All Posts by Randall Orser


About the Author

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.

Do You Think with Your Right-Brain or Your Left?

By Randall Orser | Small Business

Getting business liftoff with a brilliant website, fancy storefront, or plentiful first-time sales is terrific, but for long-term success there are many more pieces to add to the business-building puzzle.  Building a business is just that—building an entity one building block at a time.

What stage of the building process are you in:  development, revision, maintenance, or expansion?  How do you measure your progress?  How will you know when you’re slipping off-course or need a change of direction?  How do you course-correct?

Charting the Course from Various Angles

How you measure your results may vary depending on the type of thinker you are.  Are you a right- or left-brained dominant thinker?  Looking at how these two types of thinkers respond to situations can offer insight into business dynamics and perhaps help you understand why you do what you do.  Have a look at these two approaches to see if you can identify yourself or your business partner(s) in the descriptions:

  1. Right-brained thinkers are artistic or creative.  They are full of ideas.  They see possibilities.  To some right-brained thinkers, facts and figures are confining obstacles.  They love trying new things.  They love seeing things in full colour.  They’ll go to great lengths to make their creative ideas work.
  2. Left-brained thinkers, on the other hand, are practical.  They see business in dollars and cents.  Surveys, historical proof, traffic counts, facts, data, and the like, are important to them for decisions making.

So, What’s Better?

A good left-brained thinker will look for underlying causes of plummeting numbers, look for logical actions to take, and course-correct.  He may be good at saving the business money and protecting profits.  He may be instrumental in securing ongoing financing.  A left-brained thinker is good at keeping the business in the black.

This practical thinker may be tempted towards knee-jerk reactions though.  He might become tempted to take drastic measures to bring the numbers up.  The left-brained thinker is cautioned, though, not to throw the baby out with the bathwater.  Perhaps tweaking a product or service can help recharge sales.  Firing the best employees in a quick-ditch effort to save money on payroll might end up costing more money in severance payoffs, legal bills and then rehiring and training costs further down the road.

Practical thinkers can benefit from having the viewpoint of right-brained thinkers who are possibility and bigger-picture oriented.  The right-brained thinker may be skilled at seeing untapped markets or have just the right trick up his sleeve that might boost sales.  While the left-brained thinker makes decisions based on logic, he’ll be wiser to consult with his right-brained counterparts in order to make the most prudent decisions that align with the values and long-term goals of the business.

The right-brained thinker may be willing to hang in there long enough and through difficulties to see his ideas fly.  On the downside, he may have so many varying ideas that he fails to focus or launch the right idea in the right niche at the right time.  The right-brained thinker may benefit from having the input of a left-brain thinker to help him measure the practicality of his dreams against the cost of doing business and profitability.

Consider All Viewpoints

Typically, individuals with a strong left-brained bent may have trouble understanding the enthusiasm of their right-brained counterparts.  They can sometimes become impatient with creativity and find it hard to invest in mere concepts.  Equally, right-brained creative types can become impatient with numbers-driven left-brained counterparts.  It takes awareness to see the dynamic of this type of dual thinking in play.  It’s important that each personality type respect and value the contributions of the other.

A good mix of right- and left-brained thinking is ideal.  As a business owner, you may be well equipped with a little of both.  If not, building a balanced team or counting on outside business coaches or advisors to fill the gap may be beneficial.

Develop Consistency

Making changes too often either because of a lack focus, or as a knee-jerk response to falling profits, may actually circumvent your ability to build a solid reputation.  Customers might never fully understand what your business is about if you continually hopscotch around.  There won’t be consumer buy-in if they perceive you as unstable, flighty, lacking confidence, or if you send conflicting messages.

