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President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.

Happy New Year!

By Randall Orser | Happy New Year

Wow, it’s hard to believe that 2017 is coming to a close already as it feels we just started it a few weeks ago. I do hope your 2017 has been a good one, and that 2018 is even better.

The Finns do it the weirdest

In Finland, each new year family and friends gather to burn metal in a pan for a ritual called "molybdomancy". The Finns inspect the shadows the metal casts by candlelight, as those shapes are supposed to predict the future. Although, this metal is customarily called “tin,” it’s actually sometimes lead, which, among other things, is known to spark severe mental illness... that might explain why this ritual has persisted for hundreds of years. And while that's all pretty well and weird, the Finns aren't alone: Ecuadorians burn paper-filled scarecrows, the Swiss drop ice cream on the floor, and people in Siberia plunge into frozen lakes while carrying a tree trunk -- all to ring in the new year.

The 8th most common New Year's resolution is to improve a relationship

Only around 40% of us will even make a resolution. While nearly all of those vows err on the side of improvement (e.g. start exercising, improve your finances, quit smoking), the 8th most common resolution is to get along better with someone else, according to a 2012 Harris poll. So what’s the number one New Year’s resolution? Weight loss (duh).

We celebrate on Jan. 1 because Julius Caesar said so

Why does the New Year begin on January 1st? Because our contemporary (Gregorian) calendar is based on the Julian one (named after none other than the Big Ceas) and he made January month numero uno (which is latin for "number one" btw).

But New Year's used to be on March 20th

The first indication of a new year’s celebrations crop up around 2000 BC in the Middle East. Or, as its known in 9th grade history class, “Mesopotamia". At that time (2000 BC, not 9th grade), each year began on March 20th, AKA the vernal (or Spring) equinox. That's the one where the sun crosses directly over the equator. Nowadays, celebrating New Year’s is illegal in much of the same region (e.g. Saudi Arabia). Fertile crescent? More like festive crescent!

January is named after a god with two faces

We have ancient Rome to thank for our year beginning in January. The Roman god the month is named after, Janus, was described as having two faces. That's not a catty put-down either. We mean he literally had double the mug. When depicted in ancient Roman art, one of Janus' faces looks forward, while the other looks back. You know, like how you do on New Year's. Mad metaphorical.

Southerners eat black-eyed peas on New Year's Day for good luck

Thought to have been derived from a Jewish New Year (Rosh Hashanah) custom, Americans in the South annually gobble black-eyed peas. Most Southerners (and many historians) maintain the tradition began to take hold stateside when the first Shepari Jews moved to Georgia in the 1730s. By the end of the Civil War, the Rosh Hashanah tradition had evolved into a widespread practice in the South, enjoyed by both Jews and gentiles.

The ball drop is over 100 years old

Before Times Square was the home of M&Ms, naked cowboys, and hard-haggling middle-aged men in Elmo costumes, it was a classy little bit of town, called One Times Square. Its first New Year’s ball dropping took place December 31, 1907. Since then, it’s tumbled down every year (save for a couple during World War II). Over a million-people flock to watch every December.

The New Year's kiss has been around since the Middle Ages

Historians reckon that the New Year’s kiss is derived from either German and English folklore (it was a tradition in both). Both customs contended this: the first person you encounter in a new year will set that year’s tone. So, if the person you encounter likes you enough to make out with you, things are looking pretty good. Or maybe you're just looking pretty good.

The only other people who still sing "Auld Lang Syne" are Boy Scouts

The lyrics of Auld Lang Syne (which we can't abbreviate because ice buckets) are from a 1788 poem by an old Scot called Robert Burns. Well, Burns attributed the lyrics to unwritten remarks by an unnamed old man. But a few graphs of it very closely (near verbatim) resemble a poem called "Old Long Syne" written in 1711 by a man called James Watson. It's assumed Burns at least wrote the rest of it. Things like: Is thy sweet Heart now grown so cold, that loving Breast on thine. Catchy. Apparently, the Boy Scouts of America sing it at the end of their jamborees. Now you want a "Things you didn't know about Boy Scouts", right!?

Nearly a quarter of you are gonna PTFO

About 22% of Americans cop to passing out before the clock strikes 12. Unless you’re Cinderella and you gotta buck before your whip turns pumpkin, then there's no excuse. Being conscious to recognize midnight is the whole reason there was even a party, man. That and eating all the pigs in a blanket.

Will I Have to File a Tax Return for This Year?

