Did you know...
That you should notify the Canada Revenue Agency (CRA) when directors of your corporation change?
Avoid the possibility of service delays by ensuring that information on the incoming directors is added to our system and information on the outgoing directors is removed. Once the information has been updated, the new directors will be able to speak with CRA agents on the phone and submit written requests, such as Form RC59, Business Consent Form, on behalf of their corporation.
Directors can also have online access to their business's tax information through My Business Account at www.cra.gc.ca/mybusinessaccount. For a director to have online access, CRA's system must contain his or her social insurance number.
You can send a copy of official documentation showing the change of directors by fax or by mail to their tax services office.
Examples of acceptable documentation include official notification from the incorporating body, minutes of the Board of Directors' resolution approving the change, a certificate of incumbency with an impression of the corporate seal, among others. If CRA need additional information before updating our system, they will contact you.
You can find CRA's tax services office at www.cra.gc.ca/tso.
Monday, December 8, 2008
Monday, November 24, 2008
Shareholders' Meetings
The Canadian Business Corporation Act ("CBCA") states that a corporation "... must hold a shareholders' meeting on a date that is no later than 15 months after holding the last preceding annual meeting, but no later than six months after the end of its preceding financial year."
Alternatively, shareholders may pass a resolution in lieu of meeting. A resolution in lieu of a meeting may be useful for small corporations that have only one or a few shareholders. A resolution in lieu of meeting is a written resolution signed by all shareholders who would have been entitled to vote at the meeting that deals with all matters required to be dealt with at a shareholders' meeting. This resolution is just as valid as it would be if passed at a meeting of shareholders. This resolution should be retained in the corporation‘s records.
The shareholders' meeting (or resolution in lieu of a meeting) allows shareholders to obtain information about the corporation's business and to make appropriate decisions regarding this business. The date of the meeting, or of the resolution, must be indicated on your Annual Return.
Agenda
At minimum, the agenda of an annual meeting must include the following items:
- consideration of the financial statements;
- appointment of an auditor (or a resolution of all shareholders not to appoint an auditor); and
- election of directors.
Often, the agenda includes an additional item, "any other business." This portion of the meeting allows shareholders to raise any other issues of concern to them. If directors want shareholders to consider a matter, it should be listed in the agenda prior to the meeting and not raised as "any other business."
Calling a shareholders' meeting
The directors must notify voting shareholders of the time and place of a shareholders' meeting. They must do so no more than 60 days and no fewer than 21 days before the meeting date. For example, if the meeting is to be held on May 20, the notice of the meeting should be sent no earlier than March 22 and no later than April 30.
Unless otherwise provided by the by-laws or the articles, this notice can be sent electronically to shareholders if they have previously consented to receiving such notices electronically and if they have designated a system for receiving them.
Location of the shareholders' meeting
The annual meeting may be held in Canada at a place specified in the by-laws. Or, if the by-laws do not specify a location, directors may choose one. An annual meeting may be held outside Canada only in cases where the corporation's articles permit it or if all voting shareholders agree.
Also, where the corporation's by-laws permit it, the directors of a corporation may decide that a meeting of shareholders will be held entirely by means of a telephonic, electronic or other communication means that will permit all participants to communicate adequately with each other during the meeting. In such cases, it is the responsibility of the corporation to make these facilities available.
Unless otherwise provided by the by-laws, a corporation can allow shareholders to attend the meeting electronically. The communications system used must permit all participants to communicate adequately with each other during the meeting.
Other requirements of the shareholders' meeting
Quorum
Unless a quorum of shareholders is present or represented at annual or special shareholders' meetings, no business that is binding on the corporation can be conducted. A quorum is present at a meeting when the holders of a majority of the shares entitled to vote at the meeting are present in person or represented by proxy, regardless of the number of persons actually present at the meeting. Note, however, that a corporation's by-laws can provide for a different type of quorum.
Electronic voting
Unless the corporation's by-laws specifically forbid it, electronic voting is allowed, as long as it is possible to verify the vote without knowing how each shareholder voted.
Minutes of the meeting
The corporation must keep a written record of the meeting. This record usually includes such information as:
where and when the meeting was held;
who attended; and
the results of any voting.
For more information, please consult Industry Canada's website
Alternatively, shareholders may pass a resolution in lieu of meeting. A resolution in lieu of a meeting may be useful for small corporations that have only one or a few shareholders. A resolution in lieu of meeting is a written resolution signed by all shareholders who would have been entitled to vote at the meeting that deals with all matters required to be dealt with at a shareholders' meeting. This resolution is just as valid as it would be if passed at a meeting of shareholders. This resolution should be retained in the corporation‘s records.
The shareholders' meeting (or resolution in lieu of a meeting) allows shareholders to obtain information about the corporation's business and to make appropriate decisions regarding this business. The date of the meeting, or of the resolution, must be indicated on your Annual Return.
Agenda
At minimum, the agenda of an annual meeting must include the following items:
- consideration of the financial statements;
- appointment of an auditor (or a resolution of all shareholders not to appoint an auditor); and
- election of directors.
Often, the agenda includes an additional item, "any other business." This portion of the meeting allows shareholders to raise any other issues of concern to them. If directors want shareholders to consider a matter, it should be listed in the agenda prior to the meeting and not raised as "any other business."
