Category Archives for "Business"

Working from Home – How do the New Rules for Office Expenses Work?

By Randall Orser | Business , Covid-19 , Employees , Personal Income Tax

There is good news for those of us working from home, due to the pandemic and under new CRA guidelines we will be able to choose between using a new temporary flat rate (only for 2020) or using the detailed method to claim expenses.  This will simplify the process for both employers and employees and will reduce the compliance burden for employers who usually provide T2200 forms to their employees.  However these new rules only apply to employees, nothing has changed for those who are self employed working at home.  Here are some of the highlights:

Eligibility - to claim this temporary flat rate you must meet all the following conditions:

  • You worked from home in 2020 due to the pandemic (this applies even if you chose to work from home).
  • You worked from home more than 50% of the time for at least four consecutive weeks in 2020.
  • You are claiming home office expenses only and no other employment expenses.
  • You were not fully reimbursed by your employer for all of  your home office expenses.

How it works: You can claim $2 for each day you worked from home during the four consecutive weeks mentioned above, plus any additional days you worked at home in 2020 because of the pandemic.  The maximum you can claim is $400.

Why it is simpler: You don't need to calculate the size of your workspace, keep receipts or ask your employer to complete and sign Form T2200 or Form T2200S a shorter version that can be used if you opt for the detailed method calculate your home office expenses.

How to make the claim: First count the number of days you worked from home in 2020 due to the pandemic including part days and multiply that by $2 per day up to a maximum of $400.  You will then use form T777S - Statement of Employment Expenses for Working at Home Due to COVID-19 to enter these amounts and attach it to your 2020 income tax return. 

The detailed method to claim expenses is much more complicated.  

  • You have to have chosen to work from home or your employer required you to work at home. 
  • You were required to pay for expenses related to your home workspace and directly in your work.
  • You must have worked in your home workspace more than 50% of the time or for at least four consecutive weeks, or you used the workspace only to earn employment income.
  • You received a signed T2200 or T2200S from your employer.
  • You can claim office expenses as well as office supplies but they must be separated between employment and personal use.
  • Eligible expenses include rent, electricity, heating, home internet access fees, water, maintenance and minor repairs.
  • No eligible expenses include mortgage interest, principal mortgage payments, internet connection fees, furniture and capital expenses.
  • To claim utilities, rent and other expenses you need to allocate them reasonably by taking the area of your workspace and divide it by the total finished area of your home.  The CRA provides extensive guidance on calculating workspace use.  They also provide a comprehensive list of office supplies that are deductible or non deductible.

Should you choose the flat rate or the detailed method? - this will depend on your own personal circumstances.  It might make sense to go for the detailed method if you rent your home because included in your rent are expenses such as insurance and property taxes which you cannot claim if you own your own home.  For homeowners your eligible expenses may only be utilities so the fixed method may provide a deductions similar to that under the detailed method. 

The CRA website or income tax preparer will be able to provide you with more information to help you to decide which method you should use to claim your workspace expenses.

From an article by Margaret Craig-Bourdin

Why Customer Reviews are Even More Important for your Business

By Randall Orser | Business , Employees , Retail

As more people are shopping and doing business online customer reviews have become more important.  You might think that getting critical or bad reviews may be damaging to your business but that is not always the case.  Customer reviews are an important consideration for new customers and should be encouraged. Customers are doing much more online research before making a purchase and 90% of them read online reviews before visiting a business.  

A recent survey showed that online review engagement has more than doubled during the Covid-19 pandemic.  More people are doing business online and cautious customers are reading reviews so that they know what to expect when they visit your business.  You are more likely to get a visit from new customers if they see reviews from other happy customers who rave about your business and employees and that it is run safely.

Reviews build your credibility - reviews are a large part of the online reputation of your business and can greatly enhance customer trust.  88% of consumers trust online reviews as much as personal recommendations and 72% say that positive reviews help that to have trust in a local business.