Take a personal business inventory now.  Choose your focus.  Narrow down your moneymaker and your niche.  Craft a vision that will keep you on course and help guide you when difficult decisions need to be made.  Be aware of economic trends, examine your operating cycles, and be willing to ride a few rough waves.  Use a balance of right-brained creativity with left-brained facts and evaluate your progress from a variety of viewpoints.  Most of all, remember that a successful business is never truly finished being built.  It takes ongoing fine-tuning to get it where it needs to be.

Grow Your Business with these Five Pricing Strategies 

By Randall Orser | Small Business

As a small business, even the small advantages can help in a big way. A larger business doesn’t have to make every dollar count, though doing so is still prudent, as it will probably have little impact on their bottom line. Your businesses performance will be based on how you price your products, so take advantage of as many of these strategies as you can.

Use Visuals to Make Your Sales Prices Standout

While pricing is generally literal, the human mind does have some impact on how we see that pricing. As many pundits like to point out, people buy on value they are getting from your product/service more than what they are paying. Making your prices standout visually, helps differentiate the new price from the old one. Using a different font or changing the colour of the sale price can garner more sales because the customer’s mind instantly realizes that something is special about it.

Using the 99¢ Practice

The human mind works in mysterious ways, and sees $49.99 and $50.00 differently, even though it’s only a penny different. The former price looks like it’s a dollar cheaper since it starts with 4, while the latter figure starts with 5. Combine that with a price that ends with 9, and you end up producing more sales. Using pricing that ends with 9 makes people believe that you’re cheaper, and that lower first number endorses that.

Put Cheaper Items Next to an Expensive Items

Pricing isn’t always about being cheaper than the other offering. Many times, people associate a higher price as a gauge of quality, and this can be to your benefit. You can use this to your advantage by offering two or three versions of similar quality of your product or service, and each progressively more expensive. Customers generally opt for the more expensive one when two are offered, and take the middle one when three are offered.

BOGO Pricing

Everyone loves a good deal, however small business is wary of giving away the farm, so to speak, with too cheap pricing. When you start giving deals, and get carried away, you have less money for which to grow. BOGO pricing, or Buy One Get One, can be worth doing as people are far more likely to buy.
Let’s face people are a little greedy, and when they feel they’re getting a great deal, they emphasize the possible value. It becomes not about whether it’s actually a good purchase, but about getting more than they think they should for that price. Also, offering discounts on future purchase can work too.

Prestige Pricing

You can play on prestige rather than greed. Pricing according to prestige numbers, such as 50 or 100, can create sales simply because it feels right. Flat numbers are more easily managed mentally, and suggest security. Your customer isn’t juggling numbers to see if it’s a deal; they get exactly what they want at the price they anticipate.
Your business may live and die by your pricing strategy. You set up your pricing based on your product’s or service’s value; however, your customer doesn’t care what you think your price should be. They only care about WII-FM (what’s in it for me). Once you understand that, the sooner you can chose your pricing strategy.

Home-Based Business Tax Avoidance Schemes

By Randall Orser | Business Income Taxes

Scam home-based businesses and tax avoidance promotions have gained popularity over the last few years for a variety of reasons, including:
• The desire of individuals to reduce the amount of taxes they pay.
• Unscrupulous promoters, selling tax avoidance and audit assistance packages.
• Taxpayers being advised they can deduct all or most of their home and other personal assets as business expenses.
Most taxpayers with home-based businesses accurately report their income and expenses, while enjoying the benefits that a home-based business can offer. However, some individuals have received advice that they can operate any type of unprofitable “business” out of their home and claim personal expenses as business expenses. Non-deductible personal living expenses cannot be transformed into deductible business expenses regardless of how convincing the information in marketing materials may seem.
The following are a few examples of items that are generally not deductible as business expenses:
• Deducting all or most of the cost and operation of a personal residence. For example, placing a calendar, desk, file cabinet, telephone, or some other business-related item in each room does not increase the amount that can be deducted.
• Paying children, a salary (e.g. for answering telephones, washing cars, etc.).
• Deducting education expenses from salaries paid to children wrongfully claimed as employees.
• Deducting excessive car and truck expenses when the vehicle was used for both personal and business use.
• Deducting personal furniture, home entertainment equipment, children’s toys, etc.
• Deducting personal travel, meals, and entertainment under the guise that everyone is a potential client.
Any investment scheme or promotion that claims to allow a person to deduct what would normally be personal expenses, and not ordinary and necessary business expenses, should be considered highly suspect. As always, a business must truly exist prior to claiming expenses.
In the past few years Canada Revenue Agency (formerly Revenue Canada) has hired 5,000+ new auditors, and one area that they are delving more into is people who work full-time and operate a home-based business (mostly multi-level marketing schemes) that never makes money or has little revenue and high expenses.

