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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.

What Child and Family Benefits are Left?

By Randall Orser | Personal Income Tax

The federal government in its infinite wisdom decided to eliminate many benefits for families with children and did prop up the one benefit left giving families a monthly stipend depending on their income. Now the only benefit left is the Canada child benefit (CCB).

What is the Canada Child Benefit (CCB)?

The Canada child benefit (CCB) is a tax-free monthly payment made to eligible families to help them with the cost of raising children under 18 years of age. The CCB might include the child disability benefit and any related provincial and territorial programs, such as the BC early childhood tax benefit.

The Canada Revenue Agency (CRA) uses information from your income tax and benefit return to calculate how much your CCB payments will be. To get the CCB, you have to file your return every year, even if you did not have income in the year. If you have a spouse or common-law partner, they also have to file a return every year.

Benefits are paid over a 12-month period from July of one year to June of the next year. Your benefit payments will be recalculated every July based on information from you and your spouse’s (if applicable) income tax and benefit returns from the previous year. If any of your information from the following list changes during the year, we will recalculate your benefit the month after the change occurs.

For July 2018, in its Fall Economic Statement, the Government proposes to strengthen the CCB by increasing the benefits annually to keep pace with the rising cost of living. In the fall of 2016, the Government committed to index the CCB to inflation starting July 2020, but the government believes that a growing economy and improved fiscal track means it can deliver on this commitment two years sooner. 

To be eligible for the Canada child benefit (CCB), you must meet all of the following conditions:

  • You must live with the child, and the child must be under 18 years of age.
  • You must be primarily responsible for the care and upbringing of the child.
  • You must be a resident of Canada for tax purposes.
  • You or your spouse or common-law partner must be:
    • a Canadian citizen
    • a permanent resident
    • a protected person
    • a temporary resident who has lived in Canada for the previous 18 months,                    and who has a valid permit in the 19th month
    • an Indian within the meaning of the Indian Act

What Benefits or Credits Could you Get?

When you apply, the Canada Revenue Agency (CRA) will determine if you are eligible for:

  • the Canada child benefit
  • any related provincial or territorial programs

The CRA will also register your child for the goods and services tax/harmonized sales tax (GST/HST) credit.

When Should you Apply?

Apply for the CCB as soon as possible after:

  • your child is born
  • a child starts to live with you
  • you or your spouse or common-law partner meet the eligibility conditions

CCB payments can begin the month after you become eligible, as long as you are still eligible at the beginning of the current month.

You should apply even if:

  • you share custody of your child
  • your child is living with you for a determined temporary period of time
  • your current family net income is too high to get the CCB (you might be eligible for other benefits)

Although the Canada child tax benefit and the universal child care benefit are no longer being issued, you can still request an adjustment for previous years, if you were eligible.

Who Should Apply?

The individual who is primarily in charge of the care and upbringing of the child should apply for the CCB. You are primarily responsible for the care and upbringing of the child if you:

  • supervise the child’s daily activities and needs
  • make sure the child’s medical needs are met 
  • arrange for child care when necessary

For CCB purposes, when a male and a female parent live together in the same household as the child, the female parent is usually considered to be primarily responsible for the child. In this situation, the female parent should apply. If the male parent is primarily responsible, he must attach a note to his application from the female parent. The note must state that he is primarily responsible for all of the children in the household.

If two parents of the same sex live together in the same household as the child, one parent should apply for the CCB for all of the children in the household. You are not considered primarily responsible if the child is legally, physically, or financially maintained by a child welfare agency. For more information on this situation, see children's special allowances.

Do you Share Custody?

You share custody if the child lives with you and another individual in separate residences on a more or less equal basis. The child might regularly alternate between residences in the following cycles:

  • four days with one person and three days with the other
  • one week with one person and the next week with the other
  • any other regular alternating cycle

Both individuals must be primarily responsible for the child's care and upbringing when the child lives with them. Each eligible individual will get 50% of the payment he or she would have received if the child lived with him or her all of the time. If you have just entered into a shared custody situation you have to apply for benefits.

Although a court order might state which individual should receive the CCB, the CRA is bound by the Income Tax Act, which is the legal authority the CRA uses to determine who eligible individuals are. If you start or stop sharing custody of a child, let us know as soon as possible.

How is the CCB Calculated?

