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Reduce Cash Flow Volatility

By Randall Orser | Small Business

Remember, cash is king, right? Maintaining a smooth cash flow makes your company better, and, perhaps, less reliant on costly outside financing. If your business has an unstable cash flow, then it may have sizable disparities in earnings, and that may escalate the likelihood of default, which harmfully affects a company’s cost of capital. Your company will be of a greater value if it keeps an even cash flow over one that doesn’t. By implementing adequate cash flow management processes, you’ll reduce cash flow volatility.

Cash Flow Management

Neil C. Churchill, professor emeritus of entrepreneurship at INSEAD in Fontainebleau, France, says ‘a major risk for most entrepreneurs is inadequate cash flow management.’ Managing your cash flow requires managing your risk, and that means thorough budgeting. What is your long-term contingency plan? Are you setting aside reserve funds of at least three up to six months of your operating costs? You need to do these if you want to control your cash flow risk. Having the cash on hand allows you to continue operations should your cash flow hit a soft spot.

Diversify Your Customer Base

Are all your customers in one industry? Having all your customers in one industry could be devastating in an economic downturn in that industry, and it will affect your business as well. If the need for your customers’ products or services falls, then their need for yours will drop as well.
Work with multiple industries as much as you can. You can start in one industry become known for that one, however, branch out into other industries as soon as you can. Look at related industries to the one you’re in now.

One Client Does Not a Business Make

Are you trying to achieve your revenue goals with one big client? Having your sales come from one big client leaves you at risk that if you lost that contract (especially if you’re selling based on price alone), your business will die and you’ll have to close. You need to develop your client list, and grow sales to current clients to reduce your businesses exposure to the operations of another.
Admit it if you have just one client, or one huge client, you’ve just created a ‘job’.

Use Insurance to Tackle the Loss of Key Personnel

Do you have one or two key people in your business, including you? Does a positive cash flow rely on a corps of key people? Then having key person insurance is a definite yes. Key person insurance counteracts the potential risk of your business dropping if a key player in your business leaves, is injured and is not able to work, or dies.
That means calculating three major factors: the individual’s salary, the individual’s impact on the company’s bottom line, and the cost to replace him or her upon departure.

Your Business Plan Needs a Checkup Every So Often

You spent all that time coming up with a plan, then shoved it in the drawer and forgot about, didn’t you? Over time a business’s goals will change due to internal and external situation changes. For this reason, you need to occasionally review, and update your plan as needed. You’ll be able to adapt to situational changes as they occur and exploit the benefits of new possibilities and decrease the potential results of any new risks.

Reinvest Your Profits

By putting your profits back into the company, instead of paying it out to investors (or yourself), you’ll lighten the pressure on your cash flow. By reinvesting the profits your business could still be at risk (depends on your business plan), however, a bigger risk would be not enough cash to run your business.
Many business owners make the mistake of taking out all the funds from the company, then end up loaning it back later as cash was short, and the business needed it. Or, ended up financing what could have been purchased outright.

Make Your Payments as Low as Possible

Your business’ credit rating can be damaged by making payments late, even just a few days. Whenever negotiating with suppliers try for the lowest arranged payment possible, this reduces your risk. This ensures you can make payments on time all the time; even when cash flows dips suddenly. You also free up cash for paying your variable expenses with lower payments.

All Contracts Must be in Writing

Always get contracts, proposals, business transactions and agreements in writing. With written documents, you have a chance to read and assess the terms, notices, and other critical documents. Therefore, the chance of a failure in communication is less than if it was a verbal agreement. By having these records in writing, you reduce cash flow risk as you can design your budget and cash flow needs more precisely.
Taking advantage of new business opportunities, and decreasing risk, is more art than science. And, not one you can perfect either. However, the above steps are more likely to help you achieve your business goals. And, by doing these steps you lessen your businesses cash flow unpredictability.

Minimize Taxes on Your Small Business 

By Randall Orser | Business Income Taxes

Income from unincorporated businesses is taxed in the hands of the owners. If you earn income from such a business, you must prepare an income statement each year, showing all the income and expenses of the business. The resulting net profit or loss is then transferred to your tax return and is taxed, along with all your income from other sources. The Canada Revenue Agency (CRA) provides standard business statement forms which it encourages you to use in calculating your profit and loss. However, you are not required to use these forms, as the CRA will accept other types of financial statements.

As a small business owner, you are entitled to deduct the ongoing costs of doing business, so long as the expenses are reasonable and have a profit-producing motive. It is important to have a good record-keeping system, however; otherwise it is inevitable that you will forget about certain expenses that you incurred when tax time comes around! Every dollar of expense that you overlook is one more dollar added to your taxable income, so don’t trust your memory. Instead, write it down, and save those receipts! Some of the more common deductible expenses include advertising, promotion, rent, salaries, legal and accounting fees, and auto expenses.

