Category Archives for "Small Business"

Why the Pandemic is Open Season for Scammers

By Randall Orser | Covid-19 , Personal Finances , Scams , Technology

Did you find that during the first few months of the pandemic you got a lot less scammer phone calls?  Now the scammers are back in full force exploiting people's fears about the pandemic.  Everything from free masks (you just pay the shipping), fake testing kits, miracle cures and even cleaning services claiming to rid your air vents of the virus.  Between March 6 and April 23rd the Canadian Anti-Fraud Centre logged 643 fraud reports and 158 confirmed victims, though this is probably less than the true total as many people are too embarrassed to report that they have fallen for a scam.

The pandemic has created perfect conditions for con artists as people are alone, anxious, on-line, watching frightening news and worrying about their jobs, finances and relatives who are at high risk.  Jeffrey Thomson a CAFC criminal intelligence analyst says "It's prime time for fraudsters, an extortion scam is trying to create fear and anxiety in people to get them to react.  Now people are more likely to be constantly in that state."  

One of the most common scams is getting a text or email from someone claiming to be the government directing you to provide your SIN and banking information to claim the CERB.  As Thomson says successful scams are a game of numbers and as this one is going out in huge amounts it is taking more victims.

Phishing, extortion and emergency scams are also on the rise.  Most common are a brand offering you loyalty points in exchange for your banking information or someone impersonating a friend or relative stuck abroad and needing you to send money.  Here are some of the warning signs that you should be looking for to avoid getting scammed.

  • Be suspicious if you did not initiate contact and don't respond to unsolicited messages that sound a bit fishy.
  • Think twice before clicking any links in a text or an email from an unknown source.
  • If a friend messages via social media for financial help call them to confirm.
  • Verify any websites claiming to be the government.
  • Make sure the seller is reputable when shopping on line.
  • If a deal on Covid-19 products seems too good to be true, it probably is.

If you do fall victim to a scam collect all the details and events in chronological order and report them to the police, the CAFC, the credit bureau and your bank and credit card providers.  Even if you cannot recover your own money you may help other Canadians to avoid losing theirs.

From an article by Sinead Mulhern

What Small Businesses can do to Survive the Pandemic

By Randall Orser | Budget , Covid-19 , Employees , Small Business

Businesses are doing all they can to navigate the unknown and to stay afloat during the pandemic, including laying off staff and reduced hours.  However up to 30% of small businesses are going to be unable to survive according to Jasmin Guenette from the CFIB.  

Here are a few actions that small businesses could take that might help them to deal with their situation.

  1. Check your reserves and insurance - talk with your accountant about your cash flow and reserves and how they can be best used.  Also check your insurance policy to see if there is anything that can be covered for lost income.  Even though many businesses have business interruption insurance, as this is a pandemic it does not count. 
  2. Have honest conversations with your staff about how you are going to try and keep them on the payroll but what might need to be done if your situation worsens.  
  3. Brainstorm with your staff for any ideas about how things could be done differently to save money and layoffs.
  4. Think about allowing your employees to work from home if it is possible in your business. If you can save on rent and utilities for your small office that could help your bottom line.
  5. Think about reducing business hours if possible.  This will give employees extra time to carry out cleaning and sanitizing for the office or if your are open to the public.
  6. If your business is open make sure that you follow all health and safety protocols to ensure a safe environment for your staff and the public.  Make sure all staff are fully trained and know what is expected of them.  
  7. Talk to your suppliers and lenders about stretching your payments and make sure that you take advantage of all the government, provincial and municipal help available to you.
  8. Get help from your accountant and business advisors to decide which government programs are most appropriate for your business.
  9. Continually think and plan ahead to see what you can do to minimize the impact of Covid-19 on your business. 
  10. Consult useful resources geared to small business:

From an article by Margaret Craig-Bourdin                              

How the Pandemic is Affecting Canadian Businesses

By Randall Orser | Budget , Covid-19 , Employees , Small Business

Even though many small businesses have fully or partially reopened the financial effects of the pandemic have been disastrous.  The serious decrease in revenue has meant that many have had to take on debt in order to stay afloat and many are calling for further government financial help.