Your Canada child benefit (CCB) payments are calculated for the period of July of one year to June of the next year using the following information:

  • the number of children who live with you
  • the ages of your children
  • your adjusted family net income
  • your child’s eligibility for the child disability benefit  

CRA recalculates your payment every July based on your adjusted family net income from the previous year. Your net income is the amount from line 236 of your income tax and benefit return. Your family net income is your net income plus the net income of your spouse or common-law partner, if you have one.

CRA "adjusts" your family net income so that we don't count any universal child care benefit (UCCB) and registered disability savings plan (RDSP) payments you receive. CRA does this to make sure that people with low and modest incomes get the most benefits they can. However, if you have to repay any UCCB and RDSP amounts, they will include them as part of your adjusted family net income.

Your marital status affects how your benefits are calculated. If your marital status changes, you need to tell CRA before the end of the month after the month your status changed. For example, if your marital status changed in August, tell them about the change by the end of September.

To estimate the amount of CCB you might be entitled to, as well as any benefit from CCB-related provincial or territorial programs and other benefits, use the child and family benefits calculator. Calculations are based on the information you enter in the calculator fields.

Basic Benefit for July 2018 to June 2019

CRA calculates the Canada child benefit (CCB) as follows:

  • $6,496 per year ($541.33 per month) for each eligible child under the age of six
  • $5,481 per year ($456.75 per month) for each eligible child aged 6 to 17

We start to reduce the amount of CCB you get when your adjusted family net income (AFNI) is over $30,450. The reduction is calculated as follows:

  • families with one eligible child: the reduction is 7% of the amount of AFNI between $30,450 and $65,976, plus 3.2% of the amount of AFNI over $65,976
  • families with two eligible children: the reduction is 13.5% of the amount of AFNI between $30,450 and $65,976, plus 5.7% of the amount of AFNI over $65,976
  • families with three eligible children: the reduction is 19% of the amount of AFNI between $30,450 and $65,976, plus 8% of the amount of AFNI over $65,976
  • families with four or more eligible children: the reduction is 23% of the amount of AFNI between $30,450 and $65,976, plus 9.5% of the amount of AFNI over $65,976

The CCB is now pretty much the only kid friendly tax benefit from our government. Only time will tell if it will actually benefit the lowest income people or not.

Great Summertime Jobs for Girls

By Randall Orser | Small Business

Summertime jobs are being sought after more and more by girls. In 2017, 59% of girls were working a summer job, representing an increase from the previous year. 2018 will see an increase as well as more girls seek seasonal jobs. The summertime job is much more than just a way to pass the time between school years. Many girls are working summer jobs to help them pay for college, at the same time gaining valuable experience in the employment world. The following are some great summertime jobs for girls.

Summer Camp Counsellor/Counsellor in Training

The American Camp Association says there are about 7,000 overnight camps and 5,000 daytime camps running all over the US; Canada has quite a few too though not as many as the US. With over eleven million kids and adults participating in these camps, girls have tons of opportunities to hone their skills as a camp counsellor or counsellor in training.

Lodge and Resort Jobs

According to the US Bureau of Labour and Statistics:

"In July 2017, the largest percentage of employed youth worked in the leisure and hospitality industry (26%), which includes food services."

The hospitality industry is attractive to girls as it’s an environment that nurtures companionship among peers. Jobs at resorts are bountiful in the summer as additional staff is required to adjust to the increase in vacationing guests. Some of the jobs at resorts and lodges are: assistant management, tour guide, restaurant server, front desk attendant, greeter, and housekeeping.

Pet Sitter

Most Canadians own a pet of some sort, the majority own a cat (37%) according to government statistics; dogs are at 32%. Pet owners also need to take vacations, so there’s the opportunity to help in caring for their pets during the daytime, creating the perfect job opportunity for money-minded girls who love caring for animals.

Swim Coach/Lifeguard

Coaching the neighbourhood swim team or serving as a private swim coach for a local club or organization is a great way for active girls to get their feet wet in the job market. These are an excellent way to stay active on the job while helping others learn how to master a new sport. It also gives them a chance to work with younger children, and what it’s like to coach them.

Lifeguard is another job that could be good for active girls. This could be at the neighbourhood pool, or even the beach. Great way to stay active and get acquainted with working with the public.