Reviews increase sales - When potential customers read reviews they are more likely to purchase something if other people have already done so.  The concept of people following the actions of the masses is called "Social Proof".  As more people are likely to enter a busy restaurant than an empty one customers are more likely to make a purchase if they believe that it is a good one.  

An Invesp infographic showed that:

  • 72% of consumers will only purchase after reading a positive review
  • 92% of people will buy from a local business if it has at least a 4-star review
  • Consumers are more likely to purchase 31% more from a business with excellent reviews.

Reviews give you the chance to interact with your customers - You can reinforce positive comments with thanks and rectify negative ones by showing that you care and solving any problems.  Interaction with your customers is very important to make them remember your brand and this works both ways good and bad.  Interactions with your customers help to build brand loyalty and support for your business and make them more likely to recommend you in the future.

Here are some of the most important review platforms that you should considerate to collect reviews for your business:

Google My Business - is a free tool for businesses to manage their online presence across google. Once a business verifies their information and complete their Google my business registration the users can start to leave reviews.   Google customer reviews show up in searches improve SEO.

Facebook - is an important business review site. Businesses need to create a Facebook business profile and the process of leaving reviews is easy for customers as most already have a Facebook account.

Yelp - is the largest platform for online customer reviews and can be useful to any kind of business.  It has many useful review management tools and allows businesses to reply privately and publicly to customers who have posted reviews about them.

Tripadvisor - is the world's largest travel website and businesses can list on there for free. It increases exposure to a qualified audience and is ideal for travel related businesses such as accommodations, restaurants and attractions.

Better Business Bureau - is a business rated review system that educates consumers and assists them in finding trusted businesses.  A company profile on BBB will have a short bio, a history of any complaints about the business and a rating from A to F.

All businesses benefit from an online presence and customer reviews.  They give customers the best experience that they can and reviews let more people know about it.

From an article by Claudia Labonte-Kudzman

Building Better Business and Customer Service in 2021

By Randall Orser | Business , Employees , Retail , Small Business

In 2021 most businesses are looking for ways to rebound from the disastrous year that was 2020.  As well as dealing with the ongoing Covid-19 crisis, there are many new variables affecting business such as how products and services are offered and delivered which will have an impact well into 2021 and beyond.  There are also other market forces to consider including the impact of big-box stores and being able to offer a fast delivery service that customers now expect.

According to "Go-Daddy" half of the businesses that they surveyed had a website or active social media account before the pandemic hit.  The number has now almost doubled but businesses who want to maintain their market share in 2021 will have to go further and adopt platforms that do everything in one place, sales, email communication and marketing.  When businesses improve their digital systems and at the same time continue to offer top class customer service they are more likely to survive.  This could include using the Canadian platform Shopify so customers can order and pay online, and then offering them the bonus of fast local delivery.  For those businesses who are behind in creating a digital presence they should be thinking seriously about investing in online in 2021.

For those businesses who are wondering how they can compete with the fast delivery service offered by Amazon, or the prices offered by the big box stores the answer is don't.  It is better to work on offering what the big retailers don't - excellent customer service and the personal touch.  Once you have an online platform to offer customers a fast and easy ordering service, expand on that by offering free local deliveries, discounts for in-store pick up, curb-side pick-up, and personalized invitations on key dates such as birthdays and anniversaries.  

To make your customer's experience at your store memorable think about offering little extras such as a hand written thank you note attached to the bag, or a small free gift in the bag such as a chocolate, pen, bookmark, fridge magnet etc.

When you are building your brand it is important to work on earning customer loyalty, not only do you need them to return to your store for more of your products or services but also to recommend you to their friends, relatives and colleagues.  You need to tap into what is important to your clients.  If they like to support their local stores provide them with a branded reusable shopping bag.  Remembering their names and the names of their children will make them feel special.  Encourage repeat customers by offering VIP offers or discounts.  Positive interaction with your clients goes a long way to advertise your business and good service is always appreciated even from a distance.

