxes and ensure you pay in full by April 30th. If you find yourself unable to make a full payment, file your taxes and then contact CRA to make a payment arrangement. 

Get Your Business Moving in the Right Direction

By Randall Orser | Small Business

Business development requires one of the most overlooked and important aspects, direction. How many businesses seem to fail even though they seem to have everything going for them? You can have a talented team, a great product or service, however if the business isn’t pointed in the right direction it’s going to fail.

It may sound simple, but many businesses seem to miss it. No matter if it’s a mom and pop shop or a Fortune 500 company, by not aligning all the businesses parts it’s going to be a disaster. From personnel to marketing, you need to ensure all parts of your business are focused on accomplishing the same goals. Ideally, you should be aligning those goals with the wants and needs of your customers.

Are your businesses parts all moving in the same direction? How do you do that?

People

Direction is the difference between a team that’s greater than the sum of its parts, or a disorganized and disappointing group. 

Your worst-case scenario is where your talented people are going in opposite directions and cancelling our each other’s efforts. That said, the worst-case scenario doesn’t have to exist for a lack of direction to hinder your company’s performance. 

If your people are going off in different directions, then you’re getting less than ideal results across the board. To ensure peak potential of your team everyone needs to have the identical goals in mind.

You must be communicating all the time to achieve this. Have a crystal-clear idea of what your businesses priorities are. And, being receptive to feedback is important.

Departments

You can scale direction for any company size. And, that direction needs to be on point for every department in your business. 

To that point, envision a company with each department full of talented people but missing common direction. Your marketing department is putting out great materials aimed at the 18 to 30 demographics, however, your R&D team is producing a product aimed squarely at retirees. While your sales department is focusing on getting the product stocked in stores which are most popular with new parents and young families.

The above is an extreme example; however, many businesses end up in a similarly harmful pattern of misalignment. Your business needs to have clear organization goals that all departments are aware in order to flourish.

The most successful brands in any industry create a great product and then create a marketing campaign that reflects the product in a way that appeals to the targeted demographic. And, available in places that demographic is mostly likely to check.

However, it’s all pointless unless the company is pointing in the same direction as its customers.

Customers

You can make the best product, or provide the best service ever, but that’s pointless if no one wants to buy it. A restaurant with an incredible effective marketing campaign targeting twentysomethings will have no sway in a community mostly made up of retirees.

Your businesses success hinges on aligning your goals and priorities with those of your customers. Unless you do that then no amount of effort is going to make your product or service successful.

Successful brands know their customers and provide them with what they demand. If you look at history’s biggest successes, you’ll find that they aligned perfectly with their target demographic. The failures are the ones that had a complete misunderstanding of this.

A great example of this is New Coke, remember that? This fiasco tanked the world’s most popular soft drink sales back in the 1980s. Coca-Cola’s various departments worked in perfect harmony to create the new recipe and market it to the masses, which was great; however, this wasn’t a direction its customers wanted Coke to be moving. Coca-Cola was a popular drink everyone recognized by its taste since childhood. Coca-Cola went against everything its customers wanted by changing the taste; especially one that was kind of gross.

The Takeaway

You need to be creating clear goals for your business and ensure those are reflected at every level. Your staff need to understand your company’s goals whatever their position in the company. Without everyone understanding that your most talented people may end up working against you.

It’s imperative that these efforts are aligned with the goals and expectations of your customers.

Your First Tax Return

By Randall Orser | Personal Income Tax

Filing a tax return for many people can be overwhelming, however it can feel especially difficult when you’re young filing your first return. You must file a tax return if you’ve earned income during the year, or are entitled to any credits, such as the GST/HST credit, or may be getting a refund. The following tips will help make your transition into adulthood much less stressful.

Collect Your Tax Documents

Any company you worked for during the year should send you a T4 stating the income you earned, and the income tax, CPP and EI deducted. Whether you worked one day or the entire year, if you didn’t get a T4 by mid-March then you need to go back to your employers and find out why. Did you move during the year? If so, you should’ve let all employers know. If you were self-employed, you may or may not get a T4A, so keep track of any self-employed income you made during the year.