Deductions Available to Your Small Business

The cost of advertising is deductible, as is the cost of flyers, brochures and other promotional activities. This includes the cost of entertainment and business lunches, if used to promote your business to existing or prospective clients. However, unlike advertising or promotion, only 50% of the total cost for meals and entertainment is deductible.

Office rent paid to a third party is deductible. However, if you own your business premises, or run your business out of your home, you may not deduct the rental value of these premises. Instead, you may deduct any related expenses, such as mortgage interest, property taxes and insurance. These expenses must be prorated if part of the building is used for personal purposes.

Salaries and wages paid to employees are deductible in full, as are the employer-paid premiums for Canada or Québec Pension Plan contributions, Employment Insurance, Workers’ Compensation, and sickness, accident, disability or income insurance plans. Salaries and wages paid to your spouse or child are deductible if the work done is necessary for earning business income, and the amount paid is reasonable, or equivalent to what you would have paid an unrelated person for the same type of work. Salaries drawn by you, the owner, are not deductible, however, and should not be included on the income statement.

Fees for outside professional advice or services are deductible, including consulting fees, bookkeeping and accounting fees, and tax return preparation fees.

Legal fees and similar professional fees incurred for earning business income are deductible. These include fees paid for legal advice related to on-going business activities, or to a collection agency for the collection of bad debts. However, legal fees incurred to buy capital property are not deductible. Instead, these are added to the capital cost of the property.

Business taxes and annual business licenses are deductible. Fines and penalties for infractions of public laws, however, are generally not deductible.

Automobile expenses related to earning business income are deductible. If the auto is used only partly for business, the expenses must be prorated between business and personal use based on the relative number of kilometres driven. Apart from proration, there are no restrictions on operating expenses, such as gas, oil, repairs, insurance and maintenance. However, items related to the capital cost of the auto, like capital cost allowance, interest on auto loans, or lease payments, are restricted. For automobiles acquired 2001 and later, deductibility of interest payments is limited to $300 per month and lease payments to $800 per month, plus GST and PST, or HST. Capital cost allowance is calculated on a maximum value of $30,000, plus GST and PST, or HST. Special-use vehicles, such as taxis, hearses, vans, pick-up trucks, or other vehicles used mainly to transport goods or passengers during business are not subject to these capital-cost restrictions.

You may not deduct the cost of capital expenditures (expenses relating to the acquisition or improvement of a property used by the business) in the year acquired. Such expenditures normally supply a long-lasting benefit; therefore, tax law requires that their entire costs be claimed slowly, over a period of years. This is accomplished through the mechanism of the capital cost allowance system, which allows a certain percentage of the cost to be claimed each year, on a declining balance basis. The percentage varies with the type of property purchased. Capital cost allowance rules can be quite complex, since they deal with acquisition of new property, the sale of old property, and a variety of other contingencies.

Fiscal Year

Income and expenses from a business are calculated on a fiscal-year basis, which need not coincide with the calendar year. However, it is no longer possible to defer taxes on business income (except in the startup year) by choosing an off-calendar fiscal year. This is because a formula must be applied to estimate the income earned from the end of the fiscal year to the end of the calendar year, and this amount must be added to income and taxed in the current year. The following year, the extra income is subtracted from the actual fiscal period income, and a new amount for the stub period is calculated and included in income. The elimination of income deferral means that, unless you have compelling business reasons for doing so, it is usually no longer worth the bother to have an off-calendar fiscal year.

Back up your claims for business losses with a sound business plan

Sharing is one of the first things we are taught as youngsters. The same can also apply to the Canada Customs and Revenue Agency (CRA). When your business enjoys a profit, you must share part of it with the CRA in the form of income tax. By the same token, when your business shows a loss, the CRA shares in that loss, since you are ordinarily allowed to deduct the loss against other income, thus lowering the taxes you would otherwise pay.

But first you must meet the “reasonable expectation of profit” test. The CRA is only willing to share your losses if there is a reasonable expectation that there will be future profits to share as well. If not, your losses will be disallowed as simple personal losses.

This means that you cannot deduct losses arising from hobbies or similar activities if you do not ultimately expect them to be profitable. It also means that you cannot deduct losses if the size or scope of your business is such that your expectation of profit is simply not reasonable.