By Randall Orser | Personal Income Tax

2017 is pretty much done, and it’s time to start thinking about taxes (it comes sooner than you think). You’re wondering if you need to file a tax return, and more than likely you do. Here’s eighteen reasons to file a 2017 tax return come April 2018.

Do you have to file a return?

You must file a return for 2016 if:

  • You have to pay tax for 2016.
  • Canada Revenue Agency (CRA) sent you a request to file a return.
  • You received working income tax benefit advance payments in 2016.
  • You disposed of capital property in 2016 (for example, if you sold real estate, your principal residence, or shares) or you realized a taxable capital gain (for example, if a mutual fund or trust attributed income to you, or you are reporting a capital gains reserve you claimed on your 2015 return).
  • You have to repay any of your old age security or employment insurance benefits. See line 235.
  • You have to contribute to the Canada Pension Plan (CPP). This can apply if for 2016 the total of your net self-employment income and pensionable employment income is more than $3,500. See line 222.
  • You are paying employment insurance premiums on self-employment and other eligible earnings. See lines 317 and 430.

Even if none of these requirements apply, you should file a return if:

  • You want to claim a refund.
  • You want to claim the working income tax benefit for 2016.
  • You or your spouse or common-law partner want to begin or continue receiving Canada child benefit payments, including related provincial or territorial benefit payments.
  • You have incurred a non-capital loss (see line 236) in 2016 that you want to be able to apply in other years.
  • You want to carry forward or transfer the unused part of your tuition, education, and textbook amounts. See line 323.
  • You want to report income for which you could contribute to an RRSP and/or a pooled registered pension plan (PRPP) to keep your RRSP/PRPP deduction limit for future years current.
  • You want to carry forward the unused investment tax credit on expenditures you incurred during the current year See line 412.
  • You receive the guaranteed income supplement or allowance benefits under the old age security program. You can usually renew your benefit by filing your return by April 30. If you choose not to file a return, you will have to complete a renewal form. This form is available from Service Canada.

Really, there’s every good reason to file a tax return for 2017 even if you’re not working.

Merry Christmas!

By Randall Orser | Small Business

We’d like to take this time and wish you and yours a very Merry Christmas and a Happy New Year! I hope 2017 has been good to you and here’s to a prosperous 2018.

Here’s some interest facts about Christmas.

It wasn't always on December 25

Though Christmas celebrates the birth of Jesus Christ, there is no mention of December 25 in the Bible. (Most historians believe he was actually born in the spring.) It wasn't chosen as the official holiday until the 3rd Century. Some argue that the date was picked because it coincided with the pagan festival of Saturnalia, celebrating agricultural god Saturn with partying and gift-giving.

Thank Prince Albert for your tree

Another Christmas tradition stemming from Saturnalia was the Christmas tree: During the winter solstice, branches served as a reminder of spring — and became the root of our Christmas tree. The Germans are credited with first bringing evergreens into their homes and decorating them, a tradition which made its way to the United States in the 1830s. But it wasn't until Germany's Prince Albert introduced the tree to his new wife, England's Queen Victoria, that the tradition took off. The couple were sketched in front of a Christmas tree in 1848 — and royal fever did its work.

Coca-Cola came up with the red suit

Well, Santa wore a variety of colorful suits through the years — including red, blue, white, and green — but legend has it that the popular image of his red coat came from a 1930s ad by Coca Cola.

St. Nick was more generous than jolly

Sure, you probably knew that Santa Claus came from St. Nicholas, a Christian bishop living in the fourth century AD. St. Nicholas gave away his abundant inheritance to help the needy. He also was known for good deeds like rescuing sisters from prostitution. As his legend spread, he was eventually known by names like as Sinter Klaas in Dutch — which morphed into Santa Claus. He's not just the protector of children, either: St. Nicholas is also the patron saint of unmarried women, prisoners, thieves and pawnbrokers. How's that for a naughty list?

Stockings have a funny root

Gift-giving also came from Holland. There, St. Nicholas' feast day is celebrated December 6 by children leaving out shoes overnight and finding little gifts from St. Nicolas in the morning. According to legend, hanging stockings came from the take of a poor man who couldn't afford his three daughters dowries: St. Nick dropped a bag of gold down their chimney one night so that the eldest could wed — but it fell into a stocking that was drying by the fire!

Rudolph was almost named Reginald

A copywriter named Robert L. May first invented the oddball reindeer in 1939 as a marketing gimmick for Montgomery Ward's holiday coloring books. (May considered naming the beloved misfit Reginald and Rollo.) And his nose wasn't originally going to be red: A red nose was viewed as a sign of sign of chronic alcoholism, and Montgomery Ward didn't want him to seem like a drunkard. Good thing they changed it. "Reginald, the blue-nosed reindeer" doesn't have quite the same ring … or charm.