Ensure that you have all your financial documents for the year in one folder and keep those safe until you’re ready to prepare your tax return.

Dependent College Students

You tax situation could get a bit harder if you’re a college student, and your parents support you as well. Your parents can claim you as an independent and claim part of your tuition on their taxes, they’re paying for it anyway. You can claim what you need to on your taxes, however, you can transfer (up to $5,000) to them as a deduction on their taxes. Your parents more than likely have the higher income, so it makes sense for them to get the deduction. You need to talk to your parents about your intentions before anyone files their taxes.

File Electronically and use Direct Deposit

Canada Revenue Agency prefers you to file electronically (Efile®) and use direct deposit. Returns that use Efile® get processed much faster than via paper, and direct deposit is way faster than getting a cheque. If you Efile® and use direct deposit you can have your refund within 10 business days as opposed to paper and cheque which can take up to 8 weeks. Depending on the complexity of your tax return, you may have to buy tax software to do this or hire someone to do it; the investment is usually worth the time savings. The advantage to using software or a tax preparer is that they may uncover deductions you didn’t realize were possible.

There really is no reason to file a paper return anymore, unless you’re required by CRA.

File by April 30th.

You need to file and pay by April 30th for the preceding tax year. If you Efile® ensure you file by midnight on April 30th to avoid a penalty. For paper filing, the postmark must be for April 30th, otherwise, it’s considered late. If April 30th falls on the weekend then the due date becomes the following business date, usually Monday. CRA does not give extensions for filing, other than for self-employed individuals of June 15th; if you owe then it must be paid by April 30th. You should file your return on time even if you can’t pay the balance owing right away. CRA charges a penalty of 5% plus 1% per month up to 12 months that a return is past due.

Filing your taxes is not the most enjoyable process, but don’t rush it as you could make careless mistakes. This could cost you in missed refund opportunities, penalties, or other attention from CRA you don’t want. As this is your first time filing, you may want to have a parent or other older adult look over your return, especially if you’re not using software or a tax preparer.

Build a Sound Financial Business Strategy

By Randall Orser | Small Business

Are you an entrepreneur seeking to build your company? Or someone thinking about opening a new business? To be a successful business builder the best thing you can do is focus on your company’s finances. Be the entrepreneur that focuses on the finances of the company rather than the one going to the tech conferences or inviting the media hoping to get exposure. Do you want your company to fail because you weren’t aware of its fiscal responsibilities? Keep the following sound financial business strategies in mind and you’ll have a successful business.

Learn Business Finances

To improve growth opportunities for your company, then focus on learning as much as you can about business finance. In the time other new business owners are going after media attention, you should focus on refining your business finance expertise. By learning more about business finances from experienced people, like Warren Buffett or someone in your industry, the more able you can leverage growth opportunities others might miss.

Economic Trends

By watching economic trends over various business verticals, you can ensure you’re best prepared to handle financial risks. Focusing too much on your own market sector can make you miss impending market shifts that can affect your growth rate. From trends in retail to how automation is changing business development in global markets, the opportunities are many to understand future economic trends. Gather all the information possible on global economic forecasts and ensure you’re looking years ahead, not just months.

Changing Rapidly

Business finance these days is rapidly changing. The norm used to be bank loans and venture capital, now the options have expanded and becoming more common are cryptocurrencies and ICOs (initial coin offerings). You need to understand how business finance is transforming as technology advances, if you want to ensure you’re in a good place financially.

Chief Financial Officer

A Chief Financial Officer (CFO) can be a smart in-house hire for your startup in order to secure your businesses financial strategy. Too many startups wait until far too late to look at their company’s long-term finances. Whether it’s an accelerated burn rate that is unsustainable or business expenses that can’t be recovered in an acceptable amount of time, a CFO helps keep your company out of trouble and on the path towards profits.

Spending Habits

Are you watching your competitors’ spending habits more than your own spending patterns? That’s not very productive at all. You’re much better focusing on growth elements you control, rather than on what your competitors are doing. Whether it’s expenses on talent, fees paid for services you use, keeping an eye on your own finances and looking for increased opportunities is much more productive.