From an article by iCapital

Stay Alert and Recognize Signs that your Business may be in Trouble

By Randall Orser | Budget , Business , Small Business

As a business owner closing your company can be one of the hardest things you ever have to do.  But especially in these financially difficult times it is important that you recognize the signs of trouble early and prepare to deal with these difficulties early. Here are some red flags that can indicate that it is time to consider your options and what these may be:

1.  Dwindling Cash Flow - a shrinking cash flow is the most important factor that determines if a business is failing.  Financial experts say that having a cash reserve and a 13-14 week projection of future cash flow is critical to the business.  The covid-19 crisis has shown that many businesses did not have savings for a rainy day but were basically living from one payroll and rent payment to the next.  In addition many of the both large and small businesses that have filed for bankruptcy or a Companies Creditors Arrangement Act in the past few months were already financially distressed long before the pandemic started.   Many familiar companies are working with their lenders and advisers and considering restructuring to determine if they can continue to operate as a going concern.  

2.  Leaning on subsidies vs strategy - Do not rely on government subsidies to keep your business open.  There are over 300 different programs available federal, provincial and municipal and all require different guarantees, covenants and future repayment commitments.  Qualifying for subsidies may be just delaying the inevitable instead they should be used to help you to carry on with your business without this extra support.

3  Pressure from Suppliers - When the income flow slows companies are forced to extend their payables and manage their cash flows.  However if your unpaid bills are piling up and your suppliers make you pay COD or cut you off this is a serious sign that your payables have stretched as far as they can go. This may have been the situation for many businesses prior to the pandemic and it may quite likely be the same once the pandemic is over if your cash flow has not increased.

4.  Support from Lenders - If you have a bank loan or secured creditors that have taken assets as collateral you will need to generate enough positive cash flow to keep them happy.  If that is not possible even though your bank has eased restrictions and is offering an interest only loan then it is time to say that you are done.

5. Commitment to using your personal wealth - Many small business owners put their personal wealth on the line to finance their business so if they run into cash flow problems they have to decide how much more of their personal wealth do they want to commit to the business.  Even though entrepreneurs are usually optimistic, in this current climate they need to take a hard look and decide if their business is still viable.  

Even if you are seeing an number of warning signs the solution is not always bankruptcy.  It is a good idea to consult an insolvency professional as soon as financial problems are anticipated.  They will help you to explore all your options before closing the business which could include, finding an acquisition partner, forming a strategic alliance leading to a merger, or filing a holding proposal under the Bankruptcy and Insolvency Act.  In this situation your existing creditors are held in abeyance until you are able to put together a plan to sell your assets, or change your business model to become able to repay your creditors in the future.

From an article by Margaret Craig-Bourdin

What can we do to Revive the Economy?

By Randall Orser | Business , Covid-19 , Investments , Personal Finances

Canada's financial experts are looking into their crystal balls and predicting what the future might hold for the Canadian economy and how it could rebound post-covid.  Until March 2020 our economy seemed stable and secure despite other world events and trade wars we had reliable growth, strong employment, steady interest rates and cities were booming.  Then the pandemic hit and the world closed down.  

The government issued massive wage and unemployment subsidies and our deficit ballooned.  One million jobs were lost resulting in 13.7% unemployment the highest that Canada has seen since the Great Depression.  The pandemic also brought to light many problems in our society that we had been largely ignoring such as massive inequality, gaps in social assistance and vulnerable supply chains.  

Vaccinations have now arrived and we can see some light at the end of the tunnel and the question is now, what will our economy look like when the dust has settled?  Here are some predictions from financial experts.