Social Media Assistant

According to statistics over 70% of girls use more than one social media site, and many display a great aptitude for designing and updating social media sites than their parents or members of the older generations. Working as a summertime social media assistant allows tech-savvy girls to channel their social media expertise in a way that bolsters business for their employers. The tasks of a social media assistant can include:

  • Design social media websites for companies
  • Update social media sites with daily posts and photos
  • Assist in the preparation of social media blog content
  • Help respond to customer inquiries sent through social media sites

Amusement Park Jobs

The International Association of Amusement Parks and Attractions (IAAPA) says there are over 400 amusement parks in the United States; Canada not quite as many but there are over 25. These parks employ over 600,000 people, including about 500,000 seasonal jobs. Walt Disney world is probably one of the most popular parks that hires summer employees and is known for providing jobs that are seen as challenging and interesting by those who work them. If you want to work at an amusement park this summer, here are some of the opportunities available:

  • Thrill ride operator
  • Gift shop cashier
  • Front gate attendant
  • Greeter
  • Ticket issuer
  • Security assistant

Blog Writer

A growing number of girls are making money by writing blog content for companies and as freelance writers. Many companies are looking for teenage girls to server as blog writers and provide age appropriate and gender specific content. Some of the most successful young female bloggers end up blogging full-time and make thousands of dollars per month by launching their own blogs.

Tutor

Tutoring is a rewarding and lucrative job for girls who are academically inclined and who excel at helping others learn and retain information. Tutoring opportunities are plentiful in the summer, especially in the subjects of math, science, and English. You can also tutor students who are preparing for standardized tests such as the SAT and ACT. Or, teach foreign students who are learning English for the first time.

Summer Intern

From internships.com:

"Employers can attract talent from all over the United States for internships over the summer months.       Companies such as the Walt Disney Company even offer housing and relocation assistance to attract the most talented students to their summer internships".

Summer internships are a great way for college students who are seeking employment while also looking for opportunities to satisfy college coursework requirements. Organizations such as internships.com make it easy for girls to search for available internships by location, company, and industry. You can even find valuable tips on finding the best internship to meet your educational needs.

Landscaping Technician

We tend to pay more attention to our lawns and landscaping during the summer as we spend more time outdoors. Girls who love the outdoors and appreciate greenery are great candidates for summer landscaping jobs. As a landscaping technician, you would be maintaining lawns, gardening, planning trees and shrubs, and enhancing the overall appearance of outdoor properties.

Selecting the best summertime job for you is process that should be more than asking how much money you get. When deciding on a summertime job, take the time to think about your passions, your skills, and your future goals. Ideally, the summer job you choose should facilitate your skills and passions while being challenging and rewarding. No two girls are created with the exact same set of skills and aptitudes, and you deserve to find a summertime job that will allow you to shine.

Four Tips to Help You Work Successfully from Home

By Randall Orser | Small Business

Working from home is fast becoming a trend. Many have succeeded in their home business although there are others who fail in such a set-up. The most common reason a lot of people fail in a work-at-home set-up is they lack the motivation. It is quite easy to adopt a lax attitude if you run your business from home. The comforts of home (e.g., the TV, video games, the fridge!) are temptations that are simply easy to give in to than resist. You need to create an environment that is conducive to working if you wish to achieve home business success.

Define Your Workplace at Home 

It is important that you designate a specific area of your home you can use as your office. Having a defined workspace helps you achieve two things. One, you will subconsciously associate your home office with work so that every time you sit at your desk, you automatically get into your working mood. Two, you will be able to organize your work better. Your home office can be a spare room or even just a quiet corner anywhere in the house. The only requirement is you have enough space where you can have all the things you need when you are working. You should also be able to isolate yourself during your working hours to avoid being distracted by the daily activities at home.

Get the Appropriate Office Furniture and Equipment 

As you build your home business office, you may easily be tempted to buy stylish furniture, high-tech pieces of equipment, and fancy gadgets. If you do give in to that temptation, you may discover sooner rather than later you have only wasted money if it turns out you hardly have use for them. Thus, plan the furnishing of your home office and plan it right.  

Depending on what kind of home business you have, you must first determine the types of furniture and equipment you will need for your daily operation. Identify which ones are necessary and which items you could do without. This way you could shop wisely and save your money for other, more productive uses. And do not forget your communications system. You will need a separate telephone line and an email account to be used exclusively for your business. You may also need a fax machine but do check your actual communication requirements, which must depend on how or what you will communicate with your customers, associates, and suppliers.