Jingle Bells was originally a Thanksgiving song

James Lord Pierpont, an organist from Savannah, Georgia, first performed a song he wrote, "The One Horse Open Sleigh," at his church's Thanksgiving concert. The song was re-published in 1857 and given the title of today. Bonus fact: It's also the first song broadcast from space. On December 16, 1965, the Gemini 6 crew serenaded Mission Control after they reported seeing a "red-suited" astronaut.

Christmas sends at least 15,000 people to the ER

From hanging lights on ladders to taking roast out of the oven, making merry can prove hazardous. In fact, the Consumer Product Safety Commission estimates that an average of 15,000 Americans visit hospital emergency rooms each November and December from holiday-related decorating accidents. To top it off, dried Christmas trees spark hundreds of fires, an average of 17 deaths, and $13 million in property damage annually.

Merrymaking used to be illegal

Though the first American batch of eggnog was created by the Jamestown settlers, by the time the Puritans settled Boston, Christmas was illegal. (The word nog comes from the word grog; that is, any drink made with rum.) From 1659 to 1681, celebrating the once-pagan day could cost you a fine of as much as five shillings. And after the Revolutionary War, the new Congress found the day so unimportant that they held the first session on Christmas Day, 1789. It wasn't proclaimed a federal holiday for nearly another century.

Washington Irving created Santa's sweet ride

He's best known for The Legend of Sleepy Hollow's headless horseman, but the author also came up with the idea of Santa's flying sleigh. In The Sketch Book of Geoffrey Crayon, an 1819 series of short stories, Irving recounted a dream where St. Nicholas flew across the sky in a wagon. According to legend, his stories were so popular that they sparked a Christmas fervor in the United States and even England, so much so that Charles Dickens reportedly was inspired by Irving when making his own holiday classic, A Christmas Carol.

The Grinch stole the box office

It's hard to decide which holiday classic to watch first — or which one will be most popular with the whole family. But when it comes to the box office, the highest-grossing Christmas movie of all time is How the Grinch Stole Christmas starring Jim Carrey.

Santa has his own zip code

Every year, letters to Santa Claus flood post offices across the world. Some Canadian Post Office workers even started answering them — but as more letters arrived, they set up a special zip code for Santa as part of a "Santa Letter-Writing Program" literacy initiative. The postal code? H0H 0H0.

Favorite carols have complicated histories

The original lyrics to "Hark! The Herald Angel Sings" were "Hark! How the Welkin rings!" Pretty catchy, right? (Welkin was an old English term for heaven.) And though "Silent Night" was rumored to be a Christmas miracle by Father Joseph Mohr of Oberndorf, Austria, whose organ was broken, the truth was less dramatic: A Catholic priest wrote the poem "Stille Nacht! Heilige Nacht!" in Mariapfarr, Austria. Two years later, he transferred to Mohr's St. Nicholas Church and asked Franz Gruber to put it to music, which they performed on Christmas Eve 1818.

And the holiday classic "Santa Claus Is Coming to Town" has a less jovial history. Songwriter James "Haven" Gillespie was asked to write a Christmas song. At the time, he was broke, jobless, and mourning his brother's recent death. Despite being overcome with grief, he found inspiration in the holiday memories he and his brother had shared.

Xmas doesn't remove Christ from Christmas

It's quite the opposite, in fact. According to From Adam's Apple to Xmas: An Essential Vocabulary Guide for the Politically Correct, the word "Christianity" was spelled "Xianity" as far back as 1100. X, or Chi, in Greek is the first letter of "Christ" and served as a symbolic stand-in. In 1551, the holiday was "Xtemmas" but eventually shortened to "Xmas."

Americans ship an unbelievable amount of gifts

Last year, on December 22, the U.S. Postal Service delivered a staggering 28.2 million packages — breaking its own record for most parcels ever delivered in a single day in its 237-year history. That's just ONE day of the entire holiday season, too!

Mistletoe was believed to be an aphrodisiac

Stealing kisses used to be just the beginning. The holiday flora is an ancient symbol of fertility and virility — and the Druids believed it was an actual aphrodisiac. (So thank them at the next awkward holiday function.) And the name even has a funny meaning: The mistle thrush bird eats the berries, digests seeds, and the droppings eventually grow into new plants. So, the Germanic word for mistletoe literally means "dung on a twig."

