What is a Non-refundable versus a Refundable Tax Credit?

By Randall Orser | Personal Income Tax

Deduction Save on Taxes Loopholes Exemptions on Calculator TNTax credits can greatly decrease the amount of taxes you have to pay. If you don’t fully understand them, you could be missing out on large cash opportunities. One aspect that often goes unexplained is the difference between refundable and non-refundable tax credits. What is the difference between the two, and how do they affect the amount of tax you owe to the government?

A tax credit is very different from a tax deduction. A deduction is a reduction in the gross income. For example, if you have a gross income of $50,000 for the year, total itemized deductions of $10,000 would make the adjusted gross income $40,000. You have the option to use the standard deduction or itemize your deductions if your total itemized deductions exceed the standard deduction. By increasing the value of your deductions, you lower your taxable income, therefore lowering the amount of total tax you owe.

Tax credits have a larger advantage. After you have calculated your total taxable income and determined how much you owe in taxes, a tax credit will be deducted from that total amount. For example, if you owe the government $3,000 and you qualify for a $1,000 tax credit, you now only owe $2,000. It is a 100% reduction in taxes owed whereas deductions reduce the taxes owed by a much smaller percentage. Basically, you want to get as many deductions and credits as possible, but credits have a larger impact.

Tax credits have nothing to do with how much money was withheld from your check each month for taxes. Don’t even think about how much money is withheld until the very end. The withheld amount also has nothing to do with whether a tax credit is refundable or not. These are two different aspects; do not confuse them.

Many people don’t know that tax credits can be either refundable or non-refundable. If they aren’t done in the right order, you could be losing money owed to you. Fortunately, the forms are set up so that you will automatically calculate them in the right order. However, understanding the difference between the two is beneficial.

First, calculate non-refundable tax credits. A non-refundable tax credit is a credit that cannot exceed your total tax owed. For example, if you owe $3,000 in taxes and your total non-refundable tax credits equal $4,000, your tax owed is $0. You cannot receive back an extra $1,000. There is no refund to the total tax you owe.
Non-refundable credits include education credits; child and dependent care credits, adoption credits, etc. Subtracting non-refundable credits first will minimize your total taxes owed.

Now you will have a new taxes-owed amount. Using the above example, you have $0 owed. Calculate your total refundable credits. These included the earned income tax credit, making work pay credit, first time home buyers credit, etc. Let’s say these come to a total of $2,000. These are refundable credits meaning you will have a result of -$2,000 tax. In other words, the government owes you $2,000.

Once you have calculated your taxes owed after subtracting all qualified credits, calculate your entire refund or taxes owed. If you get $2,000 from the government and $5,000 was withheld from your check, your total refund is $7,000. Notice that the amount withheld from your check is separate from the $2,000 refundable credit. You receive an extra $2,000 in addition to the money returned to you that was withheld for tax purposes throughout the year.

Calculating non-refundable credits before refundable credits maximizes your total credit potential. Non-refundable credits are used first, whether they bring your taxes owed down to zero or just reduce them. Refundable credits are calculated last to ensure that all possible refunds are realized. The above example is exaggerated to make the discussion easier. This amount in tax credits is not typical. It depends on what you qualify for. However, make sure you check out each credit thoroughly to ensure you get your maximum return or minimize your taxes owed as much as possible.

Accomplishing More Through Setting a Time Limit

By Randall Orser | Small Business

critical thinking-TNAmong the many methods that professionals use in time management is what’s called “Time framing”. In a nutshell it’s giving yourself a limit on the time you employ to do a certain task. For example, if you need to write a report, you give yourself no more than an hour to complete the task. If you finish the report within that time frame, you have the extra time that can be employed for another task. Or you can reward yourself in some way for accomplishing the job so soon. If the job takes longer, you drop the assignment and move on to the next assignment you have scheduled. You can give your first task time to develop overnight until you schedule it for another time. You don’t abandon your report; you’ve only given it a time limit.