Because businesses are rarely profitable immediately, start-up losses are usually routinely allowed. However, if your business does not show a profit in a reasonable length of time, those losses may eventually be disallowed. Remember that the CRA can go back as far as three years (sometimes six years if a loss carryback claim has previously been filed) to disallow any losses previously claimed. If your losses were significant, the back taxes and interest can be substantial.

Since you cannot always know in advance whether your business will succeed or not, it is important to protect yourself in case you are not able to get your business “into the black” within a reasonable time. You can avoid having your bona-fide business losses disallowed by taking certain precautions, the most valuable of which is the five-year business plan. So, take the time, put in some effort and be fair to yourself!

For example, let’s say you love photography and have spent a lot of money on equipment. Your work is very good and occasionally you have sold some pictures. It occurs to you that, with a little effort, you could turn your hobby into a business. After all, it would be nice to write off all that equipment, wouldn’t it? Before you jump in, however, take some time to do your homework.

First, prepare a five-year business plan, showing projected income and expenses over that period. Estimate how much revenue you can realistically bring in each year. Then list all the expenses required to generate that income. Be sure to include all expenses that are deductible for tax purposes, including the cost of any personal items you intend to use in the business (for capital items, include depreciation only). Your business plan should also indicate who your intended customers are and how you intend to reach them. It should explain how and where you will obtain the necessary financing, what management skills and expertise you will contribute to the business, and what you must hire from others.

Now study your business plan. Do you have what it takes to run a small business? What are the projected profit/loss figures for the first five years? If your business plan indicates serious deficiencies, or projects persistent losses, you should either revamp your plan, or else continue your photography simply as a hobby, not a business. In other words, until you have a workable business plan, you should consider the losses to be the personal cost associated with a hobby and forget about trying to write them off on your tax return.

However, if your plan is sound, and the projected profit/loss statement shows an upward trend resulting in profitability after a reasonable length of time, you probably have a viable business, even if there are losses in the first few years. If you decide to proceed, use the business plan as your blueprint for building your business. Remember to save one copy of it for your files: it may come in handy if the CRA decides to look more closely at your business sometime down the road.

At the end of each year, compare your actual income and expenses to the projections in your business plan. If your losses were larger than you had projected, figure out why. Were your expenses higher because your business plan overlooked some regular, recurring expenses, or were there start-up costs you didn’t account for? Was your revenue lower than expected because you over-estimated the market or didn’t advertise enough? It is important to determine the cause of the discrepancy, and whether it is a one-time thing, or an on-going problem. Then make the necessary corrections and revise your business plan accordingly.

An Example

To illustrate the importance of the business plan, let’s assume you started your photography business without one. Let’s further assume that things did not go well at first, and you showed consistent losses of $3,000 in each of the first three years. You still think that it is a good business which will eventually make money, but the CRA, looking at your track record, decides to disallow your losses for all three years – all on the basis that you had no “reasonable expectation of profit.” Without a business plan, it is difficult to challenge that judgement. Thus, you could end up out of pocket, not just for the original $9,000 loss, but for the back taxes and interest on that amount of money as well!

How would a business plan help you? First, it would give you an objective, concrete basis for judging whether your business is likely to make a profit. After all, maybe the CRA is right; maybe you were just engaged in “wishful thinking.” A business plan would have indicated this to you much sooner and allowed you to cut your losses before they became too large.

On the other hand, maybe the CRA is wrong. Maybe your expectation of profit is entirely realistic. Maybe the losses were due to unusual circumstances, which have since been rectified, or were a necessary part of getting started in a cut-throat business. A sound business plan, adjusted yearly, will help you prove your case. It will enable you to counter the CRA’s perfect “hindsight” with facts and figures instead of unsubstantiated hopes and dreams.

Thus, instead of paying taxes on disallowed losses, you could invest that money in the business. Or better yet, spend it on something fun, like a well-earned vacation.

Ten Tips for Increasing Your Cash Flow

By Randall Orser | Small Business

Cash is king! That phrase is meant to mean that if the cash doesn’t flow into your business, then your business will die. Efficient cash flow management means you are predicting the cash you’ll need at a point in time, no you don’t have to be physic. You can forecast the trends in cash inflows and outflows to determine any potential surpluses or shortages that could occur. You need to maintain a firm control on inventory, how you extend lines of credit, and prudently manage accounts receivable, if you want a smooth cash flow, or would like to increase it. In this article, we’re going to look at the top ten efforts that’ll support you in the above.

Examine Your Pricing

When was your last price increase? Do you increase them a little every year? Is your pricing aligning with your increase costs? Are you afraid you will lose sales if you increase pricing? For the most part, consumers believe a company needs to implement small, regular price increases to counteract for the businesses rising costs. Are you checking out competitor pricing? You should. If you find your prices are lower than your competitors for similar products/services, then it may be time to hike prices.