Calling a shareholders' meeting
The directors must notify voting shareholders of the time and place of a shareholders' meeting. They must do so no more than 60 days and no fewer than 21 days before the meeting date. For example, if the meeting is to be held on May 20, the notice of the meeting should be sent no earlier than March 22 and no later than April 30.
Unless otherwise provided by the by-laws or the articles, this notice can be sent electronically to shareholders if they have previously consented to receiving such notices electronically and if they have designated a system for receiving them.
Location of the shareholders' meeting
The annual meeting may be held in Canada at a place specified in the by-laws. Or, if the by-laws do not specify a location, directors may choose one. An annual meeting may be held outside Canada only in cases where the corporation's articles permit it or if all voting shareholders agree.
Also, where the corporation's by-laws permit it, the directors of a corporation may decide that a meeting of shareholders will be held entirely by means of a telephonic, electronic or other communication means that will permit all participants to communicate adequately with each other during the meeting. In such cases, it is the responsibility of the corporation to make these facilities available.
Unless otherwise provided by the by-laws, a corporation can allow shareholders to attend the meeting electronically. The communications system used must permit all participants to communicate adequately with each other during the meeting.
Other requirements of the shareholders' meeting
Quorum
Unless a quorum of shareholders is present or represented at annual or special shareholders' meetings, no business that is binding on the corporation can be conducted. A quorum is present at a meeting when the holders of a majority of the shares entitled to vote at the meeting are present in person or represented by proxy, regardless of the number of persons actually present at the meeting. Note, however, that a corporation's by-laws can provide for a different type of quorum.
Electronic voting
Unless the corporation's by-laws specifically forbid it, electronic voting is allowed, as long as it is possible to verify the vote without knowing how each shareholder voted.
Minutes of the meeting
The corporation must keep a written record of the meeting. This record usually includes such information as:
where and when the meeting was held;
who attended; and
the results of any voting.
For more information, please consult Industry Canada's website
Did you know.... Tax Deductions for meals and/or entertainment
DID YOU KNOW....
As a business owner and/or independent contractor, the general rule for tax deductions related to meals and/or entertainment is that you may deduct up to 50 percent of the cost of meals and/or entertainment, or "an amount that is reasonable in the circumstances, whichever is less" (Business and Professional Income Guide, CRA).
As a business owner and/or independent contractor, the general rule for tax deductions related to meals and/or entertainment is that you may deduct up to 50 percent of the cost of meals and/or entertainment, or "an amount that is reasonable in the circumstances, whichever is less" (Business and Professional Income Guide, CRA).
Wednesday, November 19, 2008
Offer to Lease & Commercial Lease
I previously blogged about the importance of seeking legal advice before signing any offer to lease.... well, recently I got a call from a new client asking me if I could review his offer to lease. As usual, my first question was: Did you already sign the offer... the client said yes, the broker was pressuring me and I wanted to make sure that I got this deal!!! Unfortunaly, after reviewing the offer, a lot of important points were not covered and therefore; it is now too late for the client to ask for it. Once the offer to lease is signed, it is a binding contract. Please make sure that you are seeking legal advice BEFORE signing any agreements, I can assure you that may save a LOT of money in the long run. Again, I am dealing with a lot of brokers and the vast majority of them recommend to their clients to seek legal advice before signing any type of offer... but it appears that others do not recommend such advice. However, at the end of the client it is your responsability as a business person to ensure that you are protected.
Thursday, October 30, 2008
YBN-NC Season Launch & YBN-NC's 2nd Year Anniversary Celebration ~ Inspiration from Ottawa’s Top Executives ~
My group will be hosting a great event on November 18th; here is the official invitation.
YBN-NC Season Launch & YBN-NC's 2nd Year Anniversary Celebration ~ Inspiration from Ottawa’s Top Executives ~
Mark your calendars for this special and inspiring evening and learn how to get to the peak of your career from Ottawa’s Businesswomen of the Year, Robin McIntyre, 2005 Ottawa’s CEO of the Year, Peter Strom, and Justin Shimoon, recipient of the 2008 Top 40 Under Forty Award of the Ottawa Business Journal.
Enjoy a fabulous cocktail party with an outstanding view from the Sussex Room at the Marriott Hotel and learn how these top executives moved to the top while managing a great work-life balance.
Date/Time: -November 18th, 2008, 6:30pm
Location: -Marriott Hotel, Sussex Room, 100 Kent Street
Cost: - Free for YBN-NC members
- $25 for non-members (advance registration)
- $30 for non-members (onsite registration)
Register early to secure yourself a spot at this event by sending an email to events@ybn-nc.ca. Please provide your name, organization, and title.
YBN-NC Season Launch & YBN-NC's 2nd Year Anniversary Celebration ~ Inspiration from Ottawa’s Top Executives ~
Mark your calendars for this special and inspiring evening and learn how to get to the peak of your career from Ottawa’s Businesswomen of the Year, Robin McIntyre, 2005 Ottawa’s CEO of the Year, Peter Strom, and Justin Shimoon, recipient of the 2008 Top 40 Under Forty Award of the Ottawa Business Journal.