1.  "Wage subsidies will help to save retail businesses" - until most people are vaccinated there will be sporadic shut downs so continuing with wage subsidies will help to keep businesses from going under. Pedro Antunes - chief economist, Conference Board of Canada

2.  "Small businesses will need more than government loans to survive and workers will need more support." Werner Antweiler - associate professor, Sauder School of Business

3.  "Businesses will need better access to rent relief, the current government has been a failure so more help is needed."  Laura Jones - executive vice president and chief strategic officer, Canadian Federation of Independent Business

4.  "Employers need to adopt flexibility for their workers to encourage them to grow resulting in better productivity and morale."  Jean McClellan, national consulting people and organization leader, PwC Canada

5.  "Automation will replace millions of jobs - and that's not necessarily a bad thing".  Companies investing in training for their existing workforces will help to sustain livelihoods without major disruption. Linda Nazareth, senior fellow for economics and population change, the Macdonald-Laurier Institute.

6.  " Business travel will come back safer though it will probably take three years or more to return to normal levels of business travel."  Nancy Tudorache, regional vice-president, Canada, at the Global Business Travel Association.

From an article by Ali Amad

Online Holiday Sales Expected to Surge by 90% in 2020

By Randall Orser | Business , holiday season , online shopping , Small Business

Shopping in this 2020 holiday season is going to look unlike anything we have ever seen before as 30% of shoppers will be buying their gifts online.  This will cause a shift in what is known as the seasonal rush as couriers, delivery services and Canada Post rush to deliver parcels.  A huge surge in online shopping occurred almost overnight starting back in March as shops closed due to the pandemic.  Digital sales saw a five year acceleration in just a few months trigged by this change in shopping habits and the retail industry will see a 15% market share which took 30 years to reach explode to at least 30% by the end of the year.

As more people are choosing to shop from home the main driver of these online sales will be social media direct advertising.  At least 15% of purchases will be referred to company websites from social channels especially in the height of the season and almost one in ten online purchases will be made directly through digital purchase points on social media.  The digital e-commerce demand is so strong this year that experts predict that companies offering personalized and curb side pick up options will increase their digital sales by 90% in 2020.

The anticipated volume of parcels to be delivered prompted Canada Post to release a video asking consumers to shop early to help to alleviate the backlog for their workers and to ensure packages were delivered on time.  On December 14th alone, Canada Post delivered half a million parcels.  They are adding more than 4,000 temporary seasonal workers and increasing their fleet by more than 1,000 vehicles.  There will be weekend deliveries and additional pick up points and post office hours will be extended.  Additional processing equipment has been installed along with enhanced tracking technology to enable customers to track packages. Despite these measures up to 70 million gifts could be delivered late.   

Many larger retailers have set up their own delivery services or teamed up with mail carriers and couriers to delivery purchases to customers.  Many are offering national two day shipping and next day delivery in major cities and in additions some started their holiday events early offering shopping with strict social distancing measures, online shopping with curb side pick up or home delivery.  

In order to have a successful holiday season retailers have had to change the ways that they do business to include more personal services such as the ability to chat on line with a store associate. Offering free shipping often with a dollar amount of purchases is always a bonus to attract a customer and have them buy more to get free shipping.

From an article by Michelle Singerman

Big Grocer is Watching you!

By Randall Orser | Business , marketing strategy , Retail

Did you know that grocers are using artificial intelligence to make shopping faster, easier and far more trackable?  The new technology that they are using will one day, (and that is not too far away) allow you to put your shopping in your cart, and go straight to your car, load up and head home with no human contact and without having to wait in the checkout line or tap your debit or credit card. Sound unbelievable? well it is already in place and depending on how you look at what is really happening here you might see it as a good thing or a bad thing.

The new smart carts being rolled out have their own scanner so that customers can scan the items with barcodes before putting them into the cart.  If items do not have a barcode the cart's sensors will weigh them.  In the future we can expect the carts to have cameras, artificial intelligence and machine learning to recognize items placed into them without the use of a barcode. This invisible checkout system has been used in Asia for several years and it is now getting more and more available in North America.  The Amazon Go Grocery outlet opened in Seattle this year and at some Walmart urban super centre locations where customers can use the My Walmart app to scan products as they shop, bypassing checkout lines.  They pay via smartphone using a credit card already registered with the store and then exit through Fast Lane checkouts. 