Avoid These Five Small Business Errors at all Costs 

By Randall Orser | Small Business

As an entrepreneur, you are simultaneously your own greatest asset and your greatest enemy. Your successes will take the start-up to new heights. Your mistakes, on the other hand, can take it down. When an employee makes a mistake, it’s often rectifiable. A misplaced shipment is easy to handle. Mismanagement from the boss, on the other hand, is a problem that can’t easily be fixed.
Knowing what to not do is as important as knowing what to do. A single mistake can undo numerous good decisions. Here are a few things you should avoid.

1. Mistaking Leadership for Dictatorship

As the entrepreneur, you’re expected to lead. No one sees the product and its future the way you do. You were the one who found a need and figured out how to fill it. Who else can lead? The problem many entrepreneurs face is not a fear of leading, but mistaking it for dictatorship. Instead of looking to inspire their employees, they dominate them, barking out orders and expecting complete compliance.
While your employees are supposed to help you achieve the start-up’s goals, they’re not slaves. They’re there for their own reasons. Some of them are there because they need a paycheck and you saw potential in them. Others are there because they see potential in you and in the start-up. Whatever the reason, you must remember that your employees are people as well.

2. Focusing on Money Instead of Freedom

Your foremost goal for the start-up is to turn a profit. However, your end goal isn’t money. Money is a tool, a stepping stone towards other things. What you want is what money brings: freedom.
It’s easy to think that money’s synonymous with freedom, especially when things are tight. When you don’t have money, it’s easy to think that financial freedom leads to actual freedom. This can lead to a number of bad decisions, such as giving up time with family to work on the start-up. Money is a tool or even a byproduct of your efforts, not the goal.
Focus on business grow. Make better products and you’ll get money. Cut corners in an attempt to raise money quickly and your company will eventually suffer.

3. Believing That The Customer is Always Right

The customer is important. As an entrepreneur, everything you do must revolve around them. Product development must be done with the end user in mind. Your marketing campaign must attract your target demographic or you risk getting the wrong people. They’re important and integral to your success . However, that doesn’t mean they’re always right.
Acting as if the customer is always right confuses your branding and message, and can result in hyper focused development revolving around a very vocal minority. Instead of thinking the customer should determine how the office runs, think about honoring them. You’re there to serve them, but they don’t always know better.

4. Failing to Define Success

Many entrepreneurs end up failing simply because they don’t know what they want. They have a great idea, a receptive market, and a good business plan, but they don’t have clear goals. The company is successful in a technical sense. It didn’t collapse and it exists, but the lack of an overarching goal gives it little direction. It’s hamstrung.
Figuring out what success looks like and what it means to you. Boil it down to something tangible, something you can recognize. If you can, look for measurable metrics, such as a rating or a number of yearly sales. It doesn’t matter what it is, as long as it’s success according to your definition and not because it’s what other successful businessmen said it was.