Ham, not turkey, is the festive favorite

The dinner debate rages on. Searches for "ham" and "turkey" both spike during the month of December, according to Google Trends data. (Though it's nowhere near how frequently "turkey" is hunted for online in November!) But despite the popularity of both festive entrees, spiral-cut ham remains the more popular choice for a Christmas table. In 2013, Americans bought 318 million pounds of ham during November and December, or 50% of their annual total consumption.

And the most popular Christmas song is...

The Irish Rovers "Grandma got run over by a reindeer,” naturally. (Fun trivia, is the biggest selling novelty Christmas single of all time in the U.S.) But the best-selling tune of all time is Irving Berlin's standard, "White Christmas."

What Does the Tax Rate Really Mean?

By Randall Orser | Personal Income Tax

Many people get confused over what tax rate they’re actually paying. We hear about tax brackets and the rates within, but what rate are you actually paying? The Canadian tax system is based on marginal rates in tax brackets, and you’re taxed based on the income and the rate in that bracket.


What is a 'Marginal Tax Rate'

A marginal tax rate is the amount of tax paid on an additional dollar of income. The marginal tax rate for an individual will increase as income rises. This method of taxation aims to fairly tax individuals based upon their earnings, with low-income earners being taxed at a lower rate than higher income earners. You’re taxed on each additional dollar of income

Your marginal tax rate has important implications for financial planning. You need to know your marginal tax rate to calculate what amount of your raise or bonus you’ll get to keep after taxes or whether it is worthwhile to contribute more to your RRSPs.

What is an ‘Average Tax Rate’

The average tax rate is pretty simple as it’s the total tax paid divided by your total income. The average tax rate reflects the total tax you are paying to the government.

The current federal rates are below (provincial rates are different for each province, so we won’t go into those right now).

Federal tax rates for 2017

  • 15% on the first $45,916 of taxable income, +
  • 20.5% on the next $45,915 of taxable income (on the portion of taxable income over $45,916 up to $91,831), +
  • 26% on the next $50,522 of taxable income (on the portion of taxable income over $91,831 up to $142,353), +
  • 29% on the next $60,447 of taxable income (on the portion of taxable income over $142,353 up to $202,800), +
  • 33% of taxable income over $202,800.

For example, James has an income of $75,500 for the 2017 tax year. His total federal tax would be $12,952.12. He’s taxed on the first $45,916 at 15% = $6,887.40 and the next $29,584 at $20.5% = 6,064.72. His average rate would be $17.15% which is the federal tax divided by total income ($12,952.12 ÷ $75,500.00).

Your total income is not taxed at the marginal rate but each dollar is taxed at the rate that your income fits as in the above example.

Of course, the above doesn’t reflect the actual tax paid, this is just an example, as your total tax bill will be depending on many factors such as RRSP contributions, donations, medical and more.

Employers – Don’t Make These Five Hiring Mistakes

By Randall Orser | Small Business

Hiring staff is probably one of the most talked about things a business person does. It’s not easy and it can be somewhat forgiving. When you’re hiring someone, you have to consider their skill level as well as their personality, and how are you going to incorporate them into your business (on-boarding). We’re looking at the five common hiring mistakes many new employers make.

Narrowing Your Search Too Much

You probably have the image of the ‘perfect’ candidate, however, you’re doing yourself a big disservice as most applicants won’t be that ‘perfect’ fit. Don’t fall into the trap of hiring the same individual every time you need to hire someone. Businesses that are diverse are much more successful. As they say, ‘hire for attitude, not aptitude.’

Going with First Impressions

While first impressions are crucial, they should not be the only basis on which you hire. Too many employers base their hiring decision on whether or not they are impressed at the first meeting, rather than the skills and mindset of the candidate. The most challenging aspects of the hiring process is not knowing if the candidate will perform to your company’s standards once they are hired.

Not Knowing What You Need

You should know what your business needs when it comes to hiring; more than just filling the positions for which you’re hiring. You must be clear on what the job entails in regard to the duties and responsibilities. The worst thing you can do is misled the candidate as you risk a bad hire. You should have a detailed job description, so the candidate knows exactly what they will be doing when hired.

Unclear Hiring Policies

Things change a lot in the world of business, and we’re okay with that. However, for hiring you need to be clear on your hiring policies no matter how many times it’s changed. With unclear hiring policies come mishaps, including confused hiring managers, and perhaps legal trouble. As an employer you need to have a handbook that covers your rules and regulations of your business.

Not Showcasing Your Company Culture

Your potential hires want to know what your business has to offer them. As they’re away from their family for half the day, they want to know what your work environment is like. They want to know about benefits, salary, flexibility, and perks. The last thing a potential hire wants to do is take a financial gamble with your company. By being clear with your hiring intentions, you avoid this mistake.