In the end, that price hike may not be that big of a deal at all. When I was starting, I was working with a coach and he said to double my prices, which I gasped at as I thought I’d lose all my clients. I didn’t double but close to that. I lost one client, and the others were ‘it’s about time’.

Switch Your Customers to Retainer-Based or Value-Based Pricing

I’ll bet your working with your customers on a project basis, or even hourly. You may want to consider going to a retainer or value-based pricing model. With this model, each customer pays an assured amount of money each month in exchange for certain agreed-to-services that are specified in the scope of that agreement.

How do you get clients to switch to retainer or value-based pricing? You could offer a fee discount, state that prices are going up substantially for project-based or hourly projects, have a value add service that wouldn’t cost much anyhow, or some other incentive. This method may reduce your profit margin a bit, however, your cash flow will be much more foreseeable.

Lease Rather than Buy Equipment

You may want to consider leasing equipment rather than buying it outright or using your line of credit. Buying outright can hurt your cash flow, especially if it’s tight to begin with, and dipping into your line of credit may hurt your ability to cover day-to-day expenses. Yes, the cost of leasing is more expensive than just buying the equipment, however, it does allow you to keep more cash on hand. Leasing can be better than financing in many situations as financing may require a large down payment, that could hurt your immediate cash flow.

Reduce Your Inventory Levels

Having too much inventory on hand is a cash killer. You should be assessing your inventory turnover on a regular basis, and ensuring they’re within your industry’s norms. You need to determine your turnover ratio. You do that by dividing your costs of goods sold by the average value of your inventory. You take your inventory turnover ratio and compare that to your industry’s norm, and if it’s lower then you have weak sales.

Be careful of big discounts to get you to buy more inventory than you need. This kind of purchase just ties up cash, and leaves you at risk of having old or outdated stock. It’s best when you’re in that situation to defer any impending orders, and sell your existing stock. It may be wise to sell your inventory at cost, to improve your cash position.

Revamp Your Billing Practices

The faster you convert your accounts receivable to cash, the better your cash flow, and the more available funds are to grow your business. Accounting software allows you to make billing practices that will help you invoice your customers faster, and more regular until the account is paid in full. The software will also allow you to create a report, Aged Accounts Receivable, which shows your receivables outstanding classified by how old the receivable is. The older the receivable, the longer the customer is taking to pay, and the greater risk they become. Typical aging goes 30, 60, 90, 120+ days, anything not in the 30 day is outstanding and needs to be collected right away. Generally, anything over 120 days is usually not collected.

More and more small businesses are accepting credit cards, and getting away from having receivables entirely. You don’t need receivables unless you’re dealing with larger businesses, and even then many have expense accounts for the buyer to use.

Buy in Bulk to Save

The easiest thing here is to go to somewhere like Costco Wholesale and buy your supplies in bulk; many businesses even buy things to sell in their business at Costco. Of course, this only works if you have the space to store them. The dollar store also works for those office supplies that, in the end, don’t really matter if they’re cheap or not.

Another idea is to create a cooperative with some colleagues to buy items in bulk; you spend less cash on supplies. You can do this with office supplies, such as pens, paper, etc., and hand them out to the other members. This allows to perhaps qualify for a bulk purchasing discount you may not otherwise get.

Make Payments to Vendors on the Due Date

Do your vendors offer extended payment terms? Or a small product discount? It may be better in the end to take the extended payment terms. This way you can delay payments until they are due, and have the cash on hand until the last possible moment.

By pushing your payments out as much as 60 or 90 days, that’s comparable to an interest free loan with your supplier. By getting this delay, you now have lots of time to collect your receivables, and then use that cash to pay your vendors.

Reexamine, and Perhaps Renegotiate Your Long-Term Contracts.

Look at your current periodic business expenses, such as insurance or phone service, and for each get three quotes. How do these quotes compare to your current services? Are they comparable? This is the best way to determine if your current vendors are giving you the best value. You should be checking on those price sensitive services, such as internet, long distance and telephone (cellular) services, etc., and renegotiate when you can.

Have more than one vendor in your pocket

Are you buying all, or most, of your supplies from one company? If so, there’s no real incentive for them to lower their prices to you. The same goes for a long-term contract, there’s no real motivation for them to give you great service. However, if your supplier knows you could give the business to another one, your current supplier may be more receptive to your needs, or wants.