Financial Technology Tools

Thanks to rapid growth in the fintech sector, financial technology tools have grown significantly and available to entrepreneurs. You need to pay attention to this sector to discover savings opportunities you might not even know exist. Technology is changing the resources to which you have access to handle your businesses finances, however, you do need to know that they exist. A core component of your business’ financial strategy should be looking at the fintech sector regularly.

Spending for Spending sake

Too many new companies fall into the trap of spending for spending sake when they get the investor funding. That cash injection is great for stimulating growth, however, spend it on things that have a high ROI (return on investment). You should be spending on marketing, or hiring someone to do it, or a sales person that can close business deals, those are much better options. You need to ensure you’re maximizing that influx of cash so spend wisely.

Business Consultants

Any business consultant you hire should be driving for revenue generation. Far too many young businesses double-down on business consultants outlays rather than bringing on someone internally. That internal person is much more likely to put your businesses interests first as they have skin in the game. The consultant on the other hand is juggling many clients so your business’ growth is not their first priority. Analyze how much you’re spending on consultants with other expenditures to ensure your costs aren’t atypical.

Accounting Team

As part of your business financial strategy, the most prudent on is to hire a top-notch accounting team, accountant and bookkeeper. You want an accountant that doesn’t waste your money on just looking for loopholes, but one that finds the tax savings that are the best long-term advantages for your company. A smart accountant can help grow your business in ways you never envisioned.

Big Isn’t Always Better

The old adage big isn’t always better is one many entrepreneurs overlook. The obsession of tech media with funding news from angel investors and venture capitalists skewed impressions among entrepreneurs. Too many entrepreneurs focus on acquiring outside funding rather than smaller, bootstrapped growth which may end up being more profitable. There is a fallacy of growth at any cost, don’t fall for it, as you may be happier and more fulfilled if you built a smaller business without any outside funding.

Remember the above strategies and your odds of building a financially-sound business increase. Put your effort into building a foundation that is fiscally sound, and the likelier you’ll be proud of your business. You’ll never regret spending your time on making smart financial decisions for your business, and your business will grow as a result.

How Do I File My Tax Return?

By Randall Orser | Personal Income Tax

There are a couple of ways you can file a tax return today. You can still paper file, though that is going to disappear within the next 5 years, I believe. You can electronically file using Netfile® for individuals. And, you can hire a tax preparer, such as Number Crunchers®, to prepare and Efile® your return. Note that tax preparers are now required by Canada Revenue Agency (CRA) to electronically file all returns, unless stated otherwise by CRA.

Note that personal tax returns are due by April 30th of each year for the prior year’s filing. Self-employed, or proprietorship/partnership, returns are due by June 15th; however, any taxes owing are due by April 30th. I believe making installments is the smarter way to handle you taxes each year. Yes, the government gets your money early, however, you won’t have a whopping balance on April 30th that you may not be able to pay.

Be Prepared!

That’s not just a Scout slogan, but what you have to be before you file your taxes.

Gather up all your slips T4s, T5s, etc., a copy of last years return, donations, medical receipts, etc. You can register for My Account which gives you online access to your notices of assessment, allows you to make any adjustments to an already filed return, and more. If you need to change your address or direct deposit information (or want to set it up) makes sure you have all that information handy including: old address, new address, bank information, etc. Also, look at the various tax credits and find out if you qualify, and if you do then have all necessary information for those available. For a comprehensive list of what you’ll need to prepare your taxes ask for a copy of our Tax Info Needed sheet.

Paper Filing

You can still paper file (2013) and I believe it will be phased out over the next five years. You can get a copy currently at any Canada Post outlet or go online to CRA’s website and make sure you pick the return for your province. You must fill out the return as required and attached an original copy of all slips (T4s, T5s, etc.), donation receipts, medical receipts, arts credit and fitness credit, public transit receipts (monthly fare card as well as proof of payment), and any other slips/receipts for which you are claiming a deduction or income.