The Canadian Federation of Independent Business (CFIB) has been tracking small businesses through the pandemic and the most recent survey of more than 4000 businesses found that 40% of them have seen revenues drop by 70% and & 70% have seen revenues drop by at least 30%.  

Even with the easing of restrictions by provinces and municipalities allowing for small businesses to reopen it is going to be a long time until sectors such as hospitality and entertainment will start to show a profit again.  Ted Mallet the vice president and chief economist of the CFIB has said it is more difficult for small businesses to operate now and despite being patronized by people who love unique products and services, many of these businesses will not survive.

The new reopening rules mean that restaurants are only able to have 50% of their normal capacity.  They usually have a profit margin of 3-5% when times are good so despite having curtsied pick up and home delivery it is difficult for many to continue to hang on. 

The CFIB survey found that 34% of respondents were behind on their major bills such as rent, credit card bills and critical suppliers, that number is 47% in the hospitality sector.  More than 25% said that their biggest worry was having to close their business, they are borrowing money to keep going but are building up debt that is going to be difficult to pay down.  In addition they have the costs associated with the changes necessary to operate their business post lockdown.

Though it is doom and gloom for many businesses, due to a change in consumer behaviour there are some business that are thriving, including home-gym products, those selling renovation products on-line, hobby shops and bike shops but these businesses are in the minority.

From an article by Ethan Rotberg CPA Canada

Will Covid-19 Relief Measures Affect my Taxes?

By Randall Orser | Business Income Taxes , Employees , Personal Finances , Personal Income Tax , Small Business

Accountants are not completely certain how the various government benefits being received by individuals and businesses during the pandemic will affect their tax bill next year.  However what will be certain is that if the benefit is a taxable benefit then you need to be prepared to pay tax on it in 2021 when you file your 2020 tax return.

As of April 2020 here is the information available from the CRA website and current legislation.

1. For Individuals

  • Any CERB payments are taxable, any payments that you have received will have to entered onto your tax return and an information slip will be available to you next year in MyAccount under Information slips so that you can enter your income in the correct boxes on your tax return.
  • One time additional payments for the Canada Child Benefit and the GST/HST tax credit are tax free and it is not expected that this will change in 2020.  The GST payment is also tax free and it is not expected that this will change.
  • If your student loan payments have been suspended then you will probably not have as much allowable student loan interest to claim on your income tax return as long as it is a qualifying student loan per CRA guidelines.
  • Deferred payments under mortgage support are added to the outstanding principal balance and are repaid over the life of the mortgage.  The mortgage support system is managed specifically by your lender and any deferral of payments is an arrangement between you and them.  The only impact on your taxes might be experienced by those who are self-employed who are able to claim business use or use of home expenses on their tax return.
  • The minimum withdrawal limit under the RRIF has been reduced by 25% for 2020 which means that if you take out less money you will pay less tax as money in your RRIF is only taxable when it is withdrawn.  

2. For Businesses

  • Tax credits and other benefits provided by the government still apply so any money received as a wage subsidy is considered government assistance and is included in the employers taxable income.  If you apply for the CEWS benefit you need to understand the tax implications of receiving this benefit.  The subsidy must be noted in your bookkeeping records and will become part of your business income that you report on your T2125.  
  • The TEWS or Temporary Wage Subsidy will be recorded in the same way.  The subsidies are a reduction in the amount that you send to the government for income taxes that you withheld from your employees and it becomes income for your business.  

It is paramount that you keep accurate accounting records throughout 2020 as they will be very important when you do your tax return in 2021.