This method of setting a time limit can be used anytime for most projects, excluding those that simply must be finished by a deadline set by your peers. Of course, this method won’t work for a surgeon who can’t leave the operating table in the middle of performing a heart bypass. But time boxing is effective for most short-term projects and those requiring a few days for completion. In both cases, creativity is enhanced and the act enforces discipline.

Working this way has several advantages. Among them:

More Creativity

The closer your set deadline approaches the more likely you are to find a creative way to complete the project to your satisfaction. That sense of urgency helps stimulate your creative faculties to find effective methods to complete the task within the allotted time frame. It’s likely you’ll finish the project much sooner than you anticipated.

A Better Way to Find a Solution

There’s no shame in delaying a project if it doesn’t meet your deadline. A breather before taking up the project can help you find a solution that you wouldn’t otherwise discover if you bulled your way through the project. We all tend to see the proverbial forest for the trees. Solutions often come at those moments when you’re most relaxed.

A Sense of Urgency

Once you’ve given the job a time limit, you’ve created an atmosphere of urgency. This allows you to give full attention to the job and removes distractions. For those projects that require more than a day, the unfinished task creates an urgency that must be resolved. Writers often use this technique, stopping at a point where they know what follows next. This gives them the incentive to pick up where they left off and continue the momentum from the day before. While stopping a project in the middle of the task may keep you awake at night, you won’t lack for creativeness and imagination.

Enhances Organization Skills

If you’ve placed a time frame on your project, you’re better organized. It makes scheduling easier. Many business people wear many hats, so they must organize their time for maximum effectiveness. They have to schedule their tasks around those areas where they have little control. Staff and executive meetings can’t be delayed waiting for them to finish off a project past the start of the business meeting. The benefit of time framing is that it allows you the comfort of not having to work overtime hours. Carrying work home with you will likely mark you as inefficient. Overtime should be reserved to projects that have short time limits set by your employer or company, which you cannot control.

Establishes professionalism

If you consistently finish your projects ahead of your set deadline, you’ll likely impress your boss. Promotion and higher pay are the rewards for those who use their time wisely. Time framing enforces discipline. All successful people have learned the habit of discipline. They’ve increased their sense of self-importance and become an asset to their employer as well as their families.

So the next time you tackle a project, set yourself a time limit to complete it unless that time limit is enforced by your employer. You will find more joy in accomplishment and create a sense of happy fulfillment.

Put Money Back in Your Pocket with the Home Office Deduction

By Randall Orser | Personal Income Tax

Canadian dollars money TNIf you perform any type of work from home, whether as a freelance writer or selling merchandise via shopping or auction websites, the expenses you incur at home could save you a bundle on your taxes. Here are the things that you need to know and have available in order to reap all of the benefits of home office expense tax deductions:

Determine if your home office is actually an “office”.

In order to take this type of deduction, the area of workspace must be exclusively used for your business or you must be able to determine what percentage of the time you use that workspace for your business. For instance, if you have one room where your computer sits and you use that area only for conducting your business, that is considered your home office and is used 100 percent of the time for that purpose. If you conduct your business in your living room via a PC or laptop and you also use that room for entertaining guests, spending time in front of the television with friends and family, or you sleep there, your living room can still be considered your home office, but only at a fraction of the time. Let’s say your room is available 24-hours a day to use as an office, but you work 6 hours on a laptop and the other 18 hours, the room is used for watching television, playing video games, or sleeping on the sofa, your percentage of use for home office would be 6 out of 24 hours or 25 percent.

You will need these types of information to deduct your home office expenses.

Whether you own your home or rent, you will need to know how much money in total that you spend on either your mortgage interest or rent payments throughout the past year. Utility bills that you paid during the previous year for electricity and natural gas or propane can be used as a deduction. Repairs or maintenance that was conducted on any part of your home, indoors or outdoors, is deductible. These amounts are for your entire home and are separate from any purchases you made or bills that you paid exclusively for a home office.

Expenses that were solely for your home office.

Although it is rare, if you pay extra rent for an outbuilding where you live and you use that as your home office, that would be considered rent that is exclusive to your home office and is fully deductible. Lines of communication such as telephone, Internet or a separate line for a fax machine that are used exclusively for your home office are deductible and separate from the full home expenses.