You must either mail or drop off your tax return to your local tax services office. CRA does not accept returns by email

Netfile®

The Netfile® transmission service allows an individual to file your personal tax return directly to CRA, usually via a tax preparation software. You must use a CRA accredited software, and there are some free ones, check CRA’s website. With Netfile® you do not have to send your slips and receipts with the return. CRA will look at your return initially and send you a notice of assessment with your balance owing or refund. Since CRA does not get your slips/receipts with the return, they do ‘reviews’ either during the tax season or after the season (usually September onwards). Generally, CRA just wants proof of any deduction you’re claiming or may want to validate your income.

Netfile® is only for filing the current year tax return (2012 at the time of writing this). You cannot change your address, name or direct deposit information through Netfile®, do that before you file (see Be Prepared!).

The advantages to filing electronically are: faster refunds, it’s generally fast and easy (if you have a simply return), you can file for free (again, if you have a simply return), your information is secure and safe as CRA uses security levels equal to your bank, and filing electronically does not increase your chance of an audit.

Hire a Tax Preparer

The third option is to hire a tax preparer, and one that we recommend for those with a more complicated return, or you just don’t have the time to figure out the software or the paper return and file yourself.

Your tax preparer will have the software to be able to Efile® your return, and has the knowledge to get the job done right. Your tax preparer won’t need your Netfile® access code either as they would have their own account access for filing.

I have found many times deductions for clients they had no idea they were entitled, sometimes saving them thousands of dollars on their taxes. For what it costs to have someone prepare and Efile® your return, can be saved just in the hassle of filing and possible deductions you may have missed by filing it yourself.

Be prepared (see paragraph above) applies even more so with a tax preparer. Please ensure you have all your slips and receipts ready as anything you forget delays your return getting processed. Ask us for a copy of our Tax Info Needed sheet, which covers everything we’ll need to do your taxes.

For proprietorships/partnerships, I believe, it’s more imperative to get a professional tax preparer to prepare your tax return. A professional tax preparer will know what you can and cannot write off for tax purposes, or what deductions are only partially a write off. The three main things CRA looks at with proprietorships are automobile expenses, meals, and home-office expenses. So, you want your tax return to be as accurate as possible.

Filing your tax return is important and you want it to be accurate. Electronic filing is the best way to file your return. I find many people don’t file because they are going to owe taxes. That is a big mistake and can hurt you worse than filing and owing. As long as you file on time, you won’t be penalized, and you will only be charged interest on the balance owing. That is why it is better to make installment payments so you won’t have to worry about a balance owing at tax time.

It’s Now All About the Cloud

By Randall Orser | Small Business

When we talk about the cloud all we’re really talking about is someone else’s server. Your data is stored somewhere else rather than on computers right in your office. Of course, this also includes Software-as-a-Service (SaaS), which is software (usually in the cloud) for which you pay a monthly fee and are always on the most current version; rather than the old way of buying software for thousands of dollars, installing it on your computer then having to deal with IT issues as they come about. Plus, then buying the software again when a new version comes out.

The beauty of SaaS is it can also help you with the profitability of your business and should be the number one priority. SaaS startups offer a whole slew of things from mobile productivity tools to artificial intelligence (AI) marketing, and, of course, cloud-based accounting. By implementing SaaS technology into your businesses MO you’re prepared for future growth while maximizing your profit margins. If this is your year for growing your business full tilt, then these tips for choosing SaaS will help.

Fiscally Responsible

Your bottom line is important and using SaaS is a good way to start. Most companies offering SaaS have fair pricing options, many provide a free trial. Why buy bloated software packages when you don’t need to, and SaaS can be customized to your company’s particular needs. Pick a subscription package that will best work for your growing company.

Latest Technology

The beauty of SaaS is that you are always on the latest technology. Whenever your provider upgrades the software, you get access to the newest version right away. SaaS businesses usually do their best to keep you as a happy customer as that’s cheaper than trying to find new ones. From AI algorithms to machine learning capabilities, today’s SaaS companies are incorporating a myriad of powerful APIs into their software.

Lower IT Costs

SaaS tools are a great way to significantly lower your IT costs. Yes, you’re paying a monthly or yearly fee all the time, but that fee is generally much lower than the cost of managing your own servers or installing IT hardware at your business. Lower IT costs + immediate access to newer technologies = a winning way to build a prosperous business.