The perfect employee doesn’t really exist; however, you can get close. The above tips will aid in your hiring process and increase your chances of a good hire.

Are You an Apprentice?

By Randall Orser | Small Business

Have you recently become an apprentice for one of the trades or other? If so, you may be able to get some tax incentives. You can get a credit for the tools you have to buy, as well as the tuition and books you need to do the schooling for your trade.

Tradesperson’s Tools deduction

If you have purchased eligible tools to earn employment income as a tradesperson or apprentice, you may be able to deduct their cost, including any goods and services tax (GST), provincial sales tax (PST) or harmonized sales tax (HST) you paid.

An eligible tool is a tool (including associated equipment such as a toolbox) that:

  • you bought to use in your job as a tradesperson and was not used for any purpose before you bought it;
  • your employer certified as being necessary for you to provide as a condition of, and for use in, your job as a tradesperson; and
  • is not an electronic communication device (like a cell phone) or electronic data processing equipment (unless the device or equipment can be used only for the purpose of measuring, locating, or calculating).

Maximum deduction for eligible tools is the lesser of:

a) $500; and

b) the amount, if any, determined by the formula

A − $1,161 where

A = the lesser of:

1. the total cost of eligible tools that you bought in 2016; and

2. your income from employment as a tradesperson for the year

  • plus, the amount you received in 2016 under the Apprenticeship Incentive Grant and the Apprenticeship Completion Grant programs;
  • minus the amount of any Apprenticeship Incentive Grant and Apprenticeship Completion Grant overpayments that you had to repay in 2016.

You are an eligible apprentice mechanic if you:

  • are registered in a program established under the laws of Canada or of a province or territory that leads to a designation under those laws as a mechanic licensed to repair self-propelled motorized vehicles (such as automobiles, aircraft, boats, or snowmobiles); and
  • are employed as an apprentice mechanic.

Eligible Apprentice Mechanic

As an eligible apprentice mechanic, you must first calculate the tradesperson's tools deduction (above), if any, that you qualify for.

You are an eligible apprentice mechanic if you:

  • are registered in a program established under the laws of Canada or of a province or territory that leads to a designation under those laws as a mechanic licensed to repair self-propelled motorized vehicles (such as automobiles, aircraft, boats, or snowmobiles); and
  • are employed as an apprentice mechanic.

An eligible tool is a tool (including associated equipment such as a toolbox) that:

  • you bought to use in your job as an eligible apprentice mechanic and was not used for any purpose before you bought it;
  • your employer certified as being necessary for you to provide as a condition of, and for use in, your job as an eligible apprentice mechanic; and
  • is not an electronic communication device (like a cell phone) or electronic data processing equipment (unless the device or equipment can be used only for the purpose of measuring, locating, or calculating).

Tuition Tax Credit and licensing examination fees

If you have eligible tuition fees, as well as certain licencing examination fees, you may be able to claim them on your income tax and benefits return.

Examination fees paid to an educational institution, professional association, provincial ministry or other similar institution, to take an occupational, tradeor professional examination that is required to obtain a professional status recognized by federal or provincial statute, or to be licensed or certified as a tradesperson, to allow you to practice the profession or trade in Canada, may be eligible for the tuition tax credit. You should be provided with a receipt to substantiate your eligible exam fees. To view the information that should be contained in the receipt go to example of a receipt for licensing examination fee.

If you have more than one tax certificate, you can claim all amounts that are more than $100.

You cannot claim the tuition amount on your tax certificate if any of the following applies to you:

  • the fees were paid or reimbursed by your employer, or an employer of one of your parents, where the amount is not included in your or your parent's income;
  • the fees were paid by a federal, provincial, or territorial job training program, where the amount is not included in your income;
  • the fees were paid (or eligible to be paid) under a federal program to help athletes, where the payment or reimbursement has not been included in your income.

Education amount

You will have received a tax certificate from your educational institution indicating the number of months you were enrolled full-time (Box C) or part-time (Box B).

Full-time – Box C

For tax years prior to 2017, multiply $400 by the number of months indicated in Box C.

You can also claim the full-time amount if one of the following applies to you:

  • you were enrolled as a full‑time student;
  • you were enrolled part-time and you can claim the disability amount; or
  • you were enrolled part-time and you had a mental or physical impairment certified in a letter by a medical doctor, optometrist, audiologist, occupational therapist, psychologist, physiotherapist, or speech-language pathologist but you do not qualify for the disability amount.