Expenses that pertain solely to your business.

Certain expenses that incur in order to conduct your business, prepare for opening / starting a business, or drum up new business are deductible. Advertising costs, office supplies, computer equipment and software, purchasing new furniture for your home office, snow removal / trash removal that is exclusive to your home office and certain meals and entertainment expenses are deductible. Purchases of software, furniture, or equipment that you paid more than $100 for are depreciable. What this means is that over time, these items will lose their value or become obsolete. In such cases, you are allowed to deduct the amount of value that is lost whether you decide to take the depreciation deduction all at once or spread it out over time.

Vehicle expenses when you use your car, truck or van for business use.

Whether you drive children to school as part of your childcare service or you use your vehicle to drive to the post office to purchase stamps that you will use in your business, the expenses of powering and or maintaining your vehicle are deductible. The catch here is that you must keep written records of your mileage that pertains to the use of your vehicle for business purposes. When filing your taxes, determine which method will grant you the larger return: a) deducting standard mileage amounts or b) actual expenses for gasoline, oil, tires, and repairs. Another important factor to remember is that if you will be conducting the same type of business the following year, you must use the same method of deduction (standard mileage or actual expenses incurred) each year.

Home office expenses are often over-looked and not taken as deductions toward tax liability. These important tax credits and deductions could put as much as $500 – $5,000 or more in your pocket based upon your personal income, home, and home office situation. It is worth your time and effort to keep accurate records and explore all of your tax avenues before you file.

Why a Joint Venture Could Save Your Small Business

By Randall Orser | Small Business

joint venture solution 10-14 TNIf you are a solo entrepreneur, creating a Joint Venture with other businesses can give your business access to needed resources and can help you to grow your business at a much faster rate than you can do alone. Joint Ventures allow each business involved in the project to maintain business integrity, while gaining the benefits of working within larger organisations.

Many internet entrepreneurs have created joint ventures with other entrepreneurs to expand access to customer databases and to generate mutually beneficial sales leads. While many entrepreneurs started a Joint Venture to combat the tiny marketing and advertising budget available, some of the millionaire entrepreneurs continue to use Joint Ventures even when a larger advertising budget becomes available. This means there are other benefits to working within a joint venture.

A joint venture may give you access to a wealth of ideas and a collaborative team spirit that can help you to take your own business to the next level. You can use the joint venture to gain credibility, data lists, and access to advertising. If you have a brilliant product idea, and are starting out your small business to sell your product, a joint venture with a respected company in the industry can help you to get your product out into the public sphere or into a new market.

Usually, a company will recommend your product, in return for a sales commission when you sell. This means you can enter a joint venture with no money upfront and no risk. Joint ventures can save you money as a solo entrepreneur and you may not need to borrow money from banks to advertise and market your product.

You need to make sure the joint venture is mutually beneficial, so negotiating a win-win situation with the company you are proposing to enter into a joint venture agreement is essential. Research is the most important first step in setting up a joint venture, as the right research will ensure you know the business you are planning to have as a partner. If you want to establish business credibility for your product, you need to be sure your business partner has the consumer credibility you want.

If you are entering a joint venture with a business offering a product or service, ensure the product is quality and suits your own company’s market list. A joint venture is reliant on trust. If you are recommending another company or product to your customers, you need to be sure that the company will deliver on the promises made; otherwise, your customers may leave you too.

When you are discussing a joint venture proposal with a prospective business, you need to clearly outline each partner’s responsibilities, roles, and the rules surrounding profit sharing within the joint venture.

Build a quality joint venture relationship based on trust, solid ethics, and mutual understanding. Your joint venture partnership may continue for many years, so put the effort into establishing and maintaining a trustworthy relationship with your new business partner.

A joint venture could save your small business, especially in this economic climate. Mutually beneficial joint ventures can make a big difference to your cash flow, credibility with customers, and building a reputation for delivering quality products.