Enjoy a fabulous cocktail party with an outstanding view from the Sussex Room at the Marriott Hotel and learn how these top executives moved to the top while managing a great work-life balance.
Date/Time: -November 18th, 2008, 6:30pm
Location: -Marriott Hotel, Sussex Room, 100 Kent Street
Cost: - Free for YBN-NC members
- $25 for non-members (advance registration)
- $30 for non-members (onsite registration)
Register early to secure yourself a spot at this event by sending an email to events@ybn-nc.ca. Please provide your name, organization, and title.
Thursday, October 23, 2008
TSX Venture Capital Pool Company Program (CPC)
TSX Venture Capital Pool Company Program (CPC)
The Capital Pool Company (CPC) program is a unique listing vehicle offered exclusively by TSX Venture Exchange. The program is a two-phased process, involving the following steps:
Phase 1 - The Capital Pool Company
Creating the CPC:
Three to six individuals with an appropriate combination of business and public company experience put up a minimum of $100,000 in seed capital.
These founders incorporate a shell company - the Capital Pool Company (CPC) - and issue shares in exchange for seed capital at a minimum price between the greater of $0.05 and 50% of the price at which subsequent shares are to be sold via prospectus.
The CPC and its advisors prepare a prospectus that outlines management's intention to raise between $200,000 and $1,900,000 by selling CPC shares at typically twice the issuance price of the seed shares, and to use the proceeds to identify and evaluate potential acquisitions.
Selling the shares:
The CPC files the prospectus with the appropriate securities commission(s), and applies for listing on TSX Venture Exchange.
The broker sells the CPC shares, pursuant to the prospectus, to at least 200 arm's length shareholders, each of whom buys at least 1,000 shares. No one purchaser can purchase more than 2% of the offering, and no one purchaser together with his, her, or its associates or affiliates can purchase more than 4% of the offering.
Once the distribution has been completed and closed, the CPC is listed for trading on TSX Venture Exchange. The symbol includes a .P to identify the company as a CPC.
Phase 2 - The Qualifying Transaction
Announcing the acquisition:
Within 24 months, the CPC identifies an appropriate business as its "qualifying transaction" and issues a news release to announce that it has entered an agreement in principle to acquire the business.
The CPC prepares a draft filing statement or information circular providing prospectus-level disclosure on the business that is to be acquired.
TSX Venture reviews the disclosure document and evaluates the business to ensure it meets minimum listing requirements.
Closing the deal:
As shareholder approval is typically not required, the filing statement is posted on SEDAR for at least seven business days, after which the qualifying transaction closes and the business is acquired.
Additional components of the deal often include the following: name change and private placement coinciding with the closing of the qualifying transaction.
The .P from the ticker symbol is removed and the company now trades as a regular TSX Venture listed company.
For more information on the Capital Pool Company Program, please click here.
The Capital Pool Company (CPC) program is a unique listing vehicle offered exclusively by TSX Venture Exchange. The program is a two-phased process, involving the following steps:
Phase 1 - The Capital Pool Company
Creating the CPC:
Three to six individuals with an appropriate combination of business and public company experience put up a minimum of $100,000 in seed capital.
These founders incorporate a shell company - the Capital Pool Company (CPC) - and issue shares in exchange for seed capital at a minimum price between the greater of $0.05 and 50% of the price at which subsequent shares are to be sold via prospectus.
The CPC and its advisors prepare a prospectus that outlines management's intention to raise between $200,000 and $1,900,000 by selling CPC shares at typically twice the issuance price of the seed shares, and to use the proceeds to identify and evaluate potential acquisitions.
Selling the shares:
The CPC files the prospectus with the appropriate securities commission(s), and applies for listing on TSX Venture Exchange.
The broker sells the CPC shares, pursuant to the prospectus, to at least 200 arm's length shareholders, each of whom buys at least 1,000 shares. No one purchaser can purchase more than 2% of the offering, and no one purchaser together with his, her, or its associates or affiliates can purchase more than 4% of the offering.
Once the distribution has been completed and closed, the CPC is listed for trading on TSX Venture Exchange. The symbol includes a .P to identify the company as a CPC.
Phase 2 - The Qualifying Transaction
Announcing the acquisition:
Within 24 months, the CPC identifies an appropriate business as its "qualifying transaction" and issues a news release to announce that it has entered an agreement in principle to acquire the business.
The CPC prepares a draft filing statement or information circular providing prospectus-level disclosure on the business that is to be acquired.
TSX Venture reviews the disclosure document and evaluates the business to ensure it meets minimum listing requirements.
Closing the deal:
As shareholder approval is typically not required, the filing statement is posted on SEDAR for at least seven business days, after which the qualifying transaction closes and the business is acquired.
Additional components of the deal often include the following: name change and private placement coinciding with the closing of the qualifying transaction.
The .P from the ticker symbol is removed and the company now trades as a regular TSX Venture listed company.
For more information on the Capital Pool Company Program, please click here.
Sources of Financing for Entrepreneurs
For your information, the Governement of Canada have an interesting website that you should visit. Sources of financing can help you locate traditional or alternative sources of financing for your small business. You will find an extensive directory of Canadian financial providers, information on different types of financing, and tips to help you secure financing. I found this site quite helpful to understand the financing process and to also locate sources of financing.