Part-time – Box B

For tax years prior to 2017, multiply $120 times the number of months indicated in Box B.

You cannot claim the education amount if you:

  • received a grant, reimbursement, benefit, allowance or were reimbursed for the cost of your courses by your employer or another person with who you deal at arm's length;or
  • received a benefit as part of a program (such as free meals and lodging from a nursing school).

Textbook amount

You can claim only one textbook amount for each month that you qualify for the full-time or the part-time education amounts.

You can claim the textbook amount only if you can claim the education amount.

The amount is:

  • $65 times the amount in Box C of the certificate you received from your school; or
  • $20 times the amount in Box B of the certificate you received from your school.

This credit may disappear after 2017 tax year.

As an apprentice you have some great deductions you can claim against your income, and you should definitely take advantage of them come tax time. Just remember to keep receipts, and you have to have your employer sign a T2200 Declaration of Conditions of Employment.

Make Outsourcing Work for your Business

By Randall Orser | Small Business

How are you going to handle expansion? You need to make some decisions in your business on this front. You could hire staff and the associated risk with that plus the issue of turnover, but this is can be costly and a presumption that the growth will continue to cover your costs. Of course, you could curtail your marketing and keep your business at a constant level you can handle.

However, there is another choice that you can make that not only allows for your expansive without too much of that financial risk as the above alternatives have. Outsourcing is a way to use outside agencies to help you spread the workload. Outsourcing can be a very economical way of propelling your business forward. You do need to do outsourcing the right way if you want to reap the benefits.

Outsource the Right Functions

What is a good fit for outsourcing? Not everything is for sure. The favourable activities are those that focus on everyday administration or other routine work, rather than your core business. A good example, and one I highly recommend, is your bookkeeping and accounting, that’s a perfect choice. By outsourcing this you can draw on their experience without sacrificing control over what makes your business unique.

However, outsourcing any customer-facing activities carries appreciable risks. Your reputation is vital to your continuing success, notably in this age of social media, and you need to retain tight control on your dealings with the public. You’re much better to keep these activities in-house and assign it to a trusted staff member. Or, if you do outsource, maintain control over what is posted.

Prioritize Value Over Cost

Outsourcing can save you money, but don’t forget it’s also about growing your business in an economical way. Find the right service provider who’ll bring the right results, and don’t be afraid to pay a little more, rather than just concentrating on price.

Constantly Monitor Value

Your outsourced value may not stay the same over periods of time. You actually may grow so much that you end up bringing it back in-house as this makes the most sense at the time. Market conditions may also change to the point where your current outsourcing provider is no longer the best in terms of price or quality. Outsourcing’s main point is the freedom it does give you. If making changes will help your business grow, don’t be afraid to do so.

Patience

You need to give it time to develop the right outsourcing relationship. You need to both learn each other’s strengths and weaknesses, and effortless communications can take time to create. You need to be monitoring the results continuously and carefully, and change providers when necessary, however, cutting and changing too often means your outsourcing relationship doesn’t get the chance to settle and show its value.

Delegation and Accountability

Remember, the outsource company is not an employee, and there’s no loyalty to you or the company and they won’t work beyond their assignment. You need to determine the terms and scope of services they will provide, as well as set out the results you wish to receive. You also need to setup an effective means of communication. Who is the responsible contact on each side of the relationship? You need to make this clear from the start, as miscommunication is almost inevitable if no one is clear on who is answerable to whom.

Don’t Overlook Legalities

As the importance of the function you’re outsourcing grows, the more you need to have a contract, and you should have one for any relationship. If the results end up being not what you expected, you need a clear way out without excessive cost or difficulty. Further, you need to protect yourself from an outsource partner who just up and leaves you high and dry. You can definitely lessen these risks by having a little legal backup with a well-written contract, even the best relationships have their issues.

Outsourcing can be an attractive way to accelerate growth without committing long-term resources or risking financial stability. Even so outsourcing needs to be approached carefully to get the most out of it. Solid groundwork and awareness of the potential concerns will ensure your decision to outsource is profitable.

Get Your Receipts Together Now for Taxes

By Randall Orser | Business Income Taxes

Many shoppers in Canada quickly decline the offer of a receipt when a store clerk asks them. You won’t ever catch a small business owner doing this. It’s not that they like drowning in thousands of little slips of paper; instead, they just know that without every receipt they can get their hands on, their tax return could get out of hand. What businesses need, then, is a way of cataloging and organizing receipts to present to the Canada Revenue Agency (CRA).