10 Reasons for Not Taking on the CRA Singlehandedly

By Randall Orser | Personal Income Tax

Business concept-piggy bank with glasses,calculator and a clock TNSooner or later, every tax payer may have to take on the CRA. It’s not just a matter of whether you are guilty of doing something wrong but, rather, whether tax laws change (and to what extent), whether the present administration wants to play hardball with suspected tax cheats, and whether your financial situation and reporting habits have undergone any major changes.

A number of errors (not reporting income, listing a dependent someone else also claimed, misusing deductions, etc.) and discrepancies can motivate the CRA to come after you. If this happens, you may be tempted (if you are convinced that you are innocent) to fight them on your own. Here are ten good reasons for not making this common but often costly mistake:

#1 You may unwittingly admit to a crime.

It does not matter whether you broke the law unknowingly or if you were trying to pull a fast one over the CRA. The CRA does not differentiate. Legally, anything you say to the CRA may be held against you, even if the CRA never read you your rights when you met with them or spoke with them over the phone. Sadly, many people end up being in hot water with the CRA not over anything they were suspected of doing but over what they admitted to during official communication with the CRA. With advice from a tax professional or attorney, you can sometimes sidestep legal land mines of this nature.

#2 You may bring to the CRA’s attention something that might have otherwise gone unnoticed.

Contrary to popular opinion, the CRA does not know everything about you; nor do they have a crystal ball that tells them about all the mistakes and omissions you have committed. Your best approach is to not provide any more information than is requested, being sure not to bring up any incident or fact that the CRA does not specifically bring up.

#3 You probably do not know enough about tax laws.

This means that you most probably do not know about your rights as a tax payer, what limitations have been imposed on the CRA, what you should say and not say, under what circumstances may certain information be requested (and how), and when you should refuse (if ever) answering specific questions.

#4 If alone, the CRA may see you as being more vulnerable, prompting them to possibly take advantage of you.

As a general rule, the CRA treats differently people who come in on their own from those who show up with legal counsel or with a tax professional.   Having a knowledgeable professional watching out for your interests will provide you with peace of mind and may compel the CRA to play by the book.

#5 You can’t take advantage of the special relationship that some tax advisors and attorneys have with CRA agents and supervisors.

In some instances, the person representing you may be able to smooth over an otherwise rough situation, simply by virtue of that special connection. This does not mean CRA agents will not do their job but well-connected attorneys may know what might be negotiable and forgivable and what would ultimately have to be taken to court. Sometimes, the CRA can be persuaded to settle a matter quietly, especially if a tax payer was treated unfairly or disrespectfully by an agent.

#6 If the matter has to go to court, you will not be in as good a position as an attorney to prepare for the event.

Every good attorney knows that every word uttered (orally or in writing) can play a crucial role later on; consequently, an attorney will not only document all meetings, but will also know what documents to subpoena (if necessary), whom to contact on your behalf, and how to bring together the most beneficial evidence.

#7 You may not realize that everything you say to the CRA can later be used against you.

Even if you realize this, you are probably not as well prepared as tax professionals to know what you should and what you should not say. Simply refusing to answer the CRA’s questions will only get you in hot water, unless you can preface the refusal with “Upon advice from legal counsel…“ The CRA may have good grounds for going after you but you have the right to not have to help them put the noose around your neck.

#8 CRA agents are notorious for sometimes misrepresenting, exaggerating, or even misinterpreting the facts surrounding a case.

This is especially true if an CRA agent has a vendetta against a tax payer, a certain ethnic group, or someone he/she is convinced is a liar or a crook. Tax professionals are probably better equipped to deal with these types of situations. A “personal” situation is more easily defused by someone who can objectively look at the facts, hopefully being not only your advocate but a cool-headed, objective professional.

#9 You may not be as adept as a lawyer when it comes to negotiating for a reduced tax-owed amount, a special, affordable payment plan, or no jail time (if a criminal act is suspected).

The fact is that many special deals are conceived of and proposed by attorneys and tax professionals, not by the CRA or taxpayers. Such “deals” can often greatly ameliorate otherwise egregious situations.