From an article by Susan Watkin

How to Manage Flexible Work Arrangements for your Business

By Randall Orser | Employees , Small Business

Prior to the pandemic employees were already looking for new incentives to keep themselves motivated and engaged including the most popular one flexible working arrangements.

From an employers point of view offering flexible working means that there are some hurdles to be overcome. These can include the feeling that not making full use of the office space that they have invested in is a waste of money and secondly how can they make sure that their employees are being productive if they are not continually supervising them?

Due to the pandemic many more employees are working from home employers have had to change their mindset to embrace this.  For example instead of measuring the amount of hours spent at their desks they need to measure their employees productivity. Previous research into flexible working arrangements showed that employees have a greater degree of job satisfaction and higher productivity rates when they work away from the office.

It is true that flexible working arrangements do not work for every business especially if face-to-face contact with clients is important. However during the pandemic many businesses are getting around this by setting up Zoom meetings with their clients.  

Flexible Work Locations:

Offering flexible work arrangements will include work locations.  Employees can work in the office part of the week and from outside the office the remainder of the week whether it be at home or at another remote location of their choice.  Alternatively they can work entirely out of the office and just be in the office for special training, staff meetings or special events.  One advantage to this system is that employers do not have to hire talented workers who live locally instead they can hire from the best talent available in the industry wherever they live.

Flexible Schedules:

Instead of the 9-5 schedule required in the office employers can allow workers to set their own eight hour work day within a 12 hour period, or they can work 10 hour days for four days a week.  This schedule could be subject to change after a 3 or 6 month time period depending upon the requirements of the company.  

Job Sharing:

Job sharing allows two employees to share one full time job.  Sometimes an employer cannot find a person to work full time but can find two employees who can share the tasks which often happens in businesses that hire from an employee pool including students, mothers and seniors.  The benefit of this to the employer is that they often do not have to pay the same benefits to part time workers that they pay to their full time staff thereby saving on overhead.   The downside is that the employer will responsible for coordinating the work between the two employees to make sure that all the required tasks are completed and that everyone is on the same page.

Although flexible working comes with advantages and disadvantages for both employers and employees these arrangements were becoming more popular but the outbreak of Covid-19 has seen an  unprecedented move from office to home working.  It will now remain to be seen how many companies will continue to have their employees working remotely.

From an article by Alyssa Gregory

Planning for the Future of Your Business

By Randall Orser | Business , Retirement , Small Business

In 2011 the Canadian Federation of Independent Businesses conducted a poll that revealed that only 10% of small business owners had a succession plan.  As a small business owner you need to plan for your company's future change of ownership.  A careful exit strategy will help you to maintain the value of your company and your legacy and will ensure a smooth transition to a new owner.

A good succession plan will maintain positive relationships with employees and business partners that will help to bring a good sale price.  It will provide financial security for your heirs and other stakeholders as a plan is in place to deal with unexpected events such as death or illness.

Changes in ownership can be stressful for employees, suppliers and customers so your succession strategy needs to include communication plans to make sure that everyone is kept informed during the changeover thereby ensuring that the business continues to run smoothly.

If you expect to be leaving your business within the next five years you need to start planning right away.  Even if your business is fairly new you need to have a plan in place should the unexpected happen.  

Susan Ward a Canadian business writer says that 70% of businesses do not survive the transition from the founder to the second generation due to poor or no planning, and she offers the following tips for succession planning:

  1. Start business succession planning early, five years in advance is good, ten years is better. Think about including a business exit strategy right into your initial business plan.
  2. Make sure that you involve your family in all business succession planning discussions.  This will help to ensure that everyone is aware of your plans.  It is important to pay attention to the personal feelings, ambitions and goals of all members of the family who might be directly involved with the succession.
  3. Plan realistically, if your children do not have the skills or have no interest in taking over the company from you then consider a different family member who might be more capable.  If there is no one in the family to take over the business then you should consider selling it.  Whatever you decide it should be in the best interests of the business that you have worked hard to make successful.  
  4. Don't plan for everyone to have an equal share in the business.  It is fairer for those who have an active part in running the business to have a larger share of the ownership of the business than non active family members.  You could also transfer complete ownership to your chosen successor and make other financial arrangements for other members of the family.
  5. Make sure that you work with and train your successor for a few years so that they are ready and able to take over the reins should the need arise.  It can be difficult to teach someone your business skills and share decision making but it will be in the best interests of the business. 
  6. Make sure that you get outside help with your succession planning from your lawyer, accountant and financial planner.  They will help you to put together a good plan as well as plan asset transfer tax strategies to minimize taxes due upon your death. 

​From an article by Susan Ward and Freedom 55 Financial

Charging PST on Online Sales

By Randall Orser | On-line sales , Sales Taxes , Small Business

If you are a business that does online sales have to collect and remit taxes just the same as if you had a bricks and mortar business.  This means that you will need to charge and remit other province's sales taxes and different rules in different provinces can make this process complicated.  

Businesses need to register as a provincial sales tax vendor with each province where they will be doing business. Unfortunately, there is little that can be done get around this additional paperwork and bookkeeping, except for to limit the provinces where you ship goods, for example if businesses only sell products to consumers in their own province or if they only sell non-taxable goods and services.

Provincial sales taxes vary by province. There is also the goods and services tax and some provinces use the harmonized sales tax which combines the GST with their provincial sales tax.   For businesses selling only within their own province or territory they only need to follow the rules for their province, but for those selling to other provinces they must charge taxes according to the rules in those provinces.  

  • In BC if the business specifically targets customers in BC through advertising or similar means that they are targeting customers in that province and they are therefore expected to collect and remit PST.
  • In Manitoba out of province businesses must register as a vendor if they solicit sales, the orders originate, the goods are used or goods are shipped to that province.
  • In Saskatchewan all businesses selling online order to customers there are expected to collect and remit PST.
  • In Quebec out of province businesses must register before selling goods to residents there.
  • In Alberta, Nunavut and the Yukon there is no PST.
  • New Brunswick, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Prince Edward Island and Ontario charge the HST.
  • BC, Manitoba, Quebec, and Saskatchewan charge the GST and a PST.


From an article by Susan Ward

How to Close your GST Account with the CRA

By Randall Orser | Sales Taxes , Small Business

There could be a few different reasons why the time may have come for you to close your GST account with the CRA.

  • If your total taxable revenue (before expenses) has dropped below $30,000 in the last four consecutive calendar quarters then you can apply to regain your small supplier status and no longer collect and remit GST.  However, you must have been registered for GST for at least one year before they will close your account.
  • If you sell or close your business
  • If you no longer make taxable supplies
  • If you are in receivership, a receiver appointed by the courts may take control of your existing GST account until the closure of the business, and your GST account will also be closed at that time.
  • If you are filing for bankruptcy you will need to send copies of the court issued bankruptcy documents to the tax services office.
  • If you are merging or amalgamating with another business.  In this case the CRA may either issue a new business number or allow the reuse of the existing business number.
  • If the business is a sole proprietorship and the owner dies, the heirs or agents will be required to close the account and file a final return.
  • If the business is a partnership and one partner leaves or dies.  Depending on the circumstances the existing number may be reused or a new one might be required.

To close your account you need to complete form RC145 Request to Close Business Number Accounts and send it to your tax services office.  You must also make sure that you file any outstanding GST returns for the period up to the date the account is closed and pay any remittances due.  If you are closing the business you are assumed to be disposing of the assets of the business and that you have collected GST on these sales.  You will need to determine the fair market value of these assets and report this on the return.

If you do not close the account the CRA will assume that you are still in business and will expect you to file returns.  If your business is closed or inactive you can file nil returns until your business starts up again, but if you continue to file nil returns for several years the CRA may contact you to ask if you want to close the account.  If you stop filing returns and don't close the account the CRA will require you to file for the missing dates and if you do not respond you can expect to receive a phone call or visit from from a CRA officer.  If your business is still open and you are not filing returns you will be prosecuted under the Excise Tax Act and you will be liable for penalties and interest.