The CRA has very strict rules about businesses providing proof of their expenses. They also offer lenient treatment in these matters sometimes. For instance, CRA may let businesses get away by merely showing detailed accounting and other records as proof that they have spent the money they claim and may only look at certain items. In an audit, the auditor usually has a dollar figure he wants to look at and skips over anything under that amount. Sometimes, the CRA will accept these defenses for a lack of receipts. At other times, they will have none of it. It is safest to keep receipts for everything. Two items where this is never the case is automobile and meals.

There are two parts to providing the CRA with the proof required – getting all the receipts from all the vendors you deal with and then organizing them to present to the CRA as proof. Getting the receipts is easy enough – you only have to resolve to ask for them. Organizing receipts in a manageable and presentable way, though, is the other. These tips below help you keep your records well-sorted.

To organize receipts in proper form, you need to first know what each receipt is for. When you have a load of receipts at the end of the year, it can be hard to know which proves what. Each time you get a receipt, then, you need to make notes on it for what it is for. You may not be able to use the receipt otherwise.

It can be difficult to keep hundreds of little slips of paper organized for years. The CRA can come back long after a tax year is done and ask for additional proof for something. This is what receipt scanners are there for. The CRA accepts scans in place of original receipts. Make sure that you keep a couple of backups of your scans, though. If you don’t, you could be sunk if you lose your hard drive for some reason. Taking pictures on your smartphone camera could be a great alternative, too. There are dozens of apps that help you organize your receipts.

It is hard to overestimate how confusing hundreds of receipts can be when you need to find a specific one for a specific expense. If you have the misfortune to be in a tax audit, you can find that merely having an organized set of receipts is not enough. The CRA auditor may ask for additional corroboration – in the form of a business calendar. If you are deducting travel expenses, for instance, the auditor may want to look at your business calendar to see if you actually have travel plans jotted down in there. Maintaining a detailed Outlook calendar could be a great idea.

Final tips

It is important to keep all your bank and credit card statements. These aren’t good enough to take the place of actual receipts, though. These statements typically use short descriptions for each expense. An expense line may say that you’ve spent $700 at Amazon – it won’t say that you bought business software with that money. As far as the CRA is concerned, you could have bought $700 worth of Silly String cans. You need to keep your receipts as well as your credit card statements.

Finally, whatever happens, always pay with checks or plastic. Cash expenses do come with receipts; they don’t have additional corroboration in the form of bank or credit card statements, though. As far as the CRA is concerned, there is no such thing as too much proof.

You’re much better off trying to ensure you have all your receipts for your business expense, and for those personal expenses you can deduct such as donations and medical expenses, now rather than waiting until April (June for small business); in which case, you may end up filing late.

The CRA is happy to give you thousands of dollars off your tax bill. The only thing they ask in return is solid corroboration for each expense you deduct. Collecting and organizing receipts, though, proves to be a tall order for many small businesses. These tips that follow show you where many businesses make mistakes and what you can do to keep your tax return safe. Or better yet, hire Number Crunchers® and get this headache off your shoulders.

Spark the Fire of Your Curiosity

By Randall Orser | Small Business

At a small businesses core is its owners’ curiosity. Finding new solutions to an existing problem, or simply find how something works, or why is something the way it is, and this ambition is what takes your business to greater heights. Do you have to be born with curiosity? Probably doesn’t hurt, however, you can spark your curiosity with the following four ideas.

Ask Questions

The heart of any curious person burns with questions. Look at a toddler, constantly asking ‘why?’. They want to know all the who, what, where, why, and how of things. You don’t want to be as annoying as the toddler in your questioning, however, if you want to spark curiosity you need to ask questions. Don’t stop once you get an answer. Now’s the time to figure out why it’s the way it is, and if there are other, maybe better, options. Analyze all that relates to that question.

Best of all, it’s free. While you’re trying to ascertain why certain best practices are the way they are, you get a better understanding, however, you may just bring about some insights. That insight could direct you towards other avenues that other business people didn’t see.

Expand Your Horizons

Many people often limit themselves because of their background. This influences what they think about as well as what paths they see as favourable. Some businesses will hire people from assorted backgrounds in order to get the greatest value off brainstorming sessions. You can get massive value when you have people of differing lines of thinking.

You can do this for yourself by broadening your mental horizons. One great way to do this is to travel, as experience different cultures pushes your mind to think differently. Do something different every day. Break the patterns your brain falls into.

Always be Learning

It’s great that your curious about stuff. It’s even fine that you want to know about things you don’t know but other people are doing, is good, although it’s not very efficient. Your curiosity should lead to many new things as possible, and the best way to do that is always be learning.