#10 Your dilemma may be resolved more quickly and with fewer long-term repercussions if a knowledgeable and well-connected tax professional is representing you.

Some CRA cases get drawn out for years, usually inflicting unnecessary stress and financial devastation upon the taxpayers involved. When you get someone to deal with the CRA, you may greatly reduce or eliminate this kind of stress and financial woe.

Are You Ready for the Unexpected?

By Randall Orser | Small Business

business growth TNThere have been many events and disasters over the last decade that have highlighted the need for business continuity and basic planning to assist in incident management and business recovery following events that have threatened to end business operations for good. Events and incidents like severe weather, natural disasters, terrorist attack or even just sickness, theft and vandalism can have devastating effects on business operations, making effective plans for dealing with their occurrence an essential consideration for every modern business.

The business world is networked and intertwined, with business being done across borders, time zones and currencies. Every business is in some way reliant upon the people it employs, the environment it operates within and the customers and partners it deals with. It’s imperative then that every business understands the impact of all manner of potential situations.

For many, business continuity is not regarded as a core business consideration. It’s seen as a subject that’s intrinsically linked to catastrophic events like floods or storm damage, fire damage or even terrorism, but business continuity needs to cover a much wider consideration. For many, their business insurance is what they believe they will fall back on if such events occur, but in practice this will only seek to pay out to a business that has already suffered and had to recover. Insurance is almost always of use after-the-fact and it provides little in the way of instant reaction to restore business operations.

While it’s important to have a plan around how you would recommence or restore operations if your business was attacked, flooded or burned down, you also need to be able to consider the impact of such events on your business if they actually happened to another company or set of individuals.

How would your company cope with a crisis-hit key supplier or an outbreak of disease? What if your building became unsafe for any reason? Could you recover the situation and maintain normal operations? How would your business cope with a major power failure in the local area? Could you continue with operations if the telecoms and IT connection to the world was lost for any significant period of time? For most businesses, such events could spell disaster; such is the modern reliance on services like power, telecoms and IT. It’s therefore imperative that any business continuity planning your business undertakes is capable of providing a plan for each eventuality that your business believes could threaten it’s effectiveness or existence.

The importance of business continuity planning cannot be understated, especially in the modern age of interconnected business and IT. An event on the other side of the world could affect your business tomorrow and you need to be ready to react. Business continuity planning will never give you step by step instructions for every different risk that your business is exposed to, but it can help establish a broad set of preparatory steps and actions that you know will be effective in a number of situations allowing you to react to the particular event or situation much more quickly than if you had no plan at all.

What are Allowable Motor Vehicle Expenses as an Employee?

By Randall Orser | Personal Income Tax

racing piggyMany people who are employees may have to use their personal vehicle for work, such as contractors, salespeople, and more. Many times the people do not get any kind of allowance from the employer for the use of their personal vehicle.

Sometimes the employer may reimburse them through either an allowance (which is a taxable benefit), or based on per kilometer driven for work. Whether an allowance or per kilometer basis, sometimes the amount received doesn’t cover the actual amount spent, so you can deduct the actual expenses earned less the amount received.

You can deduct your motor vehicle expenses if you meet all of the following conditions:

  • You were normally required to work away from your employer’s place of business or in different places.
  • Under your contract of employment, you had to pay your own motor vehicle expenses.
  • You did not receive a non-taxable allowance for motor vehicle expenses; or, the allowance is unreasonably low.
  • You keep with your records a copy of Form T2200, Declaration of Conditions of Employment, which has been completed and signed by your employer.

The types of expenses you can deduct include:

  • fuel (gasoline, propane, oil);
  • maintenance and repairs;
  • insurance;
  • licence and registration fees;
  • capital cost allowance (though not recommended as it may trigger a gain if the vehicle is sold);
  • eligible interest you paid on a loan used to buy the motor vehicle (max $10 per day for vehicles bought after 2002); and
  • eligible leasing costs (amount limited based on a vehicle cost).