Please click here to visit the website.
Please click here to visit the website.
Wednesday, October 22, 2008
Starting Your Business Information Session
The Entrepreneurship Centre will be hosting a uselful FREE session on Oct. 24th 2008.
The different forms of business organization,, the advantages and disadvantages of each as well as GST/PST will be covered. The Centre will cover the basic rules and regulations you will be required to follow in order to start your business in the province of Ontario.
please click here for more info.
The different forms of business organization,, the advantages and disadvantages of each as well as GST/PST will be covered. The Centre will cover the basic rules and regulations you will be required to follow in order to start your business in the province of Ontario.
please click here for more info.
Monday, October 6, 2008
Entrepreneurs Resources
In today's world of business, knowledge is power... therefore, I refer a lot of my clients to these 2 great websites.
http://www.ted.com/ and http://www.evancarmichael.com/
Take the time to have a look, it's truly worth it.
Have a look and please provide me with your comments.
http://www.ted.com/ and http://www.evancarmichael.com/
Take the time to have a look, it's truly worth it.
Have a look and please provide me with your comments.
Thursday, September 18, 2008
Do you have a proper Share Structure??
For those who are about to incorporate and have yet to do so, it is important you give appropriate consideration to establishing a proper share structure. In doing so you will likely save time, money and administrative difficulties as your business grows. While you are only required, in law, to have one class of shares (common), it is best to provide additional classes of shares so that you will have the needed flexibility in the future to attract new investors; to afford an opportunity of income splitting between family members; and possibly to make use of a family trust. Ultimately, if truly successful, you will also be in a position to take advantage of significant tax savings if the appropriate classes of shares have been in existence and have been held by the shareholders for a sufficient period of time (2 years).
Putting in place the correct share structure provides a number of advantages:
- Income Splitting - This can be an effective tax saving device if you and your spouse hold different classes of shares. This affords you an opportunity to issue dividends and/or bonuses in a tax efficient manner.
- Key Employees - Issuing shares to key employees can promote and maintain loyalty to ensure ongoing involvement of top level employees. The shares to be offered to key employees can either be voting or non-voting common shares or voting or non-voting special shares so long as such shares are part of the share structure.
- Family Trusts - The use of family trusts and the issuing of the appropriate shares to beneficiaries of the family trust can be an effective tax and succession planning device.
- Succession Planning - With the appropriate share structure in place it is possible to establish a cost effective and tax effective succession regime.
- Raising Investment Capital - While it is common that an investor will have certain requirements concerning the share structure, it is possible to envisage many, if not all such requirement in advance and this may facilitate a successful due diligence process.
- Administrative and Legal Fees - Establishing an appropriate share structure at the outset can avoid the time and expense of preparing needed Articles of Amendment in the future.
OCRI's Entrepreneurship Centre
I am a business partner with OCRI's Entrepreneurship Centre, I recommend every new clients to consult their website. It is complete and accurate - in addition, they provide useful informations for entrepreneurs. Have a LOOK !!!
Thursday, August 28, 2008
A family trust for small business pays dividends for tuition *
In previous entries, I mentionned several times the use of family trust for business owners. For almost every clients, I suggest the use of said Family trust, it is a great way of saving taxes. Today, I would like to share with you an excellent article from Tim Cestnick from the Globe and Mail, explaining clairly the advantages of using different trusts. If you have any questions regarding the same, please do not hesitate to email me.
A family trust for small business pays dividends for tuition
Every few months my extended family gets together to visit. It's a chance to get caught up with my aunts, uncles and cousins. My cousin Erik didn't make it to our last get-together.
Erik is something of a permanent student. He's got more degrees than the thermometer outside our kitchen window.
"Uncle Ron, how's Erik doing?" I ask.
"He's just fine, Tim. He's back at university this month."
"Still?" I reply. "I thought he finished last year. What's Erik going to be when he graduates?"
"A very old man," he replies.
At this point, Erik is paying for his own education. But if you're looking to help your kids with the cost of postsecondary education, and you're a business owner, consider a family trust. Let me explain.
The trust
This idea is best understood by an example. Consider Scott. Scott has three children, all in their teens. University is just around the corner for them and it won't be cheap -- about $16,000 each year, everything included.
Scott runs a business that has sufficient cash flow to help pay for the education of his kids. One option for Scott is to pay himself additional salary from his company to help cover the cost of university when that time comes. Since Scott is in the highest marginal tax bracket, he'll pay tax of about 46 per cent (varies by province) on those dollars. So, a $10,000 payment from his company in this case will leave just $5,400 to help cover the costs of education.
There may be a better option. Scott could structure the ownership of his company so that some of the common shares of the company are owned by a family trust. Then, the company could pay dividends to the trust annually for each child once they're 18 and are attending university or college.
The dividends could then be paid out of the trust to each child to help pay for school. The results? Scott's company will pay tax of about 18 per cent (again, varies by province) on its active business income below $400,000.
The dividends paid to the trust and then out to Scott's kids will not be taxed in the trust, and will face little or no tax in the kids' hands if they have little or no other income. In fact, each child could receive about $32,000 (varies by province) in cash dividends annually and pay little or no tax if he or she had no other income. This total tax cost of about 18 per cent is much less than the 46-per-cent tax cost of paying additional salary to Scott.