Take Advantage of Early Payment Discounts

Do your vendors give you terms such as, 2% net 15 or 4% net 30? If so, it may well be worth taking this discount. That two percent discount on a 30-day invoice could amount to an equivalent 24% profit on an investment. Check on your invoices to see if there is an early payment discount, and use it to your advantage. If not, request your vendors provide one. Some larger companies just take the 2% off anyway when the remit payment.

Cash flow management is there for you to standardize the flow into and out of your business. There are many ways to realize this goal, such as minimizing inventory levels, renegotiating supplier contracts, and joining or starting a buying cooperative.

New Year, a Brief History

By Randall Orser | Small Business

New Year is the time at which a new calendar year begins and the calendar’s year count increments by one. Many cultures celebrate the event in some manner. The New Year of the Gregorian calendar, today mostly in use, falls on 1 January (New Year’s Day), as was the case both in the old Roman calendar (at least after about 713 BCE) and in the Julian calendar that succeeded it. The order of months was January to December in the Old Roman calendar during the reign of King Numa Pompilius in about 700 BCE, per Plutarch and Macrobius, and has been in continuous use since that time. Many countries, such as the Czech Republic, Italy, Spain, the UK, Canada, and the United States, mark 1 January as a national holiday.

During the Middle Ages in western Europe, while the Julian calendar was still in use, authorities moved New Year’s Day variously, depending upon locale, to one of several other days, among them: 1 March, 25 March, Easter, 1 September, and 25 December. These New Year’s Day changes generally reverted to using January 1 before or during the various local adoptions of the Gregorian calendar, beginning in 1582. The change from March 25 – Lady Day, one of the four quarter days – to January 1 took place in Scotland in 1600, before the ascension of James VI of Scotland to the throne of England in 1603 and well before the formation of the Kingdom of Great Britain in 1707. In England and Wales (and in all British dominions, including Britain’s American colonies), 1751 began on March 25 and lasted 282 days, and 1752 began on January 1. For more information about the changeover from the Julian calendar to the Gregorian calendar and the effect on the dating of historical events etc., see Old Style and New Style dates.

A great many other calendars have seen use historically in different parts of the world; some such calendars count years numerically, while others do not. The expansion of Western culture during recent centuries has seen such widespread official adoption of the Gregorian calendar that its recognition and that of January 1 as the New Year has become virtually global. (Note for example the New Year celebrations held in Dubai to mark the start of 2014, which broke the world record for the most fireworks set off in a single display, lasting for six minutes and including the use of over 500,000 fireworks.)

Nevertheless, regional or local use of other calendars persists, along with the cultural and religious practices that accompany them. Many places (such as Israel, China, and India) also celebrate New Year at the times determined by these other calendars. In Latin America, the observation of traditions belonging to various native cultures continues per their own calendars, despite the domination of recently arrived cultures.

The most common dates of modern New Year’s celebrations are listed below, ordered and grouped by their alignment relative to the Gregorian calendar.
Because of the division of the globe into time zones, the new year moves progressively around the globe as the start of the day ushers in the New Year. The 1st time zone to usher in the New Year, just west of the International Date Line, is in the Line Islands, a part of the nation of Kiribati, and has a time zone 14 hours ahead of UTC. All other time zones are 1 to 25 hours behind, most in the previous day (31 December); on American Samoa and Midway, it is still 11 PM on 30 December. These are among the last inhabited places to observe New Year. However, uninhabited outlying U.S. territories Howland Island and Baker Island are designated as lying within the time zone 12 hours behind UTC, the last places on earth to see the arrival of 1 January. These small coral islands are found about midway between Hawaii and Australia, about 1,000 miles west of the Line Islands. This is because the International Date Line is a composite of local time zone arrangements, which winds through the Pacific Ocean, allowing each locale to remain most closely connected in time with the nearest or largest or most convenient political and economic locales with which each associate. By the time Howland island sees the new year, it is 2 AM on 2 January in the Line Islands of Kiribati.

Paperwork Nightmare Rules

Four Financial Rules To Live By In The New Year

By Randall Orser | Budget , Personal Finances , Personal Income Tax , Small Business

People set ambitious goals when the new year hits, but one of the best goals you can make is to improve your finances and the way you handle them. This article outlines 4 financial rules that you should live by this year.

  1. Save every month

If you do not already have a savings account set up, now is the time to do it. You might have lots of money in your checking account, but it’s a good idea to have a separate account set up specifically for saving. This way you won’t spend it without thinking. You do not have to add every extra penny to the new savings account, but adding a nice chunk to get you started it a good start. It will motivate and inspire you to continue saving. You should also leave a little money to have fun with. Once you have a saving account you can decide how much you will save every month.

