All Posts by Randall Orser


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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.

Death and Taxes

By Randall Orser | Personal Income Tax , Small Business

As the old cliché goes, the only things inevitable in life are death and taxes; and, they can happen at the same time. Today we’re going to talk about what happens when, as a taxpayer, you die. I think the biggest thing is that people are not financially prepared for death. We know it’s coming, maybe not when, but eventually we pass, and our loved ones are left to deal with your estate. It’s best to talk about it before, have your will, and ensure your wishes are met. And, of course, pay as little tax as possible.

Types of Returns

In addition to the final return, you can choose to file up to three optional returns for the year of death: return for rights or things, return for a partner or proprietor, and return for income from a testamentary trust.

Optional returns are returns on which you report some of the income that you would otherwise report on the final return. By filing one or more optional returns, you may reduce or eliminate tax for the deceased. This is possible because you can claim certain amounts more than once, split them between returns, or claim them against specific kinds of income.

Information about the deceased’s income sources will help you determine if you can file any of these optional returns. You do not report the same income on both the final and an optional return but you can claim certain credits and deductions on more than one return. You can check out this chart on CRA’s website.

On each optional return and on the final return, you can claim:

  • the basic personal amount (Line 300);
  • the age amount (Line 301);
  • the spouse or common-law partner amount (Line 303);
  • the amount for an eligible dependent (Line 305);
  • the amount for infirm dependents age 18 or older (Line 306);
  • the family caregiver amount for children under 18 years of age (Line 367); and
  • the caregiver amount (Line 315).

Legal Representative

You are the legal representative of a deceased person if: you are named as the executor in the will; you are appointed as the administrator of the estate by a court; or you are the liquidator for an estate in Quebec.

As the legal representative, you may wish to appoint an authorized representative to deal with CRA for tax matters on your behalf. You may do so by completing and mailing (do not fax) Form T1013, Authorizing or Cancelling a Representative.

As the legal representative, you should provide CRA with the deceased’s date of death as soon as possible. You can advise them by calling 1-800-959-8281, by sending a letter or a completed Request for the Canada Revenue Agency to Update Records form.

Under the Income Tax Act, as the legal representative, it is your responsibility to: file all required returns for the deceased; ensure that all taxes owing is paid; and let the beneficiaries know which of the amounts they receive from the estate are taxable.

As the legal representative, you are responsible for filing a return for the deceased for the year of death. This return is called the final return.

Clearance Certificate

As the legal representative, you may want to get a clearance certificate before you distribute any property under your control. A clearance certificate certifies that all amounts for which the deceased is liable to us have been paid, or that we have accepted security for the payment. If you do not get a clearance certificate, you can be liable for any amount the deceased owes. A clearance certificate covers all tax years to the date of death. It is not a clearance for any amounts a trust owes. If there is a trust, a separate clearance certificate is needed for the trust.

To request a certificate, complete Form TX19, Asking for a Clearance Certificate, and send it to your regional tax services office. The addresses of these offices are listed on Form TX19. Do not include Form TX19 with a return. Send it only after you have received the notices of assessment for all the returns required to be filed and paid or secured all amounts owing.

Deemed disposition of property

When a person dies, CRA considers that the person has disposed of all capital property right before death, this is called a deemed disposition.

Also, right before death, CRA considers that the person has received the deemed proceeds of disposition (referred to as “deemed proceeds”). Even though there was not an actual sale, there can be a capital gain or, except for depreciable property or personal-use property, a capital loss.

For depreciable property, in addition to a capital gain, there can also be a recapture of capital cost allowance. Also, for depreciable property, instead of a capital loss there may be a terminal loss.

The lifetime capital gains exemption has been increased from $800,000 to $813,600 for dispositions in 2015 as the exemption is indexed to inflation starting in 2015. Since the inclusion rate for capital gains and losses is 50%, the lifetime capital gains deduction limit has been increased from $400,000 (50% of $800,000) to $406,800 (50% of $813,600) for dispositions in 2015.