Other thoughts
Now, there are rules in Canadian tax law that will make this strategy less effective if you pay dividends directly or indirectly through a trust to a child under 18. These "kiddie tax" rules will cause tax at the highest marginal tax rate on those dividends. But the idea works well for kids 18 or older.
In addition, there are some other benefits to the trust strategy. If you expect the value of your business to grow in the future, you may be able to shelter part of that growth from tax using the $750,000 capital gains exemption of each of your children who is a beneficiary of the trust. The trust will also protect the assets in the trust from any creditors or future spouses of your kids. Finally, those dividends paid out of the trust could be used for any purpose -- not just education.
* written by Tim Cestnick - Tim is a principal with WaterStreet Group Inc. and author of Winning the Tax Game, among other titles. This article was published in the Globe and Mail on September 28, 2006 and was slighty edited to reflect accurate numbers.
A family trust for small business pays dividends for tuition
Every few months my extended family gets together to visit. It's a chance to get caught up with my aunts, uncles and cousins. My cousin Erik didn't make it to our last get-together.
Erik is something of a permanent student. He's got more degrees than the thermometer outside our kitchen window.
"Uncle Ron, how's Erik doing?" I ask.
"He's just fine, Tim. He's back at university this month."
"Still?" I reply. "I thought he finished last year. What's Erik going to be when he graduates?"
"A very old man," he replies.
At this point, Erik is paying for his own education. But if you're looking to help your kids with the cost of postsecondary education, and you're a business owner, consider a family trust. Let me explain.
The trust
This idea is best understood by an example. Consider Scott. Scott has three children, all in their teens. University is just around the corner for them and it won't be cheap -- about $16,000 each year, everything included.
Scott runs a business that has sufficient cash flow to help pay for the education of his kids. One option for Scott is to pay himself additional salary from his company to help cover the cost of university when that time comes. Since Scott is in the highest marginal tax bracket, he'll pay tax of about 46 per cent (varies by province) on those dollars. So, a $10,000 payment from his company in this case will leave just $5,400 to help cover the costs of education.
There may be a better option. Scott could structure the ownership of his company so that some of the common shares of the company are owned by a family trust. Then, the company could pay dividends to the trust annually for each child once they're 18 and are attending university or college.
The dividends could then be paid out of the trust to each child to help pay for school. The results? Scott's company will pay tax of about 18 per cent (again, varies by province) on its active business income below $400,000.
The dividends paid to the trust and then out to Scott's kids will not be taxed in the trust, and will face little or no tax in the kids' hands if they have little or no other income. In fact, each child could receive about $32,000 (varies by province) in cash dividends annually and pay little or no tax if he or she had no other income. This total tax cost of about 18 per cent is much less than the 46-per-cent tax cost of paying additional salary to Scott.
Other thoughts
Now, there are rules in Canadian tax law that will make this strategy less effective if you pay dividends directly or indirectly through a trust to a child under 18. These "kiddie tax" rules will cause tax at the highest marginal tax rate on those dividends. But the idea works well for kids 18 or older.
In addition, there are some other benefits to the trust strategy. If you expect the value of your business to grow in the future, you may be able to shelter part of that growth from tax using the $750,000 capital gains exemption of each of your children who is a beneficiary of the trust. The trust will also protect the assets in the trust from any creditors or future spouses of your kids. Finally, those dividends paid out of the trust could be used for any purpose -- not just education.
* written by Tim Cestnick - Tim is a principal with WaterStreet Group Inc. and author of Winning the Tax Game, among other titles. This article was published in the Globe and Mail on September 28, 2006 and was slighty edited to reflect accurate numbers.
Tuesday, August 19, 2008
How to keep records - Requirements of Canada Revenu Agency (CRA)
How to keep records
You are responsible for keeping records if you are carrying on a business or engaged in a commercial activity in Canada.
Requirements
Your records whether in paper or electronic format, have to:
a) be reliable and complete;
b) provide you with the correct information you need to assist in fulfilling your tax obligations and to calculate your entitlements;
c) be supported by source documents to verify the information contained in the records;
d) and include other documents, such as appointment books, logbooks, income tax and goods and services tax/harmonized sales tax (GST/HST) returns, scientific research and experimental development (SR&ED) vouchers and records, and certain accountants' working papers, that assist in determining your obligations and entitlements.
* Note: Persons carrying on more than one business must keep separate records for each business.
Retention and destruction
You have to keep all of the records and supporting documents that are required to determine your tax obligations and entitlements for a period of six years.
This six-year period starts at the end of the tax year to which the records relate. The tax year is the fiscal period for corporations and the calendar year for all other taxpayers.
Records and supporting documents concerning long-term acquisitions and disposal of property, the share registry, and other historical information that would have an impact upon sale or liquidation or wind-up of the business must be kept indefinitely.
Location of records
Your records must be kept at your place of business or at your residence in Canada, unless CRAgive you permission to maintain them elsewhere. To request permission, write to your tax services office.
* Note: CRA may require you to keep records for an additional period of time. If this is the case, you will receive details by registered letter or by a demand served personally by one of their representatives.