From an article by Susan Ward

What are Input Tax Credits?

By Randall Orser | Business , Sales Taxes , Small Business

Input Tax Credits or (ITC's) are the sum of the GST/HST you paid on legitimate business expenses or the allowable portion of the GST/HST paid.  The CRA refers to these as Input Tax Credits and they used by businesses to recover the GST/HST paid on purchases and expenses related to operating their business.

To use ITC's you must be registered for the GST/HST and then each time you incur an expense or make a purchase related to your business you need to keep your receipt and keep track of these payments in your bookkeeping system.  It is very important that you keep your receipts so that you can prove your claim in case of a CRA audit.

Some of the expenses that you can claim ITC's per the CRA website include: rent, equipment rentals, advertising related expenses such as business cards, flyers and ads, accounting and other professional fees, home office and motor vehicle expenses, office expenses such as stationery, postage, computer and a certain amount of travel including airfare, car rental and hotel rooms.  You can also claim ITC's on Capital expenses including: capital property, machinery and vehicles, furniture and appliances, and improvements to capital property.  See the CRA website for a full list.

According to the CRA you can only claim Input Tax Credits for anything related to your business and the the purchase or expense must be reasonable in quality, nature and cost.  Some of the things that you can't claim for include: some capital property, membership fees or dues to a club which include dining, recreation or sporting facilities (including golf clubs, and fitness clubs) unless you acquire the membership to resell in the course of your business, and taxable goods and services bought or imported to provide exempt (zero rated) goods and services.

From an article by Susan Ward

Is it Time for the Annual Clean-up and Back-up of your Files?

By Randall Orser | Business Income Taxes , Cloud-computing , Small Business

The end of the year is a good time to put some time and attention into cleaning up and backing up your files. Cleaning up your files lets you clear up physical, digital and psychological space so everyone can get more done. Backing up is essential in case something goes wrong.

Here's how to do your annual file clean-up and backup.

Delete Clutter from Project Management

If you still have old projects open in your project management software, delete them or archive them now. People on your project management software should only be seeing projects that are actually relevant to their work right now.

Archive Physical Files

If you have a lot of physical files lying around that aren't being used anymore, archive them. Small businesses can open a small storage facility to store their archived files. Larger businesses can open an account with a file archive facility.

What to Back Up

At least once a year, you should back up:

§ An entire copy of your website. You should have the "front" end of your website, including the CSS and HTML code, as well as the "back" end infrastructure (e.g. server code) all backed up somewhere.

§ Your entire database should be backed up as well.

§ Your email list and newsletter list should be backed up, along with any mailing sequences.

§ Your customer list should also be backed up.

§ Your forums or any other communication channels should be fully backed up. You should be able to restore your community if anything happened.

Basically, anything that could critically cripple your business if it disappeared should be backed up regularly.

At Least Three Backup Sources

You should have at least three backups of all your most important data. Each offers a different level of protection.

§ Online backup - Online backups work well for small files and for files stored on personal computers.

§ On site backups - These can be done as frequently as once a month. Simply take all your digital data and dump them on a hard drive, then store that drive.

§ Off-site backups - On site backups can't protect your data against earthquakes, fires, floods and other disasters that could affect the physical devices your data is stored on. Off-site backups will hold your data for you, so you're protected in case of a disaster.

Just one level of protection isn't enough to protect you against a catastrophe. Higher levels of protection require more work and are generally performed less frequently.

Change Dropbox Passwords

At least once a year, ask all your employees to change their Dropbox, Google Drive and other backup passwords. Passwords now need to be more complex, and best are ones that are 16 or more characters.

If you perform these tasks regularly, you'll be well protected against disasters in all forms.

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