Easy Upgrades

The great thing about SaaS is that you get the latest tech, and upgrades as they come out or as you may need them. You can start out with the free version or basic package and upgrade as your company grows. Most SaaS businesses offer enterprise-level upgrades to tweak; you can tweak your software subscriptions as the profitability of your business grows.

The days of buying software on CDs, or downloading it, are long gone. The business owner of today is savvy and going with cloud-based SaaS. Are you ready to double-down on your intelligent business building this year?

Capital Gains and Your Taxes

By Randall Orser | Personal Income Tax

When you buy a stock or a mutual fund, you do so in hopes of making a profit. That is why it is so important to keep careful track of not only how much you paid for that security but any income it generates while you hold it. All of those factors go into your cost basis, which in turn helps you determine your true profit.

Computing your capital gain is important, since an inaccurate figure could cause you to either overpay or underpay your taxes. If you overstate your cost basis, you will pay too little in capital gains taxes, and that could invite some unwanted attention from Canada Revenue Agency. If you understate your cost basis, you will pay too much in capital gains taxes, cutting into your profit and leaving you with less money in your pocket.

Understanding Your Cost Basis

Many investors assume that the cost basis of a stock or mutual fund simply consists of the amount they paid, but in fact it is a bit more complicated than that. Many stocks and mutual funds pay dividends along the way, and those dividends are considered taxable income. When you hold a dividend-paying stock or mutual fund, you should receive a T3 or a T5 form each year showing exactly how much you received. You must then include that amount on your tax return, and pay the applicable taxes on that money.

If you fail to factor in those dividend payments, you risk understating your cost basis and paying taxes twice on the same money. When you receive a T3 or a T5 form, you should immediately add the amount shown to the amount you paid for the stock or mutual fund. Continue to add those dividend payments to your cost basis each year, since you have already paid taxes on those amounts. This is assuming you are not receiving cash for the dividends and they are just added back into the investment

Computing Your Capital Gain

The cost basis of your stock or mutual fund consists of the amount you paid, plus any brokerage commission, along with those quarterly or annual dividend payments. Once you have added up all those amounts and determined your true cost basis, it is time to compute your capital gain.

When you sell a stock or mutual fund, you should receive a T5018 form, which shows the amount of proceeds you received (some forms do show the cost and/or adjusted cost base too). Once you know your cost basis, computing your capital gain is as simple as subtracting that cost basis from the gross proceeds.

Once you know the amount of the capital gain, you can simply include it when you file your taxes. If you use tax preparation software to prepare your return, all you need to do is answer the questions about capital gains and use them to see the impact of that gain on your total tax bill.

Avoid These Types of Customers at all Costs

By Randall Orser | Small Business

Is any customer a good customer when you’re a small business? No, they’re not. As a small business owner, you probably realize just how important it is to grow your client base and keep them coming back. However, there are those customers who are just too much to handle. As a small business owner, you are more likely to connect more closely with your clients, so interacting with a bad one can leave you in a delicate situation. These types of interactions can be way more stressful than what they’ll cost you in respect of your time, money, and reputation. The following ten customers are the ones to definitely avoid, even when starting out.

The Endless Negotiator

Are your prices set in stone? Or are you open to some negotiation? I would think you’d have a good idea of what you’re going to charge any given customer. However, there are those customers who just insist on bargaining and determined to do so. This person will constantly move the goalposts to get a better price or more perks, forcing to adjust costs with no actual promise of their business. Just say goodbye and move on to someone who’s more than willing to pay what you want to charge.

The Customer in a Rush

Mr. Rush always wants the full package deal done in half the time, and they won’t take no for an answer. If you can negotiate a fair price for the rush job, then go right ahead. Sadly, this person is just trying to push you to complete an impossible job for little pay, and you just need to say no. If you feel the timeframe is unrealistic, don’t feel pressured to work to it; otherwise, you end up exhausted, your staff are too, and end product that’s not up to par, and a disappointed client.