For more info - visit CRA's Website
You are responsible for keeping records if you are carrying on a business or engaged in a commercial activity in Canada.
Requirements
Your records whether in paper or electronic format, have to:
a) be reliable and complete;
b) provide you with the correct information you need to assist in fulfilling your tax obligations and to calculate your entitlements;
c) be supported by source documents to verify the information contained in the records;
d) and include other documents, such as appointment books, logbooks, income tax and goods and services tax/harmonized sales tax (GST/HST) returns, scientific research and experimental development (SR&ED) vouchers and records, and certain accountants' working papers, that assist in determining your obligations and entitlements.
* Note: Persons carrying on more than one business must keep separate records for each business.
Retention and destruction
You have to keep all of the records and supporting documents that are required to determine your tax obligations and entitlements for a period of six years.
This six-year period starts at the end of the tax year to which the records relate. The tax year is the fiscal period for corporations and the calendar year for all other taxpayers.
Records and supporting documents concerning long-term acquisitions and disposal of property, the share registry, and other historical information that would have an impact upon sale or liquidation or wind-up of the business must be kept indefinitely.
Location of records
Your records must be kept at your place of business or at your residence in Canada, unless CRAgive you permission to maintain them elsewhere. To request permission, write to your tax services office.
* Note: CRA may require you to keep records for an additional period of time. If this is the case, you will receive details by registered letter or by a demand served personally by one of their representatives.
For more info - visit CRA's Website
Thursday, August 14, 2008
Sometimes Less (Revenue) Is More...
here is a great Q & A from Norm Brodsky from INC, magazine. READ IT AND THINK ABOUT IT AND PLEASE PROVIDE ME WITH YOUR COMMENTS ABOUT THIS ANSWER....
Sometimes Less (Revenue) Is More
QUESTION:
Norm, My home-based design business sells store fixtures and related equipment to the retailers we work with. I try to operate on a 25% to 30% gross margin, but I don't know if that's appropriate. I always wonder how much more revenue we could get if we charged less.--Norbert
ANSWER
Norbert, You're wondering about the wrong thing. You should be asking yourself how much less revenue you'd get if you charged more. Gross- and net-profit lines are far more important than sales. I'd greatly prefer to have $20,000 in gross profit on $50,000 in sales than to have the same gross profit on $100,000 in sales. Why? Because I'd have fewer headaches, fewer shipments, fewer people, and on and on. If I were you, I'd look for ways to increase your margins, not reduce them. Maybe you can get better deals on the products. Maybe you can cut your shipping prices, but I wouldn't do it unless you're certain that you'll get the additional sales—and that they'll be worth it.--Norm
Sometimes Less (Revenue) Is More
QUESTION:
Norm, My home-based design business sells store fixtures and related equipment to the retailers we work with. I try to operate on a 25% to 30% gross margin, but I don't know if that's appropriate. I always wonder how much more revenue we could get if we charged less.--Norbert
ANSWER
Norbert, You're wondering about the wrong thing. You should be asking yourself how much less revenue you'd get if you charged more. Gross- and net-profit lines are far more important than sales. I'd greatly prefer to have $20,000 in gross profit on $50,000 in sales than to have the same gross profit on $100,000 in sales. Why? Because I'd have fewer headaches, fewer shipments, fewer people, and on and on. If I were you, I'd look for ways to increase your margins, not reduce them. Maybe you can get better deals on the products. Maybe you can cut your shipping prices, but I wouldn't do it unless you're certain that you'll get the additional sales—and that they'll be worth it.--Norm
Monday, August 11, 2008
YBN-NC Breakfast Speaker Series – August 20th
My group, The Young Business Network of the National Capital is pleased to invite you to the fifth breakfast of the YBN-NC Breakfast Speaker Series. It will take place on Wednesday, August 20th, at 7:00 am, at Cora’s Breakfast and Lunch restaurant on Rideau Street (corner of Rideau and Dalhousie). Our guest speaker for the breakfast will be Mike Caldwell, and in his presentation “V.E.A.R Toward Success”, Mike shares the examples and the methods he used to achieve success in a multitude of arenas.Mike holds a Master of Science in Management degree. In his career, he was hired to start up and activate Ontario's current air ambulance helicopter system. Athletically, Mike has completed 2 Ironman triathlons and 2 Keskinada 54km Ski Loppets. In the realm of volunteer services he spent 3 months in Guyana doing community service. For travel he has guided whitewater rafts throughout the Rocky Mountains, the Canadian Arctic and the French Alps. Most recently, Mike has single handedly turned an abandoned 6,000 square foot sawmill into an off-the-grid home and conference center. Mike's motto is "If it can be done, it can be done by me" and his message is, if he can do it, so can you!
This is a down-to-earth presentation which will definitely inspire and motivate you.
To register, please send an email to philip.brock@NBPCD.com
This is a down-to-earth presentation which will definitely inspire and motivate you.
To register, please send an email to philip.brock@NBPCD.com
Tuesday, July 29, 2008
A great application for Blackberry owners
A good friend of mine, Kunal Gupta, CEO of Polar Mobile Group created this great application for blackberry. The applications are allowing you to read easily magazines on your blackberry ... they are signing up new magazine every week now - in addition, it is FREE !!!!