5. Not Communicating Well

The thing with communication is you can feel entirely confident and sure that you’re getting the right idea across and still end up confusing everyone in the room. Effective communication is more difficult than it sounds. It’s more than being passionate — it’s about leading people down the same thought process as you so they either arrive at the same conclusion or they have a picture in their heads identical to the one in yours.
When communicating, it’s best to use facts, something that isn’t reliant on your perception of things. By using a common frame of reference, you can minimize misunderstandings. Everyone understands that the ruler is 12 inches long, but they might have a different idea of what a “large stick” means.
Succeeding as an entrepreneur is more than avoiding mistakes. However, avoiding these mistakes will allow you and your start-up to build up the necessary momentum to survive those turbulent early months and years. Keep an eye out for these and you should do fine.

Nine Simple Ways to Avoid a Grueling Tax Review

By Randall Orser | Sales Taxes

Undergoing a tax review is one of the most frightening and harrowing experiences any adult can endure.  A tax review probes deep into financial and personal matters, and if errors and omissions are discovered in tax returns, the result can be imprisonment or a fine, possibly both.  More frightening still, the aftermath of tax evasion can be just as harsh for innocent mistakes as serious attempts to defraud the authorities.
So, what can an honest citizen do to prevent a tax review?  For starters:
1.  Take your time completing your accounts and preparing your tax return.  Rushing to meet an imminent submission deadline is a major cause of mistakes and omissions, and subsequent harsh punishment.
2.  Complete your accounts and prepare your tax return when you’re wide-awake and free from distractions.  Children playing noisily in the background, customers demanding your attention, falling asleep at your desk, all can lead to errors and ambiguities and a subsequent visit from the taxman.
3.  When you think your accounts and tax returns are problem free, put all your paperwork to one side, preferably at least four weeks before the final date for submitting tax returns.  A week later, study your figures; check your calculations, correct errors you didn’t spot earlier, enter details you overlooked previously.  Check again two weeks before tax submission deadline, and if all looks good, submit your return right away.
4.  Get a certificate of posting for submissions by post, make a screenshot of returns processed online.  Then when your return goes missing in transit, you can prove you submitted on time, and avoid a potential tax review.
5.  Submit your tax returns on time, every time.  Submitting late might suggest you rushed your submission, and possibly made mistakes.
6.  If you don’t use an accountant, consider getting one, preferably with expertise in your area of business and on good terms with the tax authorities.  Search online for someone with a good reputation for filing submissions on time and without making mistakes, as well as for signs an accountant may have been jailed or expelled from a professional association for fraud or misconduct. Key the name of a potential accountant into the search box at, then study the first three or four pages of search returns where most derogatory entries are likely to be found.
7.  If you submit something unusual in your tax returns, such as a major drop in income or an unusually high expense, explain it in a note accompanying your return or in the appropriate location on your submission form.   The more you tell the taxman, the less likely a review will be opened to determine reasons for gaps and irregularities in your tax return.
8.  If paper filing, prepare your submission on a photocopy of the official tax return form before preparing your final return.  Alternatively, use pencil on the original form so errors and ambiguities can be edited later.  Lots of deletions and amendments to an original form suggest a disorganized individual, and potentially more mistakes for the taxman to find.
Hopefully, you’re electronically filing your return. If so, then review the return before you file and print a copy of the confirmation as proof you filed your return.
9.  Add tips and cash payments, also barter transactions to your declared earnings, so the taxman doesn’t feel obliged to ask about income you may have overlooked or considered tax-free. If doing barter, exchange invoices so you have an audit trail.
For the record, almost every form of income should be declared on your tax return, except income from sales of personal goods.
All this time and effort spent preparing your tax return shows you are an honest and law-abiding citizen, someone who does not deserve special attention from the authorities.

Five ways protect to cash flow

By Randall Orser | Small Business

Cash Flow Management Tips to Keep Your Cash Flow Flowing

When times get tough, money gets tight. And when money is more difficult and expensive to borrow, it’s especially important for small businesses to take steps to ensure that their cash flows keep flowing. Here are five ways to protect your cash flow and help your small business ride out the storm.