The Buddy

This is someone you knew vaguely in college, or your cousin’s best friend, or someone you met at a party that one time. This person is determined to us this connection to manipulate a better price, in order words, you do fair work at an unfair price. Don’t get caught by this person. You’re fine to offer a ‘friends and family discount’ but don’t feel compelled to do it for everyone who says they’re a buddy.

The Time Hog

If you’re a service-based business, then this type of customer is especially dangerous. The Time Hog is very willing to pay what you ask, and their request is reasonable, however, they’re going to ask a thousand questions and demand an absurd of your time with meetings and updates. This kind of customer will require extra time, and you should calculate your hourly rate based on how much extra time you need to spend with them. In the end, you’ll probably realize that they’re just not worth the hassle after all.

The Bad Communicator

This customer sends haphazard emails, doesn’t answer your questions, and you end up improvising much more than you’re comfortable with doing. You may be thinking they just don’t care what they get in the end, but that’s not usually the case. The bad communicator is usually the one that refuses to pay or gives a bad review chastising you when they don’t get the result they wanted. So, unless you can read minds, just say no to this type of customer.

The Freeloader

No one likes a freeloader, but it’s sometimes hard to tell which of your customers are just being fussy and which are freeloaders. The freeloader usually wants something for free before doing business with you, such as samples, or for the designers out there a mock up. Almost always, the samples are all they’ll want, and they may even try to sell them to someone else. Determine what your policy will be in regard to samples and hold firm from customers who demand for more.

The Enquirer

Customers will always make inquiries, however, there are times when you get that knot in your stomach that says, ‘Why does this person care about that detail?” When a customer enquires looking for detailed answers to a lot of specific or unusual questions, before they’ve even started working with you, then more than likely they’re not a customer at all. Other businesses or potential competitors may be using this as a way to analyze the specifics of what you offer, which is just a waste of your time.

The Customer Who Knows Best

This customer worked in your industry decades ago, or an old college pal ran a similar business, or they’ve been getting information off the internet. Showing real interest is a good thing, but being an uninformed know-it-all isn’t. They will disagree with your methods, ignore your advice, or contend that they know better than you. This customer will never be happy with the finished product no matter how hard you try.

The Perfectionist

This customer comes to you with high expectations and highly refined sense of what they want, so you need to be careful on how you continue. If you feel your abilities can make their dream come to life then go ahead, however, if you’ve got any doubts then stay away from the perfectionist. They won’t change their thinking no matter how unrealistic it is, so don’t even bother going down this to start.

The Customer Who Promises to Return

Stay away from that first-time customer who keeps telling you what they could do for you if you’d just do this job for free, a steep discount, or lots of free samples. This especially goes for creative people as most of these types of customers will tell you about all the “exposure” you’re going to get by working with them, which is absolute BS. Good repeat customers determine whether they’ll work with you again based on what you delivered to them, not before. Stand firm and only offer the same kind of perks you’d offer any first-time customer, even if they keep pushing.

Bad customers end up being a bad headache for you and your business. Worst-case scenario then can end up being disastrous for your small business, especially when you’re just starting out. To keep your business running smoothly, happily, and free of unnecessary drama, avoid the above ten customers at all costs, even when first starting your business.

What Types of Income Do You Have to Report?

By Randall Orser | Personal Income Tax

You probably already know that you must report the wages you make to Canada Revenue Agency (CRA). But the tax agency also considers your other sources of income, and it is important to report those as well. Under-reporting your total income can subject you not only to back taxes, but to interest and penalties as well.

Whether this is the first year you have filed your taxes or not, it pays to brush up on the sources of income you must report. Paying careful attention to all those sources of income is the best way to avoid problems with the CRA.

Total Wages

You should receive a T4 form from your employer each year, showing the amount, you received in wages during the previous year. If you held more than one job during the previous year, you should receive a T4 from each employer. The T4 form also shows the amount already withheld from your paycheck for income tax, Canada Pension Plan, Employment Insurance, and any benefits received. Your wages include: wages, overtime, commissions, and benefits.

Wage Loss Replacement

If you received payments from a wage-loss replacement plan shown in box 14 of your T4 slips, you may not have to report the full amount on your return. Report the amount you received minus the contributions you made to the plan if you did not use them on a previous year’s return. Do not include this amount when you calculate your total income on line 150.