  1. Stop indulging so often

It’s fun to treat yourself to things now and then, but if you’ve made a habit out of treating yourself to a $5 coffee every day or a new piece of clothing every time you get a pay cheque, you are overindulging and spending money that you don’t need to be spending. Just because you have money doesn’t mean that you need to spend it. By cutting out three coffees each week, you will save money automatically.

  1. If you want something, save for it

Credit cards have made the need to save seem obsolete. This isn’t the case though. Once your credit card bill comes in, you still need to pay for whatever you bought. If you don’t have the money in your account when you buy the item you want, then it’s better to not buy it. Save up for what you want and then buy it. You’ll appreciate things more when you save for them before rushing out to buy them.

  1. Pay off credit card in full

It’s important to your credit score that you pay off all bills in full and on time. If you tend to forget what you’ve bought and what your balance is going to be when you get your bill, hold on to all receipts so that you can add them up. If you don’t pay off your bills on time, the interest will add up and it’ll be even more difficult to pay off.

Improving the way you deal with money will not only help you this year, but also for life. Good money habits will last you forever.

Christmas, A Brief History

By Randall Orser | Small Business

Christmas or Christmas Day is based on the old term Christ’s Mass (Crīstesmæsse in Olde English), and was used as celebrating Jesus Christs’ birthday (though no one knows when he was born, maybe April or September). By the early-to-mid 4th century the Western Christian Church had placed Christmas on December 25, a date which was later adopted in the East. Today, most Christians celebrate on December 25 in the Gregorian calendar, which has been adopted almost universally in the civil calendars used in countries throughout the world. However, some Eastern churches celebrate Christmas on the December 25 of the older Julian calendar, which currently corresponds to January 7 in the Gregorian calendar, the day after the Western Christian Church celebrates the Epiphany.

Although it is not known why December 25 became a date of celebration, there are several factors that may have influenced the choice. December 25 was the date the Romans marked as the winter solstice, and Jesus was identified with the Sun based on an Old Testament verse. The date is exactly nine months following Annunciation, when the conception of Jesus is celebrated. Finally, the Romans had a series of pagan festivals near the end of the year, so Christmas may have been scheduled at the time to appropriate, or compete with, one or more of these festivals.

The celebratory customs associated in various countries with Christmas have a mix of pre-Christian, Christian, and secular themes and origins. Popular modern customs of the holiday include gift giving, completing an Advent calendar or Advent wreath, Christmas music and caroling, lighting a Christingle, an exchange of Christmas cards, church services, a special meal, and the display of various Christmas decorations, including Christmas trees, Christmas lights, nativity scenes, garlands, wreaths, mistletoe, and holly. In addition, several closely related and often interchangeable figures, known as Santa Claus, Father Christmas, Saint Nicholas, and Christkind, are associated with bringing gifts to children during the Christmas season and have their own body of traditions and lore. Because gift-giving and many other aspects of the Christmas festival involve heightened economic activity, the holiday has become a significant event and a key sales period for retailers and businesses. The economic impact of Christmas has grown steadily over the past few centuries in many regions of the world.

“Christmas” is a shortened form of “Christ’s mass”. It is derived from the Middle English Cristemasse, which is from Old English Crīstesmæsse, a phrase first recorded in 1038 followed by the word Cristes-messe in 1131. Crīst (genitive Crīstes) is from Greek Khrīstos (Χριστός), a translation of Hebrew Māšîa (מָשִׁיחַ), “Messiah”, meaning “anointed”; and mæsse is from Latin missa, the celebration of the Eucharist. The form Christenmas was also historically used, but is now considered archaic and dialectal; it derives from Middle English Cristenmasse, literally “Christian mass”. Xmas is an abbreviation of Christmas found particularly in print, based on the initial letter chi (Χ) in Greek Khrīstos (Χριστός), “Christ”, though numerous style guides discourage its use; it has precedent in Middle English Χρ̄es masse (where “Χρ̄” is an abbreviation for Χριστός).

The earliest known Christian festivals were attempts to celebrate Jewish holidays, especially Passover, per the local calendar. Modern scholars refer to such holidays as “Quatrodecmials” because Passover is dated as 14 Nisan on the Jewish calendar. All the major events of the life of Jesus were celebrated in a single festival, including conception, birth, and passion. In Greek-speaking areas of the Roman Empire, the Macedonian calendar was used. In these areas, the Quartodecimal was celebrated on April 6. In Latin-speaking areas, the Quartodecimal was March 25. The significance of the Quartodecimal declined after 165, when Pope Soter moved celebration of the Resurrection to a Sunday, thereby creating Easter. This put celebration of the passion on Good Friday, and thus moved it away from the Quartodecimal.