  1. Keep your weather eye open.

One of the key factors in weathering any storm is knowing that it’s coming and what direction it’s moving. Keep an eye on the leading indicators for your business and be aware of changing economic conditions. Prepare cash flow projections for the next year. This will help you to see what changes need to be made and when. If such-and-such happened and your predicted cash flow dropped x%, what could you do?

  1. Review your credit policies and the credit histories of customers and/or clients.

Managing your customers’ credit is an important part of cash flow management. Weed out unprofitable customers, those that cost more to maintain than they add to the bottom line. Flag those who have a history of slow payment. Remember that you do not have to extend credit to anyone. If a customer has a history of slow payment, changing the credit terms or even eliminating credit entirely may be necessary.

  1. Take action to speed up payment.

First, invoice promptly. Putting off invoicing gives the customer the impression that you don’t care how long it takes to get your money. Second, take measures to encourage prompt payment, such as clearly stating payment due dates and sending overdue notices. Use Invoices That Encourage Action gives more suggestions. Use collection services when necessary. Getting the money if you can is always better for your cash flow than a bad debt.

  1. See if payments to suppliers can be extended.

On the other side of the coin, check on the credit terms that your small business’s suppliers allow. Most suppliers allow thirty days to pay but you may be able to get them to extend that term to sixty or even ninety days, allowing you to keep the money in your cash flow pipeline longer.

  1. Renegotiate contracts.

Landlords, lenders and contractors are not impervious to changing economic conditions so trying to renegotiate is worth a shot. For instance, if the lease on the premises of your bricks-and-mortar business is up, you may be able to negotiate a more favourable rate with your landlord – especially when other retail property is standing empty. A less expensive lease will let you free up more of your cash each month and get more of a cash flow going.

Remember, the outflow part of cash flow is never a problem; money will always run out of your business easily. Keeping the money coming in on a regular, sustained basis is the tricky part of cash flow management. Following the suggestions above will make it easier to keep your cash flow flowing.

Make Your Home Office More Efficient with these Six Strategies

By Randall Orser | Small Business

As a business owner, or a telecommuting employee, the design of your home office plays a major role in your productivity. Having a well-organized home office design helps you be more productive as well as more profitable, and accessories are a good place to begin.

Boost your productivity? Have a more successful operation? Picking the right accessories can make a huge difference in your world. These are the six must-have accessories for your home office productivity.

Wireless Printer

With most home offices, space is at a premium, so a big bulky printer can use up precious real estate. A wireless printer, on the other hand, means you can print from anywhere, and frees you up to place it wherever you have space. Maybe on a bookcase shelf, an unused corner, or in the closet on a shelf so it’s out of the way. You can make your life easier and more productive by switching to a wireless printer.

VoIP Phone System

VoIP, or Voice Over Internet Protocol, technology has immensely improved over the years as has the equipment. VoIP is just as reliable, and much more flexible, than traditional phone systems. Generally, at a much lower cost than traditional phone systems. The beauty of VoIP is that you can have a number for most areas of the world, and answer it at your home office. Do you do business in Arizona? You can have an Arizona number that you answer in your home office in Vancouver. Even if you move across the country, you can keep your local number, and take the phone system with you. The downfall to VoIP is that you need a broadband internet connection, and one that is reliable with very little down time.

Number Crunchers® uses a VoIP system from RingCentral, which works very well, is reliable, and has only been down when the internet is down.

Wireless Headset

Getting a wireless headset allows you the freedom to move around while you chat with clients, prospects, suppliers, etc. There’s two types of wireless, USB wireless (you put a dongle in your computer that connects to the headset), and Bluetooth®. Bluetooth technology has grown and become much better than it was just a couple of years ago. You can use your computer to call out, rather than get an actual phone.

You’re no longer chained to your desk. You can search for files you need, pick up papers from your printer (which you placed in the closet), or even check on the family, all without dropping the call or putting them on hold. Though if you’re dealing with screaming kids, you may want to put them on hold.