Have a look at those: Macleans and Canadian Business.
you can download it here for Macleans magazine.
and
you can download it here for Canadian Business magazine.
Have a look at those: Macleans and Canadian Business.
you can download it here for Macleans magazine.
and
you can download it here for Canadian Business magazine.
Thursday, July 24, 2008
Personal Tax Calculator
Most people like to have an idea of the amount of taxes that they will need to pay - I find this online tool quite practical - it's a personal tax calculator created by Ernst & Young - have a look, it's quite helpful.
Cheers,
Hugues
Cheers,
Hugues
Monday, July 21, 2008
Single Administration of Ontario Corporate Tax
The Governments of Canada and Ontario signed a Memorandum of Agreement on October 6, 2006, that will lead to the Canada Revenue Agency (CRA) administering most of Ontario's corporate taxes.
Ontario businesses will benefit from one form, one set of rules, one audit, one appeals process and one point of contact.
The CRA will administer the following corporate taxes on behalf of Ontario:
Corporate income tax
Corporate minimum tax
Capital tax
Special additional tax on life insurers
Ontario will continue to administer:
Mining tax
Insurance premiums tax
Electricity Act payments-in-lieu of federal and Ontario corporate taxes
Single administration will take effect for taxation years ending after December 31, 2008. This means that:
The CRA is now accepting blended provincial and federal instalment payments for the 2009 taxation year; and
The CRA will be ready to accept a single, harmonized T2 Corporation Income Tax Return (including the Ontario Corporations Information Act Annual Return) for taxation years ending after December 31, 2008.
for more information click here
Ontario businesses will benefit from one form, one set of rules, one audit, one appeals process and one point of contact.
The CRA will administer the following corporate taxes on behalf of Ontario:
Corporate income tax
Corporate minimum tax
Capital tax
Special additional tax on life insurers
Ontario will continue to administer:
Mining tax
Insurance premiums tax
Electricity Act payments-in-lieu of federal and Ontario corporate taxes
Single administration will take effect for taxation years ending after December 31, 2008. This means that:
The CRA is now accepting blended provincial and federal instalment payments for the 2009 taxation year; and
The CRA will be ready to accept a single, harmonized T2 Corporation Income Tax Return (including the Ontario Corporations Information Act Annual Return) for taxation years ending after December 31, 2008.
for more information click here
Monday, July 7, 2008
A kid in a candy shop... Springwise.com
For those, who like me, really enjoy business ideas, take the time to have a look at this great website : Springwise
What is Springwise?
Springwise scans the globe for the most promising business ventures, ideas and concepts that are ready for regional or international adaptation, expansion, partnering, investments or cooperation. They ferociously track more than 400 global offline and online business resources, as well as taking to the streets of world cities, digital cameras at hand.
Have a look, it's worth it.
What is Springwise?
Springwise scans the globe for the most promising business ventures, ideas and concepts that are ready for regional or international adaptation, expansion, partnering, investments or cooperation. They ferociously track more than 400 global offline and online business resources, as well as taking to the streets of world cities, digital cameras at hand.
Have a look, it's worth it.
Thursday, July 3, 2008
Taking care of business with estate freezes *
I previously wrote about an estate freeze happening during the course of a corporate reorganization. Today, I would like to share a great article written by Tim Cestnick from the Globe and Mail:
SECTION 86, Income Tax Act - Estate Freeze
THE CONCEPT
What in the world is an estate freeze?
It's the process of taking certain assets you own today and freezing them at their current values. The idea is that the future growth of those assets will accrue to anyone you choose – your children or other heirs, for example. So, why would anyone consider a freeze? There are a few potential benefits.
Cutting the tax bill on death. When a freeze is completed, all future growth between the date of the freeze and your death will accrue in the hands of your heirs. That future growth will otherwise be taxed in your hands at the time of your death, if not sooner, if the freeze isn't done.
Deferring the ultimate tax bill. By passing the future growth in the asset's value to your heirs, you can defer income tax on that growth until a much later time. Although your heirs will eventually pay tax, these taxes may not be due, for example, until your heirs pass away. Establishing the tax bill on death. By freezing the value of an asset today, you'll be able to establish, pretty accurately, what your tax bill will be upon death. This makes planning for those taxes much easier. You could, for example, consider buying life insurance to cover the tax liability.
Utilizing the capital gains exemption. A freeze may allow you to take advantage of the lifetime capital gains exemption where you own shares of a qualified small business corporation or qualified farm or fishing property. This exemption could shelter up to $750,000 of capital gains on these types of assets.
Splitting income with family members. In the process of completing a freeze, you'll be placing certain assets (often private company shares) in the hands of your heirs, either directly or indirectly through a trust. These assets can provide regular income to your heirs that will be taxed in their hands – not yours.
Protecting assets from creditors. It may be possible to protect certain assets from creditors by transferring their ownership to your heirs or, better still, a family trust, as part of a freeze.
Protecting assets from spouses. If your kids (or you) own valuable and growing assets prior to marriage, it may be possible to use a freeze to minimize the claims of future spouses or ex-spouses through planning that can be done prior to marriage. Reducing probate fees. A freeze will restrict the growth of the frozen assets in your hands. This means that you'll generally own less in your hands at the time of your death than you would have without the freeze, which will minimize probate fees.