Develop Self-Discipline 

When you decide to work at home, you become your own boss. With this comes the responsibility of finishing your work on time. This means you should not be playing with your kids when you know you must be working on a project. Arrange for a sitter or place them on day care when you have to work but do set a family time so you can spend quality time with them. Online chatting and playing computer games are also big time robbers that you must be smart enough to pass up during your working hours. Of course, you also need to go on breaks during your workday but schedule those breaks to avoid disrupting your focus. 

Organize Your Work and Create a Routine 

One way you can efficiently work from your homebusinessoffice is to regard it as a regular work place. Organize your paperwork, file your documents regularly, and schedule all your tasks. Observe cleanliness in your home office and keep your desk uncluttered at all times. Set priorities and arrange your schedule accordingly. 

Follow the aforementioned tips and you can be certain to achieve home business success.


PESTLE Analysis for Your Business

By Randall Orser | Small Business

Politics, economics, sociology, technology, legal, and environmental (PESTLE) is an analysis framework the allows businesses to determine the health and potential of their business. These six factors of the PESTLE method contribute contextual information that expedites more targeted and informed business decisions. You can gain a better understanding of your business and industry by doing your due diligence of these six areas. In the end, you’re much better placed to make proactive decisions that promote growth and stability.

Politics

What is the government on the federal, provincial and local level up to as it relates to your industry? Whatever the government does can have an impact on your industry and the economy. Tax laws and trade restrictions (think the trade war happening now) can greatly influence your operational procedures and sooner or later your profit margins. You need to stay informed of any pertinent changes to political policies or legislation.

Political changes often reflect the attitudes of your target market, so it’s smart to stay on top of local and national political sentiment. The political environment can be a positive as well as a negative influence on your day-to-day business, however, knowing about any changes in advance helps you to be proactive in your preparations so you can at least try to take advantage of any situation that occurs.

Currently, the housing market is one area right now (2018) that the government is sticking its nose into thinking it can make housing affordable, not realizing that by doing so many owners may end up in financial ruin.

Economics

The success of any business is fundamentally related to the wider economic climate. You need to look at how present and anticipated economic factors, such as inflation and interest rates, are affecting your business. Stay informed about the economic outlook for your industry and community and make decisions based upon what’s right for your business.

The timing of major financial decisions can have a great impact on your financial prosperity. An example would be getting a loan when interest rates are low would save a large amount of capital that could be better spent in other areas. The key to using various economic changes to your advantage is keeping abreast of what’s happening so dedicate sufficient time and resources to collecting economic data.

Sociology

Your market demographics should be a foundational component of your sociological research. Take the time to determine the descriptive characteristics of your market such as their age, location, and disposable income. The more you know about your potential customers, the more strongly you can direct your product and marketing to them.

Knowledge of all cultural and demographic aspects of a market can help you develop your service. All businesses need to fulfill a role in society and only through detailed sociological analysis can you clearly define yours.

Technology

Technology is often a critical driver of innovation and market growth. Keep apprised of technological advances that could improve your efficiency and profitability. Technology is changing faster than ever, but you still need quickly figure out which ones will have a tangible and positive impact on your business.

Whether you commit to your own research and development or just keep your finger on the pulse of innovation, technological research is an important aspect of business development. Determine your current setup and identify any areas that could be improved by a change in technology. Executing technological changes in your business will prove to be a wise investment if it increases efficiency and widens profit margins.

Legal

You need to assess the legal landscape of your industry and business as they may directly affect the operation of your business. You need to be aware of the basics all businesses must follow, such as consumer and employment laws, but you also need to know of any legislation that may specifically relate to your business.

There may be industry specific laws that your business is subject to, however you may find that you’re actually exempt from others. Governments will regularly encourage certain industries via individualized legislation and tax breaks, so it pays to be aware of the law as it applies to your business.

Environmental

Some industries can more keenly benefit from environmental research, however, it’s definitely advantageous for all businesses to have a base knowledge of how environmental factors may impact business. For example, the climate and ecology of a specific area are certainly relevant to the tourism, insurance and farming industries. The environmental impact of your business may also be driving potential customers away, so apart from the ethical side of things, it can be undeniably more favourable to lessen your environmental impact of your operation.