Today, many non-Christians celebrate Christmas, or the spirit of Christmas (peace, love, harmony), and partake in the activities. Christmas trees, presents, a big family dinner are all done by many non-Christians.

organized workplace

How to Organize Your Workplace

By Randall Orser | Small Business

As the new year approaches, it is a good time to think about your workplace and how it’s organized. A properly organized workplace provides a far less stressful and more efficient location for working. Taking some time to rearrange your work area is not just about clearing your desk, but making it more productive. The following tips will help you to clear out your home office and transform it into a much more pleasant place to work.

Get Rid of the Things You Don’t Need

Many home offices start to look like they belong to a compulsive hoarder after a while. However, when you have to rifle through a whole lot of junk in order to find something you need, you are simply wasting time which could be better spent focussing on more constructive and important areas of your daily routine. If you have a particularly cluttered workplace, going through a mountain of papers, old mail and other items might seem like a bit daunting, but spending some time weeding out the junk and the other things you don’t need will definitely pay off. Determine what you need in your office and get rid of anything that is not necessary for your daily routine.

Organize Your Desk

If you haven’t got one already, it is a very good idea to have a desk which offers plenty of drawers or cupboards. Keep your desk organized by placing the most important and frequently-used items in the top drawer. Categorize the lower drawers to have one which holds, for example, correspondence and another which holds things like receipts and tax information. Get the clutter on the desk under control by using a single tray for papers and other items which you need to use in the next day or two. Get rid of any clutter which isn’t associated with work and put it elsewhere in your home.

Organize Cords and Wires

While wireless technology and mobility is all the rage these days, the number of cords and wires can still get overwhelming, particularly if you have things like surround sound speaker systems, printers, external hard disks and other peripherals connected to your computer. The average desktop computer still comes with a tangled mess of cables which have an annoying habit of getting in the way all the time. You can help to keep them organized by routing all cords through a cut-out hole in the back of your desk, connecting all power points to a surge protector (this is also safer), using wires to keep cables together and placing identification tags on the end of each cable.

Give Yourself a Change of Scene

Often the best way to organize your office, or at least get inspired to do so, is to simply start from scratch. A change of scene can work wonders when it comes to getting motivated and inspired, so it may be time to completely rearrange your home office or even move it to another location in your house. Choose a room which has plenty of natural light and enough space that you can comfortably move around while also being able to store everything that you need in the most convenient manner possible. You may also want to consider buying a new desk offering improved storage options, or changing the lighting in your office to give it a different atmosphere. Having a room with a view, if possible, is also ideal for any home office.

Make Getting Organized Part of Your Daily Routine

If organizing your office doesn’t become part of your daily routine, then it is not likely that it will stay organized for long. Keeping organized should become a habit. Even spending just a few minutes at the end of every working day arranging your office can help to keep it in great form in the longer term. Get into the habit of throwing away old documents and letters which are no longer required as soon as you are done with them. Spend a few minutes clearing your office so that you will be ready to get straight to work the next day without any unnecessary stress.

Guaranteed Income Supplement

As a Senior Do I Qualify for the Guaranteed Income Supplement

By Randall Orser | Small Business

The Guaranteed Income Supplement provides additional money, on top of the Old Age Security pension, to low-income seniors living in Canada. To be eligible for the GIS benefit, you must be receiving the Old Age Security pension and meet the income requirements explained below.

How do I Apply for the Guaranteed Income Supplement?

You must apply for the Guaranteed Income Supplement (GIS). To get an application form, contact Service Canada at 1-800-277-9914. You can also re-apply for GIS by filing your income tax return. If you did not qualify for the GIS benefit in the past, but you think you might be eligible now, you should apply as soon as possible. Normally, individuals must apply for the GIS benefit on their own behalf. If you are applying for someone else, please call Service Canada for more information.

Changes made to the Old Age Security Act have simplified the application process for the Guaranteed Income Supplement (GIS). It is now easier for you to apply and receive the benefits for which you are eligible. You only need to apply once for the benefit and will not need to re-apply, as long as you file an income tax return each year.

Do I Need to File a Tax Return Every Year?

If you do not file an income tax return, or if we need more information, we will send you a renewal application form in the mail. If you receive an application form from us, you must complete and return it as soon as you have all the necessary income information, even if you file a tax return.

The GIS benefit is based on your annual income, or the combined annual income of you and your spouse or common-law partner, if you have one. A change in income could therefore result in a change in benefit. Each July, you will receive a letter that tells you the new amount of your monthly payment or the reasons why your GIS benefit has stopped.

What Makes Me Eligible for the GIS?