Pensions or Superannuation

You must report your Canada Pension Plan (CPP), and Old Age Security (OAS) benefits received during the year. You do have to report the Guaranteed Income Supplement (GIS), however, that is only used to calculate certain credits not for taxes. Also, report any income from a company pension or government pension, RRSP withdrawals or RRIF withdrawals. You will receive slips for the above that include the amount received and the taxes withheld.

Note:  You do not claim income earned in or withdraws from a TFSA.

Interest Income

You must report the interest you receive from your bank as income when you file your taxes. The bank should send you a T3 or T5 form showing exactly how much interest you received for the previous year. If you earned interest from more than one bank, you should receive a T3 or T5 form from each one.

Dividend Income

Dividend income is taxable as well. If you earned dividends on stocks or mutual funds you own, the brokerage firm or mutual fund company should send you a T3 or T5 form. Contact the brokerage firm or mutual fund company if you do not have this form in hand by the end of February.

Capital Gains

If you sold stock during the year, you must pay capital gains taxes on the profit you made. The brokerage firm sends you a statement showing the net proceeds of the stock sale, but it is up to you to determine how much you paid and compute the profit and the capital gains taxes you owe. You may also have to claim a capital gain if you’ve sold any personal property during the year.

Self-Employment or Business Income

Whether you run a business or do some freelance work on the side, you are required to report the money you make to the CRA. If you are a freelancer, your major clients may send you a T4A form detailing exactly how much they paid you, but you are required to report all the income you made, whether you get a T4A form or not. If you did get a T4A form, you still claim this as business income on the T2125 Statement of Business Activities.

You Need to Know These Five Accounting Tips

By Randall Orser | Small Business

Did you know that accurate accounting is important to whether your small business lives or dies? Accounting is so dreaded by most small business owners that they would rather go to the dentist than do their books. As a small business entrepreneur, don’t let procrastination over your accounting become your reality. If you are willing to be proactive, there are ways to manage your accounting. The following five tips for managing your bookkeeping will, hopefully, make it seem not so overwhelming.

Balance Your Books Regularly

Delaying until month end to reconcile your books could be a costly mistake. Accounting errors are caught much faster within the week rather than digging through a month’s worth of receipts. Ongoing bookkeeping is not just better for your sanity but could lower the amount of money you might lose to an accounting blunder, accidental or deliberate.

Using Your Own Money

Most small business owners start out using their own money to pay for supplies, and often don’t realize the importance of keeping business and personal separate. You want to make sure your business starts off on the right foot, and continues, so ensure your personal finances are completely separate from your businesses revenues and expenses. Keep track of your data is essential. A business account and a credit card that is only used for business are essential.

Manage Your Receipts

I bet you never realized that your receipts fade over time, especially those thermal ones; and, never mark them with a highlighter as that destroys them. What would happen if your receipts which you’re planning on using for tax write-offs were no longer legible? What if you couldn’t even find them. This is where accounting software can help you manage those receipts on a regular basis, so you never have to worry about them when year-end tax preparation comes around. We recommend QuickBooks Online for your accounting and supplement that with Hubdoc, which is an online document retrieval and storage system.

Compliance Management

This is critical for efficient small business accounting. You need to understand the accounting compliance restrictions, as well as the specific compliance requirements for your business. Your accounting software should be set up to address any compliance requirements of your business specially to avoid costly issues at year-end.

Mange Your Cash Flow

A good cash flow is absolutely pivotal to small business success and not something you should overlook. It’s easy to get used to paying for procures or services on credit, only to be horribly surprised when you reconcile your books. As a small business owner, you need to understand the importance of cash flow and profitability, otherwise you may make impulsive purchasing decisions that may impact the long-term viability of your business.

By paying attention to the above five accounting tips, your small business will stay on track. Effective accounting plays a pivotal role in the survival of your small business, and not understanding that will lead to failure. Instead of looking at business accounting as a dreaded tax think of it as a growth mechanism, and you’ll appreciate the critical role a well-managed set of books plays in your business success.