If you use a motor vehicle for both employment and personal use, you can deduct only the percentage of expenses related to earning income. To support the amount, you can deduct, keep a record of both the total kilometers you drove and the kilometers you drove to earn employment income. Canada Revenue Agency considers driving back and forth between home and work as personal use.

If you use more than one motor vehicle to earn employment income, calculate each vehicle’s expenses separately.

When you file your taxes, you enter these amounts in the Calculation of Allowable Motor Vehicle Expenses area on Form T777, Statement of Employment Expenses, and attach it to your paper return. If you file electronically, CRA doesn’t get this statement just the amount on Line 229.

As with any tax deduction, keep all your receipts, including payments from your employer for an allowance, and keep a log book of your kilometers driven for work related activities.

You Must Include These 10 Essential Elements in Your Business Plan

By Randall Orser | Small Business

Business Plan Puzzle TNWriting a business plan can be a daunting experience for anyone who has never done it before but it needn’t be so. For most people it’s actually the thought of having their plan rejected by investors or the bank that makes them nervous about writing one. The very process of writing a business plan should be what gives you confidence that you either have a viable proposition or not.

By working your way towards a comprehensive business plan, you’ll answer most, if not all, of the questions that potential investors will ask. The key to success is in making sure you know what questions will be asked so you can have your answer and proposal ready.

A business plan is a document that you will use for a number of purposes. Primarily, it’s to record your idea and business proposal, but it’s also a tool to use to convince investors and stakeholders that you know what you’re doing and that they should trust you and your plan for the business.

There are therefore a number of key elements that any business plan will need to address. You can choose in which order they appear in your plan, but you should make sure you cover all of them.

The nature of your business

The first thing you’ll need to be able to do, even before you set pen to paper, is describe what your business is being set up to do. If it’s based upon a product or a service, can you describe that and can you say why your product or service has merit or is unique?

Your strategy and business aims

Describing what your business will do may be relatively easy, but ask yourself whether you can articulate the direction your business is heading in and what your aspirations are for the future. When laying out your business strategy, you will need to set it in the context of the market and environment around it, taking account of influencing factors and dependencies. Potential investors will want to know what you are planning for in the future, what the future direction of the business will be and ultimately what you intend to achieve.

The market

Every business sits within a market. Whether it’s your customer base or your competitors that represent your biggest challenge or opportunity, you need to be able to articulate where your business will sit and fit in the marketplace.

Your plan should discuss the sector that you will operate in, the demand for your product or service and where your business will sit in relation to customers and competitors. How strong are you or your products in comparison to those of the competition? Will you be able to carve out a market share? If so, how and why?

It’s vital to deal with how you will promote your business within your chosen market. Make sure you can describe what your marketing approach will be and that you demonstrate your understanding of routes to that market as well as areas for potential growth.

Revenue

From where will the business get its money? Not the investment money to get moving, but the day to day sales revenue, the life-blood of the business.

When discussing revenue in the plan, you should consider where the money will come from. Is it through sales of products and services or are you expecting to rely on some other earning stream? How much are you expecting to receive either annually, monthly or even weekly and what do you see the growth of revenue being over time?

To make your information easy to understand, use graphs and charts as well the more established accountancy table formats. This lets the reader see your estimations quickly without having to wade through text to get a feel for your overall forecast.

Cost Base

Before you can predict profit in any way based on the revenue you described, you will have to work out what it is going to cost you to run the business. Your business’s cost base is the normal expected cost of running the operation. It’s not about the amount of money you need to get started. You can cover that elsewhere in the plan.

Make sure you look at the cost of accommodation, salaries for any staff you may have, utilities costs and the costs of raw materials or goods you may be purchasing on a regular basis. Make sure you lay this information out in a way that can be easily understood and always check your assumptions.

If you are heavily reliant on manpower, make your staff levels clear and show how they will grow with time. It’s also a good idea to spend give a brief outline of the roles you envisage being needed and what skills they will require.

Investment

This is the amount of money, or capital, that your business will need injected into it to get off the ground or to expand. Potential investors will want to know how much money is needed and for how long you will need it. What is equally important, but often missed in business plans, is what you will do with that money and what impact you expect it to have on the business. Consider very carefully what you will do with the investment you are asking others to make and ask yourself if they will understand your strategy and agree with your approach.