One of the most valuable tools for you home office will be a scanner, and you will wonder what you did before without one. A scanner basically allows you to create electronic copies of your paperwork, and then share them with customers, etc. wherever they may be. There are programs, and services, that allow you to send documents to get filled out and/or signed by someone without ever leaving your comfy home office. A full-sized scanner is best, or a multi-function printer/scanner/copier is an even better option. Which type of scanner all depends on the size of your home office. If its too small for the latter options, then a handheld one will work too.

Videoconferencing System

Skype, Facetime, etc. are handy tools; however there comes a time when you need something more professional. A standalone videoconferencing system gives your home office a more polished and professional look, whether it’s connecting with your biggest customer or trying to complete a major deal. Can you afford such a system? There are some inexpensive systems out there, and may be more affordable than you think. Your VoIP system may already come with a videoconferencing option, or as an inexpensive add-on. I know RingCentral has such an option for up to 50 people at a time. If you need more you may want to look at Zoom, or similar service.

Wireless Router

Think of the wireless router as your home office hub. Most of the items above (printer, scanner, VoIP system) can be hooked to the router and easily shared; this includes your computer or laptop, tablet or phone. All your tech can be connected to this office hub making you much more productive, and your life a whole lot easier.

While it can be your dream to work from home, it can be difficult to remain focused and productive when you have any disruptions. The six accessories above can get you on the road to being more productive, and, hopefully, get more done.

As an Entrepreneur, You Need to Hone These Skills

By Randall Orser | Small Business

Your skills as an entrepreneur are crucial to being successful, whether you’re a Silicon Valley startup or a business owner in Vancouver. Two things come from focusing your efforts on becoming a better business owner, helping your company grow, and the opportunity to be a role model to others. Great entrepreneurs concentrate on building their skills as an entrepreneur, not just press mentions and networking. Do you want to become a better entrepreneur? Here are five actions that will accelerate your success.
It all starts with you! You need to focus on developing your personal strengths, as much as focusing on the business 24/7 or your company suffers in the long run. As you focus on your own strengths, and continual emotional and mental growth, you are much more likely to be happier and successful.
By focusing on becoming a better-rounded individual, through yoga classes, new meditation practices, documentary films, or reading, you’ll never regret this expenditure of energy.
Push Past Mediocrity
Never settle for mediocrity! You want to grow your business and mediocrity is the way to kill it. However, don’t become paralyzed with the constant need to improve your product either; and don’t offer a product or service that is just okay.
How’s your offering? Is it spectacular, or just meh? If you’re not offering something great, then your competitors probably will. Are your just meeting customer expectations, or exceeding them? You not only encourage ongoing sales growth, but honour yourself as an entrepreneur.
Be an Entrepreneur of Achievement
Is what you’re doing now, getting you towards your goals? Be that revenue, net profit, customer list size, or something else. More and more business owners are spending too much time on social media, and networking. Does networking even work anymore? How do you build a successful company when you spend so much time online? Challenge yourself to be a person of action.
When you’re getting ready for bed at night, can you make a list of the tasks you got done that day. Talk is cheap. You need to concentrate on getting those tasks done that help grow you company.
Your Customers are Your Best Resource
What are the wants and needs of your customers? Do you know? Your customers are the best way to grow your business. I know what you’re thinking ‘well, duh’. You’d be surprised how many entrepreneurs miss this essential realization.
Use your customer’s input to move your company forward, as they are your greatest resource for information. Every piece of intelligence your customers provide is important market research for you; this could be product tweaks they’d like to see, to feedback on your customer service, maybe information on your competition, and more.
Make your customers priority #1, and you’ll be astonished at the opportunities for growth that come your way. The great thing about customer feedback is that it’s free, though it may cost you in the long run if you don’t pay attention.
Become Addicted to Opportunity
Are excuses inhibiting your business growth? Are roadblocks and excuses stopping you from meeting challenges? You need to look at the terrific opportunities coming at your that others may miss, such as testing existing markets, or making new ones.
Are you too accepting of the status quo? Successful businesses are built because shrewd entrepreneurs made a mindful choice not to accept that status quo. Want to accelerate your business? Search for opportunity that others may not see.
Successful entrepreneurship is about hard work and determination, not about networking and surfing online. You need to concentrate on entrepreneurial skills that matter for success, especially if you want a company that grows. Stop schmoozing and focus your efforts on becoming a better entrepreneur. Your bottom line will love you for it.
Networking is dying, however, there is a better way. Check out Derek Coburn’s book Networking is not Working.