An analysis of the strengths and weaknesses of your business, in relation to your industry and market, will increase your understanding of the operational health of your business. Using a mix of the factors in the PESTLE framework is a simple and dynamic approach to assessing your business and its potential for growth and sustainability.

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Is Now a Good Time to Review Your Tax Situation?

By Randall Orser | Business Income Taxes , Personal Income Tax

As summer is upon us, business slows down a bit, and we take time to relax.  It may also be a good time to think about your taxes. Yeah, I know. It’s summer, I don’t want to think about that yet. But, hear me out. The first half of the year is gone, and you have a good idea how it went, so from this you can project what the rest of the year is going to be. With this projection, you can estimate what your tax bill will be. Why? So, you’re not shocked come April of the next year with how much you owe. Instead, you’ll be like, yeah that’s what we thought and you have the funds to pay the bills. 

When we’re talking about taxes, we’re including the Canada Pension Plan (CPP) in these calculations, because as a self-employed person you pay your taxes and CPP at the same time.

Are your books up-to-date?

In order to be able to do any tax projections, you have to have your books up-to-date for the end of June. Are your expenses entered, banks reconciled, credit cards reconciled, and payables entered too? Once you have June completely finished then you are able to look at what your taxes could be. If you’re working with a bookkeeper, let them know what you want to do, and they should get you financials as soon as June is completed. They may even be able to help you with the projections.

The big question now is, how much do you set aside for taxes? 

Canada Revenue Agency (CRA) may have already done this for you based on a prior tax filing year. If you owed more than $3,000 in a prior tax year, CRA will send you a notice in August that you must make instalment payments in September or December. In February you’ll get a notice for the March and June payments. Usually CRA splits the amount into 4 equal payments. If you’re going to owe at least the same amount last year, then you must make these instalments or you will suffer penalties and interest for not paying them.

You’ve looked at your profit and loss statement (P&L), and realize that you’re doing much better this year compared to last year at the half way mark. You need to decide if you should increase your instalments for September and December, or keep them the same. As long as you paid the amounts in your instalment reminder, you should be okay even if your tax owing is more when you file the next year. Now, if you haven’t made any instalments this year, then now is the time to estimate and pay those in September and December.

The simplest way to estimate taxes owing is to take 25% of your estimate net income (revenue minus expenses) times the 25%. The 25% would be approximately 10% for CPP and 15% for taxes. Now this doesn’t take into account the home office deduction, depreciation, or other deductions, such as RRSPs. This isn’t perfect, however, it does give you something in order to pay instalments. If you’re net income is below $15,000, in many cases you’ll owe CPP, and very little to no tax, depending on your province of residence. In this case, you could use 15% and be pretty accurate.

You can take the net income from your P&L for the end of June, and double that and take the 25% the net income for what your potential tax liability will be for the year. If you don’t think the last half of the year is going to be as good as the first half, then estimate what you think it’ll be, add that to June’s net income and times that figure by the 25%. And, of course, if you think the last half is going to be much better then increase your net income estimate. The simplest way to estimate the last half of the year is to just take a percentage of the first half. What percentage? Well, that depends on what you think you’re sales are going to be in the last half. 

Estimating your taxes can be difficult, however, sometimes you just have to take the easy approach and give it a good ole guess. It’s better to pay too much rather than too little. Plus, remitting instalments relieves that shock come April, and you’re much more relaxed at tax time because you’ve already paid the bill.

 

How Resilient is Your Business?

By Randall Orser | Small Business

Being flexible is an essential attribute for any successful business of any size. However, smaller businesses have a much higher chance of being impacted by changing market forces or unanticipated events. How your business reacts to and recovers from unexpected events is in direct correlation as to how you structure and manage it. The following tips will help improve your businesses resilience and increase your potential for long-term stability.

Clients

Your most important aspect of your business is your customer as they generate your income. The best way to protect that income is to diversify your customer base and have more than one revenue stream. You end up exposing your business to risk if you rely on a small number of clients.

Focusing on just a narrow range of paying clients that you may struggling to cope when client numbers drop. Now this isn’t to say, don’t niche, you definitely want to pick a niche; however, you can have several niches. Your time and money should be invested into attracting a healthy pool of clients to lower the impact of a fluctuating client base.