For the consumer this is an ideal way to shop, they have control over the time they spend shopping and can choose their own produce, still impulse buy, monitor their grocery purchases to stay within their budget, avoid line-ups, and avoid having to pay (at least until their credit card statement arrives).

Behind the scenes the advantages for the grocer is that they can gather data about shoppers and their habits.  They are already doing this when you use your "Save on More" or equivalent card they can see what you buy and tailor their advertising emails to you to suggest discounts on items that you normally buy.   Grocery stores generate around $7 billion a month in sales and this is still growing.  

It is hoped that this automation will not mean that many people will lose their jobs, but instead will be moved to the sales floor to interact more with customers and answer questions about products, however some job losses will be inevitable.

From an article by Charlene Rooke

Do Businesses Need Better Access to Rent Subsidies?

By Randall Orser | Business , Retail

Though the emergency wage subsidies that the Government of Canada put in place have been reasonably successful according to Laura Jones the executive vice-president and chief strategic officer of the Canadian Federation of Independent Business the Canada Emergency Commercial Rent Assistance Program has been a failure.

When tens of thousands of businesses were forced to shut down at the start of the pandemic many of these were immediately unable to pay their rent.  Though most financial experts recommend having at least a three month rainy day fund most businesses did not have that luxury before the crisis and and definitely do not now after an extended period of lost revenue and reduced operating hours.  Now so far into the pandemic even the most established businesses have drained their rainy day funds.  Back in June a survey showed that 50% of business owners could not make their rent without government help and 22% feared eviction.

Financial experts do not see an improvement in the situation going into 2021 so government relief programs will be of the highest important to support small businesses.   The Canada Emergency Commercial Rent Assistance (CECRA) program has been a failure even though on paper it looked like a good idea.  Tenants would get a 75% break on their rent with provincial and federal governments kicking in 50% that is paid to the landlord with the landlord agreeing to take a 25% reduction in the total rent, in this way the burden would be shared.

There were two problems with this program, firstly the landlord has to agree to participate but many landlords want full rent so have not signed up.  Secondly only businesses who have suffered a 70% loss of revenue are eligible, this high amount means that many businesses are not eligible.  From this information it is not surprising that the finance department only spent less than 10% of it's committed funding on the CECRA program.  

Now that the CECRA has ended it is hoped that the a new commercial rent relief program will be rolled out that will allow tenants to access the 50% of government provided rent relief with or without the participation of their landlord and reducing the 70% loss of monthly revenue eligibility to something more reasonable.  As we are now in the second wave of the pandemic these changes are needed for the present and the foreseeable future.

From an article by Ali Amad

Suffering from Pandemic Induced Burnout?

By Randall Orser | Business , Employees , Home Based Business , Small Business

Covid-19 related stress and the blurring of your work life as a result of working from home may have you feeling out of balance. This is the same for the millions of Canadians who have transitioned to working remotely. While most enjoy not having to make the commute to the office many fill the saved time with more work which along with household chores, caregiving and navigating this covid-19 world can easily lead to burnout.  If this is you, here are some strategies that you might like to consider to help you gain greater ease in your life.

1. Work Smarter - it is important to have a schedule and stick to it.  Start work at a set time, check in regularly with work colleagues and team members and have a firm end of work day time.

2. Develop a Resting Strategy - make sure you plan to take quality rest time, whether it is daily, weekly or longer-term this will help you to retain the energy to have a successful work day.

3. Use the Pomodoro Technique - this involves breaking work down into intervals separated by short breaks, traditionally intervals are 25 minutes but they can be adjusted as necessary.  Do some work then take a break, go for a walk or do some other activity to allow your brain to rest then restart.