Whatever industry you’re in, read as much as you can about it. Go after those things that interest you to their logical conclusion. That thing doesn’t even have to be related to your work. Browsing the shelves of your local library can light your way to interesting topics. Always be learning gives you more chances for your curiosity and genius to spark.

Reassess Your Plans and Strategies

Many small business owners lose their curiosity because they adhere to their plans too strictly. This isn’t necessarily a bad thing. Your plans keep you grounded and focused, however, like many things you can take it much too far.

Why are your plans the way they are? Those plans were created using knowledge you had at the time. More than likely that knowledge has grown and changed since then. Reassessing your plans can spark something in your mind because you know more. Not only are you keeping your curiosity alive, but you get stronger plans overall.

To always be learning may not always be fun. However, knowing things is both fun and productive. This can lead business owners to concentrate only on things they know as it’s usually a positive experience. You must embrace the unknown in order for your curiosity spark to remain alive.

Will You Owe Tax at Tax Time?

By Randall Orser | Personal Income Tax

Whether or not you end up owing tax depends on many factors. If you’re employed, and don’t have income other than from your employment, then you probably won’t end up owing anything. On the other hand, if you’re self-employed, more than likely you’ll end up owing something at tax time.

Employed Person

While being an employee and getting a T4 slip at the end up of the year, you may not think you’ll end up owing on your taxes, but that may just not be the case. Do you have other income such as investments (dividends or capital gains), or withdrawals from an RRSP? Maybe you have a rental property?

Any income you earn outside of your job will cause you to owe money at tax time. How much you’ll owe will depend on what your employment income was. You have to be careful and monitor your other income during the year, so, if you do owe tax come April it’s not a complete surprise and you’ve saved up for it. Or, you’ve made instalment payments to your income tax account with CRA and you don’t have to worry about a payment in April as it’s already paid for.

Your other income may actually put you into another tax bracket, so be careful when withdrawing RRSPs and such. For 2017, the federal tax brackets are:

  • 15% up to $45,916
  • 20.5% on $45,917 to $91,831
  • 26% on $91,832 to $142,353
  • 29% on $142,354 to $202,800
  • 33% above $202,800

Where is your employment income now? And, what will your additional income be? Where does it fit into the above scale? Your tax rate will change depending on the level of income.

If you have a total income of $107,000 then you’re in the middle tax bracket of 26%. You don’t pay 26% on the full $107,000 you pay approximately: $6887(15%) on the first $45,916, $9413 (20.5%) on the next $45,915, and $3,944 (26%) on the rest for a total of $20,244.

Your employment income may have only been $85,000 and federal tax on that would be about $14,899. In this case you pay about $5,345 on the additional income of $22,000.

As you can see having that additional income can me quite a bit more tax when it pushes you into a higher tax bracket. You may be wondering how to alleviate this tax, and the best way is RRSPs. Take your profits from the other incomes and put that into RRSPs, at least you can reduce the tax you owe.

Self-employed Person

As a self-employed person, you pay income tax based on your net income (revenue less expenses), so your tax owing can vary quite a bit from year-to-year depending on how your business is doing. Any year you have a loss, it will be first applied against any other income you have, and the balance will be carried forward to the next year; you can also carry a loss back if the prior year was profitable.

Where your income fits in the above brackets is how you will be taxed. The more you make, the more you end up paying in taxes. You can alleviate tax owing by doing RRSPs, and other deductions such as spousal (if you spouse’s net income is low); tuition credits for yourself, spouse or children; child care expenses; and more.

Ideally, the goal with a business is to get the income as low as possible for tax purposes. Though, be warned, this could bite you later when trying to get personal loans or mortgages as your income may be too low for the banks.

The following, as per Canada Revenue Agency, may be considered when determining operating expenses:

The above are based on what CRA has classified as expenses per the T2125 Statement of Business or Professional Income, which you file with your personal taxes each year. The links are to CRA’s definition of that expense. You can deduct other expenses as will fit into your business, however, CRA may not allow it for tax purposes. For example, speeding tickets, parking fines are not allowed as a deduction for tax purposes, though in your books you can write those off as they are considered a part of doing business.

Note: the above calculations are for federal tax, every province and territory also levies an income tax. Those rates can be found here.

Whether or not you owe tax at tax time will depend on many factors, most notably what are your total income from all sources for the calendar year. It may be a good idea come December to figure out what your total income is, estimate your taxes owing, and make an instalment payment to cover the taxes rather than owe at amount at tax time.

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