Staff

Your staff, much like your customers, are relatively unpredictable variable. You don’t want to have too small of a staff. A focused care of reliable and trustworthy ones is good, but if their numbers drop off thought whatever circumstances, you need to be able to adapt.

Train your staff in multiple, overlapping areas of your business so each can cover the other’s absences, and train new employees as necessary. If one member of your team has a niche knowledge set, you may find them hard to replace when they leave.

Waste

Eliminating waste is always a good thing to practice. When business is doing great, we tend to slip into or ignore wild actions. Unfortunately, these bad habits end up carrying over into the less profitable times. Your staff are challenged to break out of their pre-established routines in order to keep a level of efficiency at all times. If your business becomes wasteful, the transition to frugality may be too much for you and your staff to adjust to when it’s necessary by changing market forces.

Plan

You need an action plan you can refer to in order to react quickly to an unexpected event. Having an emergency plan for unforeseen events eliminates a lot of mistakes that come about from panicked decision making. Look at each of your staff’s roles and how you’d want them to react to a range of various scenarios before they know their role.

Part of your contingency plan is ensuring you have an emergency cash reserve, so save as much as you can at all times. Create a specific fund (bank account) and add to it as often as you can, so you can pay your bills and fulfill your obligations if revenue streams dry up. Your cash reserve will more than likely be your sole savior of your business when it faces hardship or financial adversity and most successful businesses credit their success to falling back on emergency funds early on in their operational history.

Monitor

Knowing about an approaching crisis can give you the power to react to it effectively. Educate your staff on the warning signs of potential problems relevant to your business model and ensure there is a clear and effective channel of communication in place so concerns from anywhere in your organization can be conveyed quickly to the people in positions of greater power.

If your staff seem troubled, take their opinions seriously. Your staff as they work in the business everyday are more likely to identify potential problems but, unfortunately, they’re also often the last to be heard. Once you’ve identified an issue early, you have the benefit of being able to be proactive rather than reactive.

The difference between failure and success of your business is knowing how to react when disaster strikes. Your business needs to plan for unforeseen events so as to have a better chance of weathering the storm and coming through the other side as more resilient, healthy and profitable.

 

How does the CRA Select a Return for Review?

By Randall Orser | Small Business

Canada’s tax system is based on self-assessment, therefore, every once in a while the Canada Revenue Agency (CRA) must conduct reviews or audits to ensure you’re filing correctly. Each year, the CRA conducts a number of review activities that promote awareness of and compliance with the laws it administers. These reviews are an important part of the compliance activities CRA undertakes in order to maintain the Canadian public's confidence in as well as the integrity of the Canadian tax system. 

There are a number of reasons why an income tax return may be selected in one of CRA’s review programs. These reasons include:

  • random selection;
  • comparison of information on returns to information received from third-party sources, such as T4 information slips;
  • types of deductions or credits claimed and an individual's review history.

The process of selecting returns for review is the same whether the return is filed on paper or electronically. Therefore, the chances of a return being selected for review are not impacted by the method used to file the return. We refine the focus of our reviews annually based on review results and problem areas identified.

Most income tax returns filed each year are processed within two to six weeks. The CRA processes most returns without conducting a manual review of the information reported so that a Notice of Assessment and/or refund can be issued as quickly as possible. However, all returns are screened by the CRA’s computer system and may be subject to review at a later date.

Even in this electronic age you should keep all receipts and documents to support your claims for at least six years in case you are selected for review. And, in a format that CRA can access, such as PDF or Word files. If you’re a small business, keep all your accounting data backed up and have one for each year.

I would say that 90% of tax returns slated for review are just random, however, there are some things that can trigger a review, or even an audit. 

  • You’ve had a major life change happen from the previous year, such as moving, or getting married or divorced.
  • There’s a major deduction that you’ve never claimed before, such as legal fees, employment expenses, support payments.
  • Higher than normal tuition/education credits. I found this with people who went to flight school which can cost upwards of $60,000.
  • It’s your first year filing as a proprietorship or partnership. Many times CRA does a review when you just start your business to get you off on the right foot; especially if you filed your own return.
  • Larger than normal medical expenses claim will definitely get you a review.
  • The public transit amount is another deduction that gets review frequently. Remember that daily passes or tickets are not eligible. 