You can also consider splitting the investment requirements to reflect what you need in the short term to achieve some initial goals and what you will need for the longer term to meet strategic aims. This gives investors an indication of your level of foresight and your ability to set long term, achievable goals for your business.

Profit and return on investment

If you are asking people or institutions to invest money in your business venture, you will have to be able to tell them what they will receive in return. At a basic level, this will be a description and an estimation of what returns you will give them for what will effectively be the loan of their money.

Examine payback periods, particularly for initial investments and be clear about how long you think it will be before the investment breaks even and starts to make money for you and the investors. If the main purpose of your business plan is to attract private investment, rather than banking facilities, you may want to consider mentioning what other methods might be possible for return on the investments made. This could include taking a share in the business or profit-taking after a set period for example.

Take your revenue and costbase estimations into account and forecast the profit levels your business might make over the period of your plan. Bear in mind that for new businesses, profits may not be available immediately and getting the business into a profitable state may take time. If this is the case for your business, try to be as clear as possible on how long this might take and on what it may depend.

Cashflow

Many a sound business has gone to the wall through cashflow problems. It’s one of the fundamental issues that faces every business and must be addressed in a business plan. If need be, get some help from an accountant to estimate cashflow and get advice on how to present it in your plan. If you try to produce a business plan that does not sufficiently address cashflow, it’s almost certain that you will be turned down for investment of any kind. The main points you will need to consider from an investor’s point of view will be the maximum cash exposure, so that you can see the maximum amount you are likely to be out of pocket at any point in time, and for how long will this exposure last.

Risk

Few businesses, if any, are risk free. If someone tells you they have a no-risk business proposition, it’s more than likely that they’re either lying or just haven’t considered where the risks actually lie. Don’t expect potential investors to fall for the no-risk argument. Think about the things that could impact your business. What are the factors or events that would cause your business to fail or be held back in some way? List them along with an indication of the probability of them actually occurring. Beside each risk describe actions that can be taken to mitigate the risk either completely or partially. Where these mitigation actions have costs, estimate them. You should also consider what you will do if the risk occurs. This is common project management practice and is known as the fallback position. Since launching or developing your business is a project, it makes sense to use project management techniques. Again, where these fallback actions have costs associated, state what they are.

Management capability and background

Lastly, investors will want to know who is running the business and what it is that makes them the right person to do so. If it’s you who will be running the business, include your resume, or CV, and explain why you are the right person with the right skills and experience. Investors will want to establish the credentials of whoever will be managing their investment.

There are lots of other elements of a business plan that help to ensure it’s a comprehensive document that shows your business proposition in the best light possible, but these ten are absolutely essential. If you cover these, you’ll be well on the way to having a plan that covers every point investors could want to query.

How Can You Benefit From The Home Buyers Amount?

By Randall Orser | Personal Income Tax

moving-tnYou can claim an amount of $5,000 for the purchase of a qualifying home acquired in 2014, if both of the following apply:

  • you or your spouse or common-law partner acquired a qualifying home; and
  • you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years (first-time home buyer).

Qualifying home

A qualifying home must be registered in your and/or your spouse’s or common-law partner’s name in accordance with the applicable land registration system, and it must be located in Canada. It includes existing homes and homes under construction.

The following are considered qualifying homes:

  • single-family houses;
  • semi-detached houses;
  • townhouses;
  • mobile homes;
  • condominium units; and
  • apartments in duplexes, triplexes, fourplexes, or apartment buildings.

A share in a co-operative housing corporation that entitles you to own and gives you an equity interest in a housing unit located in Canada also qualifies. However, a share that only gives you the right to tenancy in the housing unit does not qualify.

Persons with disabilities

You do not have to be a first-time home buyer if:

  • you are eligible for the disability tax credit; or
  • you acquired the home for the benefit of a related person who is eligible for the disability tax credit.