Now Is the Time to Implement A RRSP Strategy

By Randall Orser | Personal Income Tax , Small Business

It’s time to think about your Registered Retirement Savings Plan (RRSP), the deadline is coming up, and you need to strategize what you’re going to do this year. We’re assuming you know what an RRSP is, and either have one, or know what to do to get one started. I will say this, please use an independent financial planner, as they are unaffiliated with any bank or institution and can invest your money how you wish.

The following are what you need to consider when developing an RRSP strategy:

  • What is my risk tolerance level?
  • What is my current income level?
  • What is my contribution room?
  • How much can I afford?

What is my risk tolerance level?

There are factors that can affect your risk tolerance level, time-frame, capital, investment objectives, and experience.

What is your time-frame for investing? What is your age now, and when do you want to retire? If you’re in your twenties, then your risk-tolerance may be high as you have a long time before you retire; however, sometimes at a young age we take too many risks, and you don’t want to be starting over again and again. As we get older we tend to get a more conservative, investing in more stable stocks and bonds, or government bills; however, that doesn’t have to be the case. You want to look at where you are now, and where you want to be when you retire, and figure out the things you need to do to get there.

How much capital do you have to work with? What do you have in RRSPs now? What is your net worth? How much risk capital do you have that won’t affect your lifestyle if you lose it? You need to look at these to determine how much you can risk investing. The more net worth you have, the more risk capital you can work with.

Do you understand your investment objectives? If you’re investing for retirement, are you willing to risk it all? You need to look at investments that fit your objectives. Trading futures in your RRSP is not necessarily the best route. Yes, it’s sheltered from taxes, however, the high level of risk may not be worth damaging your portfolio.

What’s your investing experience? Are you new to investing? Have you been doing this for some time but are going into new areas, such as options? You need to heed caution when going into new areas, and get some experience before risking too much.

What is my current income level?

To determine how much RRSPs to contribute for the year, you need to look at where your income level was, or will be. Generally, if you can you want to lower your income enough to go to the lower tax bracket. For example, if your income is $75,000 and the lower tax bracket is $65,000 then you need to contribute at least $10,000 to get into that bracket.

For the next year, do you know where your gross income will be? If you do, then now is the time to determine what you can contribute either monthly or by the next February. Once you know how much you need to contribute you can come up with a plan on how to afford it.

What is my contribution room?

Your registered retirement savings plan (RRSP) deduction limit, often called your “contribution room” is:

  • the amount that you can contribute to your RRSP.
  • the amount that you can contribute to your spouse or common-law partner’s RRSP.
  • the amount your employer can contribute to your RRSP.
  • the maximum you can deduct on your tax return, reducing your tax for that year.


The Canada Revenue Agency generally calculates your RRSP deduction limit as follows: the lesser of 18% of your earned income in the previous year, and the annual RRSP limit, which is $26,010 for 2017.

How much can I afford?

This is the big question you need to ask yourself. If you’ve determined how much you need to contribute to get into the lower tax bracket, you need to figure out how you can contribute that during the year, or save up for it over the year.

I believe that you’re better to contribute throughout the year, at what you can afford monthly. If you have some extra funds come February, then top up what you’ve contributed during the year.

What’s your strategy going to be for your RRSP this year?