If your return is selected for review, the first thing is don’t panic. The second is to read the letter carefully, determine exactly what it is they’re reviewing, and find the documents they’re seeking (only give them what they asked for, and nothing more). You have nothing to worry about as you’re organized and have all your documents in a safe place, and easily accessible for just such occasions. 

 

Use Heptalysis to Evaluate Your New Business Venture

By Randall Orser | Small Business

Is there a way to analyze a potential new business opportunity? Yes, it’s called Heptalysis, which is a seven-part framework for analyzing and interpreting such opportunities. The insights gained by using Heptalysis provide the groundwork for a successful enterprise as well as starts the business off on a great footing. The following seven considerations can definitely benefit your business.

Market Opportunities

You need to analyze the market before launching any new product or service. You need this market research to determine whether or not there is interest in your product or service and to figure out the varying needs and characteristics of your target demographic. For your product or service to be successful, you need a ready and willing market.

Once you have determined that there is a need for your product or service, it’s time to check out the competition. Your market share will depend on how many and how large your competitors’ brands are. Your best bet is to find a gap in a sustainable market before going forth with any plans.

Problem/Solution  

You need to figure out the top of mind problem of your target market. Work on your product or service until you know its definite purpose. Don’t worry about resolving problems that aren’t required by your target market.                                                                                                                     

You’re much better off marketing and selling a clearly defined product or service that solves a real problem of your target market. What does your market urgently want? Give them that or else they’re going elsewhere. Spend time and budget clarifying your product or service until it definitely solves a relevant issue.

Execution  

Now is the time to build a solid plan of action for your young business. You need to set out your strategy in order to manage a succinct and consistent company-wide roll out. Determine the structure of your business and the roles of the individual people who will fill them. Include your colleagues in the creation process as their specialized input could be valuable.

You want your team working cohesively towards the same goal, so having a good plan of execution will ensure that. Cover as much detail as you can, however, be ready to evolve and adapt as time goes on, and variations occur.

Financial Engine

Your business’ health is dependent on financial planning and is very important to young ones with limited cashflows and narrower profit margins. Construct a thorough outline of your anticipated fiscal situation including payments and money generating strategies.                                                                                                                                     

For the best detailed plan, include even the smallest financial commitments in your calculations. You won’t be able to think of every eventuality but having an extensive estimate of your potential cash flow will help in your decision-making. You will also need to provide future creditors you negotiate with such financial information.

Human Capital

This will be your employees and partners. Of course, the most important asset of a business are the people who run it. Come up with an organizational structure for your business and who will be doing what. You can identify any significant discrepancies or inefficiencies. 

Any partners should be taken on with extreme caution, do they fit in with your goals and way of thinking. For staff your best to hire slow and fire fast. Having the right people in their most suitable roles can be the best decision a young business can make so invest your time and money in getting it right the first time. The specific knowledge and expertise of the individuals in your organization also comes under the umbrella of human capital. Tap into the resources available to you by heeding the advice of anyone who can offer an informed opinion.

“It doesn't make sense to hire smart people and then tell them what to do;                                                                                               we hire smart people, so they can tell us what to do.”
                                                                          Steve Jobs

Potential Return  

What is your potential return you expect over time, looking at your market, structure, and product or service? Predicting your possible return on investment allows you to map out how you’re reinvest or otherwise use your proceeds.  

Designate a time limit within which you will see a return and implement methods for plotting your growth. Think ahead to track any changes in crucial areas of your business that you’ve identified as performance indicators.

Margin of Safety

Starting a new business always has some level of risk. Determine your key areas of risk and create a plan to minimize the threat and to deal with any issues that might arise. You’ll never avoid risk altogether, however, you can lower the impact of adverse events through careful planning.

When assessing potential problems, take internal and external factors into consideration. Legislative changes are something that happens frequently and can have a massive impact on your entrepreneurial ambitions. Recently in Canada, the federal government decided to change how corporation compensation works, and got lots of flack for it.  The business owner had to adapt the way he compensated other owners and family members. You need to keep informed and give yourself a healthy margin for error in all your calculations.