The purchase must be made to allow the person with the disability to live in a home that is more accessible or better suited to the needs of that person. For the purposes of the home buyers’ amount, a person with a disability is a person who is eligible for a disability tax credit for the year in which the home is acquired, or a person who would be entitled to claim the disability amount if they did not claim costs for attendant care or care in a nursing home on lines 330 or 331.

You must intend to occupy the home or you must intend that the related person with a disability occupy the home as a principal place of residence no later than one year after it is acquired.

Completing your tax return

Enter $5,000 on line 369 of your Schedule 1, Federal Tax. You and your spouse or common-law partner can split the claim, but the combined total cannot exceed $5,000. When more than one person is entitled to the amount (for example, when two people jointly buy a home), the total of all amounts claimed cannot exceed $5,000.

If you are filing electronically or a paper return, keep all your documents in case CRA asks to see them at a later date.

Automate Your Business to Grow!

By Randall Orser | Small Business

Business concept TNMention “business process automation” and for most people, it’s the complex IT systems of the bigger business establishments that first come to mind. Yet the smaller businesses, even the start-ups and home-based enterprises, can make use of and benefit from business process automation. Number Crunchers® is going through this process right now. We’re looking at how we can get more efficient and productive using automation with a web-based software called Infusionsoft.

What is Business Process Automation?

Business process automation refers to the use of technology and software applications in operating a business. It is the complete or partial automation of repetitive tasks and regular business processes so that labour is better utilized and costs are contained.

Tools to automate a business are aplenty: tools for accounting, inventory tracking, email marketing, order taking, customer relations, and many more. A good example is the automation of inbound calls to a company. Do you remember years ago when a telephone operator was a must for most firms? These days, callers interact with a voice response system that takes care of standard calls or inquiries and routes specific calls to the right person or department.

Benefits of Automating Your Home Business

Automation has become necessary for businesses of all types and sizes. Consider the following benefits you are bound to gain by automating your business processes:

  1. Business process automation will save you time.

If you are a one-person operation, you can be freed from handling the everyday routine tasks and devote your time instead towards marketing and growing your home business.

  1. Business process automation will cut down your costs.

By automating many of your processes, you can streamline your operations so you will not need to hire as many employees as you would if your operations were run manually.

  1. Business process automation will minimize errors.

Human errors can be costly and can lead to financial losses or poor customer service. Automated accounting systems, for instance, guarantee accuracy in computations, ensure timeliness of sending billing statements and improve the efficiency of your inventory management.

  1. Business process automation will help you manage information better.

As business owner, you need to be informed about all aspects of your business operation. With automation, information is sorted, classified, and ready for your retrieval anytime you need it.

  1. Business process automation will facilitate communication.

With correct and timely information, you get to know exactly what your customers want. You can communicate directly with your customers to address their needs or resolve their problem with your product or service.

How You Can Automate Your Home Business

If you are not yet sure which of your business processes to automate and what automation tools to use, you may want to take stock of your various business processes and learn which can be automated. Make sure to break them down where needed so you can decide on the appropriate software or application.

Take for example your marketing process. You can break it down to the following tasks: generating leads, distributing marketing materials, sending out sales letters, following up on leads, conducting surveys, and gathering feedback. For lead generation, you can design your website to include a subscription form or an opt-in box where visitors can submit their contact information. The pooled data go to your mailing list, which you then feed to your email auto responder that will in turn generate automatic responses to the email inquiries or send out pre-scheduled messages, newsletters, or sales pitches to those in your customers’ list.

With the right apps on your website, you can engage in e-commerce and run your online store where everything is automated from the order taking to receipt of payment and processing of shipment. If you have affiliates or if you advertise on other websites, you can also monitor their performance using a tracking system. Your accounting system can incorporate bookkeeping, invoicing, inventory management, payroll, voucher preparation, and so forth.

In the end, it is a matter of identifying the unique needs of your business and choosing the appropriate business process automation tools. Depending on your budget and the degree of automation that you want, you can hire an IT professional to develop an automated system for you or you can purchase one of the many canned programs that are readily available. A few solutions that you can download for free are available if your needs are simple and your volume is low.

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