To qualify for the GIS, you must be eligible for the Old Age Security pension. Eligibility also depends on whether the combined income of you and your spouse or common-law partner, if you have one, exceeds a specific amount. On July 1, 2008, an amendment to the Old Age Security Act came into effect increasing the GIS earnings exemption to $3 500 from $500. A single pensioner, for example, earning $3 500 or more, will now be able to keep up to an additional $1 500 in annual GIS benefits.

When applying for the GIS benefit, you, and in the case of a couple, you and your spouse or common-law partner, must report the following income:

  • Canada Pension Plan or Quebec Pension Plan benefits
  • Private pension income and superannuation
  • Foreign pension income
  • RRSPs that you cashed during the year
  • Employment Insurance benefits
  • Interest on any savings
  • Any capital gains or dividends
  • Income from any rental properties
  • Any employment income minus allowable deductions including your Canada Pension Plan and/or Quebec Pension Plan contributions and your Employment Insurance premiums. Subtract the lesser of the result of the calculation or $3,500;
  • Income from other sources such as workers’ compensation payments, alimony, etc.

Benefits received from the Old Age Security program, including the Guaranteed Income Supplement and the Allowance, are not included as income.

In some situations, such as when you stop working or when you suffer a loss or reduction of pension income, we can calculate your GIS benefit by estimating your pension and employment income for this year, instead of using last year’s pension and employment income. If you or your spouse or common-law partner have a lower income this year for either of these reasons, you should Service Canada. Your benefits may increase.

Here is a chart of how the benefits work:


Marital Status of GIS Recipients Maximum monthly GIS benefit

(January to March 2016)

Maximum Income

(January to March 2016)

Single, widowed, or separated $732.36 $16,368 Couple (an OAS pensioner and a spouse or common-law partner who does not receive OAS)
Couple (Two OAS pensioners) $485.61 $21,648
Couple (an OAS pensioner and an Allowance recipient) $485.61 $39,264

You can learn more and apply here.

A Brief History of Taxation

By Randall Orser | Personal Income Tax

All forms of government rule through control of taxation revenues, it has been a necessity of civilization since time began. If we grant prostitutes their claim to be the world’s oldest profession, we can be certain they had dealings with a tax collector. “It is not my due tax at all” are the words written on tablets by a scribe of Ancient Egypt in the Old Kingdom period, one of the earliest examples of tax frustration.

The keeping of accounts was the main purpose for developing a system of writing. The earliest cuneiform samples of Mesopotamia circa 2500 BC describe the relevant poll tax and the types of tolls and fees that merchants had to pay when transporting goods from one region to another. The law codes of Hammurabi, made famous in the Old Testament, deal with the penalties for smuggling to avoid paying tax as well as the punishments of citizens trying to avoid the obligatory government service. This form of tax could take the form of hard labor on civil projects such as digging a canal or, at worst, military service.

Although technically illegal, sending a hired surrogate to fulfill this obligation was a thriving trade in this ancient society, perhaps making getting out of paying your tax the world’s third oldest profession. Tax shelters have been documented as early as the fourth dynasty in the Old Kingdom of Egypt (2625-2500 B.C.E). The staff and the property of sacred temples, which were often funded through tax revenues, appeared to have been successful in gaining an exemption from paying taxes or compulsory labor

The tax collector truly became a villain in the Roman Empire, when the function was given over to ruthless profiteers who employed gangs of thugs to ensure the colonials had rendered Caesar his due.  By the time of the New Testament being written, tax collectors were considered to be amongst the lower professions. However Paul does put a divine induction on tax season saying in Romans 13:5 “This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing.”

In more modern times, as governments became more adept at collecting taxes, the revenue accrued increased dramatically. Unfortunately for the taxpayer, so did expenditure. As wars became more common and more expensive, the tax burden increased. Studies have confirmed that the tax burden of the eighteenth and early nineteenth centuries increased by 85% in England. No surprise then that this period gave rise to the first calls for what we know as Progressive Taxation. Adam Smith, in Wealth of Nations, wrote “It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.” The cry “No Taxation without Representation” was the shout heard around the world, the spark that ignited the American Revolution. The Declaration of the Rights of Man has this to say about taxation: “A common contribution is essential for the maintenance of the public forces and for the cost of administration. This should be equitably distributed among all the citizens in proportion to their means.”

Knowing that current taxation policies were founded on these principles should hopefully provide some reassurance when preparing to pay your taxes. When you are writing that check to the government consider that you are providing essential revenue to a system that is based on the highest principles of taxation theory, developed over centuries of evolution. Then be thankful you are not required to serve three months digging silt out of a royal canal instead!

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