Basic Issues to Consider When Equipment Leasing

By Randall Orser | Business Income Taxes , Small Business

Big or small, when purchasing new equipment (such as tools, forklifts, furniture, computers, copiers, etc.), there are basic issues that you need to consider. This can be from the confusing selection of financing options, to the potential drawbacks.

The first thing to think about is whether to buy the equipment outright, with cash on hand or a line of credit, or lease it from your bank, leasing company, equipment distributor, or manufacturer.

You require much less cash up front when leasing, sometime even 100% financing is available, and is permitted under your loan agreements with your existing bank. Your monthly payment is generally lower when leasing rather than purchasing outright. The reasons are:

  • Leasing companies offer longer lease terms than that of a bank equipment loan.
  • You only pay for the right to use the equipment during the lease term, usually shorter than the equipment’s total useful life.

The flexibility of leasing is also better as you usually have three options at the end of it:

  • Buy the equipment, a buyout amount or percentage is usually specified in the agreement
  • Continue leasing, or finance the buyout with a term loan
  • Return the equipment, using it as a trade-in on new equipment

Analyzing Your Budget

You need to look at your budget when it comes to new equipment. Looking at your cash flow, what size monthly payment can you afford. Some additional issues to think about:

  • Is your cash flow seasonal? (your payments may be able to be structured)
  • Is this a one-off purchase, or a series of purchases over time?
  • What added revenue or profit will the new equipment produce?
    • Does the new equipment allow you to bid on larger jobs, or finish them more quickly to increase revenue?
    • Are maintenance costs reduced compared to the old equipment?
    • Can you improve productivity, allowing you to let go of employees?

Choosing Your Leasing Company

You have several choices to choose when picking a leasing company: bank, a leasing company, or an equipment manufacturer/distributor (also called “captive” lessor).

Bank financing is usually the most expensive; however, it may be easier as you already have a relationship with them.

The leasing company offers the most flexible terms, and is the best bet if you’ll need a large volume of leased equipment over time. A leasing company has consulting services for asset management, and can help you construct a long term leasing strategy.

The least expensive financing is captive lessors, however, give fewer choices as they’ll only finance the brands they represent.

Don’t Forget the Taxman

There are two kinds of leases in Canada: operating lease and capital lease.

Operating Lease

In an operating lease, there is no asset controlled by you as you only have the right to use the asset during the lease term. Therefore, the asset is not considered yours, and will not show up as an asset on your balance sheet; only the lease payments will show up as an expense on the income statement.

Capital Lease

In a capital lease, you are deemed to have the benefits and liabilities of ownership for the lease term. This is based on the length of the lease, total lease payments required, and the buyout amount at the end. The asset will show up on your balance sheet; however, for tax purposes there is no deprecation. You can deduct the full cost of the lease payments, interest and principal.

Settling the Lease Documents

Since commercial leases are never written in plain English, like a consumer car lease, you are best to hire a lawyer to review them. Do this even if the leasing company says they’re just standard forms, or not negotiable. Commercial leases are not subject to consumer protection laws.

Certain sections that you should be paying attention to include:

  • Early termination penalties
  • Who pays for delivery, and can you return defective equipment?
  • Are payments before the lease used as collateral, then credited at the end?
  • What’s the buyout process at the end? Does the lease automatically renew?
  • At the end of term, how is equipment returned? Who pays for storage and delivery? What does ordinary wear and tear mean?
  • Will sales tax apply? Who Pays? Which sales tax rate is used?
  • Can the leasing company assign your lease?
  • What happens if you default? What are the leasing company’s remedies?

Your lawyer can also determine whether you can lease under your current bank loan financing, and if you need to get the bank’s consent for the lease

Checking into your financing options, and assessing the value of leasing over purchasing will pay off in the end. What’s best for your bottom line is getting that upgrade or adding new equipment so you can grow.

1 30 31 32