For dispositions of qualified farm or fishing property after April 20, 2015, an additional deduction is available which increases the LCGE limit to $1,000,000. Accordingly, the lifetime capital gains deduction limit is increased to $500,000 (50% of $1,000,000) for those properties. This additional deduction does not apply to dispositions of Qualified Small Business Corporation (QSBC) shares.

All the above relates to RRSPs, TFSAs, non-registered shares, rental or recreational properties, business assets if a partnership or proprietorship.

Tax Credit Payments


Generally, GST/HST credit payments are issued on the fifth day of the month in July, October, January, and April. If the deceased was receiving GST/HST credit payments, CRA may still send out a payment after the date of death because they are not aware of the death. If this happens, you should return the payment to the tax centre that serves your area. CRA also administers provincial programs that are related to the GST/HST credit. If the deceased was receiving payments under one of these programs, you do not have to take any further action. CRA uses that information provided for the GST/HST credit payments to adjust the applicable credit.

Child Tax Benefit

Contact CRA at 1-800-387-1193 and let them know the date of death. If the deceased person was receiving CCTB and/or UCCB payments for a child and the surviving spouse or common-law partner is the child’s parent, CRA will usually transfer the CCTB and/or UCCB payments to that person.

If anyone else, other than the parent, is now primarily responsible for the child, that person should apply for benefit payments for the child by: using the “Apply for child benefits” online service on My Account; or completing and sending Form RC66, Canada Child Benefits Application to CRA.

If the deceased was receiving payments under provincial or territorial child benefit and credit programs administered by the CRA, there is no need to apply separately to qualify. We will use the information from the application to determine the new caregiver’s eligibility for these programs.

Net Capital Losses

Generally, when allowable capital losses are more than taxable capital gains, the difference is a net capital loss. The rate used to determine the taxable part of a capital gain and the allowable part of a capital loss is called an inclusion rate. For 2015, the inclusion rate is one-half. Therefore, an allowable capital loss is one-half of a capital loss and a taxable capital gain is one-half of a capital gain. Net capital losses cannot be carried forward from a T1 return to a T3 return.

There are two methods you can use to deal with net capital losses at the time of death.

Method A – You can carry back a 2015 net capital loss to reduce any taxable capital gains in any of the three tax years before the year of death. If you are applying it against taxable capital gains realized in 2012, 2013, or 2014, you do not need to make any adjustment because the inclusion rate is the same in all three years. The loss you carry back cannot be more than the taxable capital gains in those years. To ask for a loss carryback, complete “Section III − Net capital loss for carryback” on Form T1A, Request for Loss Carryback, and send it to your tax centre. Don’t file an amended return for the year to which you want to apply the loss.

After you carry back the loss, there may be an amount left. You may be able to use some of the remaining amount to reduce other income on the final return, the return for the year before the year of death, or both returns. However, before you do this, you must calculate the amount you can use.

From the net capital loss, you have left, subtract any capital gains deductions the deceased has claimed to date. Use any loss left to reduce other income for the year of death, the year before the year of death, or for both years.

Method B – You can choose not to carry back the net capital loss to reduce taxable capital gains from earlier years. You may prefer to reduce other income on the final return, the return for the year before the year of death, or both returns. However, before you do this, you must calculate the amount you can use.

From the net capital loss, subtract any capital gains deductions the deceased has claimed to date. Use any loss remaining to reduce other income for the year of death, the year before the year of death, or for both years. If you claim any remaining net capital loss in the year of death, you should claim it as a negative amount in brackets at line 127 – Capital Gains of the final return.

Do not use a capital loss claimed against other income at line 127 – Capital Gains in the calculation of net income for the purposes of calculating other amounts such as social benefit repayments, provincial or territorial tax credits, and those non-refundable tax credits requiring the use of net income.

When someone dies, there are a lot of things to deal with, and the taxman is one of those. CRA does recognize that you are going through a tough time after someone’s death, and can be quite helpful at such times. It’s always best to talk to a professional before dealing with the tax side of a taxpayer’s death.

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 | Small Business

Big or small, when purchasing new equipment (such as tools, forklifts, furniture, computers, copiers, etc.), there are basic issues you need to consider. This can 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.

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