Heptalysis provides the young business with the framework need to analyze the potential market and its suitability for exploitation. There are tons of perplexing problems that businesses face in their beginning stages but using a tried and true method like Heptalysis eases the burden and makes the process simpler. You can start your enterprise off on a foundation of knowledge and confidence with careful analysis and meticulous planning

 

Surviving A Compliance Review With Canada Revenue Agency

By Randall Orser | Business Income Taxes

The dreaded audit has been somewhat replaced by the ‘compliance review’, which is a nicer way of saying we’re coming in to look at your books but won’t probe you as much. As I write this I have had a couple of clients go through a compliance review, both turned out to be nothing. What they are doing with the compliance review, especially for new businesses, is to ensure you’re doing things correctly, and are filing your remittances correct and on time. Canada Revenue Agency (CRA) is trying to ensure all businesses are compliant with their business remittance requirements before it gets too out of hand. 

The first thing you’ll get from CRA is either a phone call or letter stating what they are reviewing and when. If it is a phone call, get them to fax you what was discussed in the conversation. I always find it’s best to do this step, as there are no mix-ups as to what was required.  

The next thing is to call your bookkeeper or accountant and let them know CRA is doing a review. Follow this up with the letter you receive. I find it best to get the bookkeeper or accountant to deal with CRA in these situations, as they understand what reports CRA will need, and may have better access to the accounting system. Also, the bookkeeper/accountant will only give them what they ask, where you may give them too much information. 

The auditor will examine books and records, documents, and information (collectively referred to as records) such as:

  • Information available to the CRA (such as tax returns previously filed, credit bureau searches, or property database information);
  • Your business records (such as ledgers, journals, invoices, receipts, contracts, and bank statements);
  • Your personal records* (such as bank statements, mortgage documents, and credit card statements);
  • The personal or business records of other individuals or entities not being audited (for example, a spouse, family members, corporations, partnerships, or a trust [settlor, beneficiary, and trustee]); and
  • Adjustments made by your bookkeeper or accountant to arrive at income for tax purposes.        

*Never give personal records unless absolutely asked, and push not to provide them.            CRA will use any monies received in your personal account against you, even if it is a cheque from grandma.

You need to have this entire information ready for the review, and you may have to meet with your bookkeeper/accountant before the audit and go through everything. Don’t leave anything out that CRA has requested, and, of course, don’t give them any more than they ask.  

Your best bet for surviving this review is to remain calm, deal with the auditor in a professional manner, and if you feel not being present is best then just have your bookkeeper/accountant meet with the auditor. There is no reason to panic, as this is nothing personal, you have been selected for review either as a random pick or that you are a relatively new business.

Blow Your Competition Right Out of the Water

By Randall Orser | Small Business

No matter what sort of business you start, you're likely to face competition from other businesses like yours. You need to figure out ways to stay ahead of the competition as well as blow them out of the water.  Here are 12 ways to gain the competitive advantage that you seek.

  1. Run your business for longer hours or during times when your competitors are closed. If you run a  daycare, for example, you might extend your hours to include evenings and weekends to accommodate parents who are taking night classes or who are shift workers.
  2. Go the extra mile. It's amazing how little things make such a big difference. Send thank-you notes,   birthday or Christmas cards to your customers or clients.
  3. Offer your loyal customers special discounts or start a loyalty program.
  4. Always be honest and upfront with your customers. If you messed up, admit it and take immediate steps to rectify your mistakes.
  5. Treat all of your customers with courtesy and respect. That doesn't mean that you have to like every customer or client that you deal with, but you do have to treat each one with professionalism and common courtesy. 
  6. If you cannot perform a certain service or do not stock a particular product that your client or customer has requested, be upfront about it. Better yet, refer them to someone else who has the product or service that they need.
  7. Strive to provide excellent customer service. Customer service can make or break your business.
  8. Study your competitor's advertisements to see which products or services they are promoting.       Get your hands on all of their promotional materials and look for a way you can improve on what they have already done.
  9. Better yet, buy your competitors product. How does it compare to yours? Are there any areas that you can improve on?
  10. Do informal surveys of your target market, both online and offline. This will help you to uncover exactly what the needs of your target market are so that you can more effectively meet them.
  11. Test a product or service similar to that offered by your competition by offering your customers or clients a free consultation or product in exchange for honest feedback.
  12. Send business to your competition. This isn't as crazy as it sounds, and the payoff can be huge. If there is a service that you don't provide and you know of a competitor who does then refer the customer or client to them. Ask your competitor to so the same for you.

Pick the idea that you like the best from the ones listed above and spend some time implementing it in your business and set yourself apart from your competitors.