4. Watch what you eat and make sure to stay active - eating a balanced diet is important to stay healthy and prevent burn out, the better the fuel that you give your body the better you will feel and exercising is a must.  Think about taking an early morning walk before starting work it will set you up for the day.

5. Practice Mindfulness - Use small activities such as brushing your teeth or washing your hands to focus on your breathing and centring your body and self connecting. Be aware of how you are feeling, are you hungry or thirsty?

6. Name it to Tame it -  If you become upset or anxious about something ask yourself whether your feelings are anger, concern or exhaustion.  Naming aids help you to be self aware and manage your feelings.

7. Be Grateful - Take the time a few times a week to write down three things that you are grateful for, this will have a positive effect on your happiness and help with burnout, work-life balance and depression.

8. Practice Diaphragmatic Breathing - This involves inhaling deeply by expanding the lungs downward rather than inhaling using the abdomen or rib cage alone.  This technique has been shown to reduce stress and anxiety.

9. Release the Pressure - The pandemic has added more pressure and demands to our lives from personal and work responsibilities. Instead of adding more pressure by thinking that you should be doing things "better" or "faster" be kinder to yourself by recognizing when you are doing your best. 

10. Trust your Inner Resilience - Most of us want certainty in life so the uncertainty associated with Covid-19 is difficult to deal with.  It is important to realize that you are more adaptable than you think and what we are going through will not last forever.

11. Focus on the Here and Now - Instead of thinking that you cannot deal with the pandemic for another year focus on today and what you can do to make your life better.  We have to be positive that our businesses will come out of the pandemic stronger.

12. Make the Most out of Working Remotely - Make a new work schedule that allows you time for more rest and relaxation.  Learn how to keep your boundaries with others.  Learn new skills such as remote tools like Zoom.  Learn how to work effectively with your team while you are all apart.

From an article by Margaret Craig-Bourdin

The Inevitable Second Wave – How to Prepare your Business

By Randall Orser | Business , Covid-19 , Employees

Experts tell us that a second wave of Covid-19 is inevitable and in some places it is already here.  Now is the time for your business to review the lessons you have learned in the past few months, and prepare for future disruptions.  More people have safely returned to work but even though it seems more like normal there is still the threat of a second wave.  It is a tough prospect for businesses already suffering from the impact of the first wave but making plans for further disruptions are necessary if they are to survive at all.  Here are some things that companies should consider.

  • Make sure that all members of the response team who have been working non stop take some downtime to rest.
  • Make an honest assessment of the weaknesses experienced in the first wave.  Everyone was learning so use what was learned and plan what could be done differently and more successfully the second time around.  Areas of concern should be logistics and distribution of equipment for people working remotely.
  • The response team needs to continue to compile best practices for a return to work so that employees can do so safely.  Regular meetings and communications with employees is important so everyone stays in the loop.
  • Plan for the financial impact of reduced hours or closure.  The past few months have been devastating for many businesses even though they have been helped by government subsidies. The decline in business could be even greater the second time around so it is important to be aware of programs still in place to help.  Revenue may not be the same as it was before the pandemic so business plans should be made with this in mind, reducing unnecessary spending and creating a financial cushion are most important. 
  • Creating a phasing out plan so that non-essential employees who have returned to work can quickly pivot to working remotely again and plans can be made for more essential workers to phase out of the office if needed to minimize interaction.  The phase out plan should also include how the organization will continue to operate including supply chains and communications to clients or customers.  It also may be necessary for your company to stockpile supplies.
  • Probably the hardest part of planning for a second wave is preparing mentally.  Employees at all levels will suffer anxiety over a loss of wages in event of a partial or full shutdown while they are still trying to adapt to the new normal.  It is important to create a healthy work environment for employees and if possible the company should consider providing counselling for its workers to help them come to terms with the changes.

From an article by Ethan Rotberg

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