Minimizing annual taxes. Freezing assets typically requires a corporation to be set up. Corporations that carry on an active business are entitled to very low rates of tax (about 18 per cent) on the first $400,000 of active business income. It may be possible to take advantage of these rates, depending on the assets you're freezing.
Maintaining control over the property. You can enjoy the first nine benefits without having to give up control over or use of the assets during your lifetime.
THE CANDIDATES
An estate freeze is most commonly undertaken by those who own active businesses. The shares of a growing private company can give rise to a substantial tax bill at the time of death, and where there's a desire to pass the business to the kids or other heirs, a freeze can facilitate this nicely since you'll be able to issue new growth shares (common shares) to anyone you'd like. Other assets can be frozen as well, but it's not as commonly done.
Before undertaking an estate freeze, you should be confident in a couple of things: (1) That you're happy with the amount of growth you've received to date, and you're happy to see the future growth accrue to someone else; (2) That there will be sizable growth in the assets in the future.
If there isn't going to be much future growth in the assets you're freezing, then there won't be much growth to have taxed in the hands of your heirs; it may not be worthwhile freezing in this case.
* Published in the Globe and Mail, July 3rd, 2008
As business lawyer, I suggest this option to a lot of my clients - with an estate freeze and a corporate reorganization they can save a substantial amount of money. As usual, if you have any questions, please do not hesitate to contact me.
SECTION 86, Income Tax Act - Estate Freeze
THE CONCEPT
What in the world is an estate freeze?
It's the process of taking certain assets you own today and freezing them at their current values. The idea is that the future growth of those assets will accrue to anyone you choose – your children or other heirs, for example. So, why would anyone consider a freeze? There are a few potential benefits.
Cutting the tax bill on death. When a freeze is completed, all future growth between the date of the freeze and your death will accrue in the hands of your heirs. That future growth will otherwise be taxed in your hands at the time of your death, if not sooner, if the freeze isn't done.
Deferring the ultimate tax bill. By passing the future growth in the asset's value to your heirs, you can defer income tax on that growth until a much later time. Although your heirs will eventually pay tax, these taxes may not be due, for example, until your heirs pass away. Establishing the tax bill on death. By freezing the value of an asset today, you'll be able to establish, pretty accurately, what your tax bill will be upon death. This makes planning for those taxes much easier. You could, for example, consider buying life insurance to cover the tax liability.
Utilizing the capital gains exemption. A freeze may allow you to take advantage of the lifetime capital gains exemption where you own shares of a qualified small business corporation or qualified farm or fishing property. This exemption could shelter up to $750,000 of capital gains on these types of assets.
Splitting income with family members. In the process of completing a freeze, you'll be placing certain assets (often private company shares) in the hands of your heirs, either directly or indirectly through a trust. These assets can provide regular income to your heirs that will be taxed in their hands – not yours.
Protecting assets from creditors. It may be possible to protect certain assets from creditors by transferring their ownership to your heirs or, better still, a family trust, as part of a freeze.
Protecting assets from spouses. If your kids (or you) own valuable and growing assets prior to marriage, it may be possible to use a freeze to minimize the claims of future spouses or ex-spouses through planning that can be done prior to marriage. Reducing probate fees. A freeze will restrict the growth of the frozen assets in your hands. This means that you'll generally own less in your hands at the time of your death than you would have without the freeze, which will minimize probate fees.
Minimizing annual taxes. Freezing assets typically requires a corporation to be set up. Corporations that carry on an active business are entitled to very low rates of tax (about 18 per cent) on the first $400,000 of active business income. It may be possible to take advantage of these rates, depending on the assets you're freezing.
Maintaining control over the property. You can enjoy the first nine benefits without having to give up control over or use of the assets during your lifetime.
THE CANDIDATES
An estate freeze is most commonly undertaken by those who own active businesses. The shares of a growing private company can give rise to a substantial tax bill at the time of death, and where there's a desire to pass the business to the kids or other heirs, a freeze can facilitate this nicely since you'll be able to issue new growth shares (common shares) to anyone you'd like. Other assets can be frozen as well, but it's not as commonly done.
Before undertaking an estate freeze, you should be confident in a couple of things: (1) That you're happy with the amount of growth you've received to date, and you're happy to see the future growth accrue to someone else; (2) That there will be sizable growth in the assets in the future.
If there isn't going to be much future growth in the assets you're freezing, then there won't be much growth to have taxed in the hands of your heirs; it may not be worthwhile freezing in this case.
* Published in the Globe and Mail, July 3rd, 2008
As business lawyer, I suggest this option to a lot of my clients - with an estate freeze and a corporate reorganization they can save a substantial amount of money. As usual, if you have any questions, please do not hesitate to contact me.
Wednesday, July 2, 2008
Daily ressources for entrepreneurs - INC. Magazine
I am a big fan of Inc. magazine - If you don't know this magazine, I suggest that you have a look at their website. I can assure you that you will find a lot of really interesting stories and tips.
Friday, June 27, 2008
Business Owners - How can you extract up to $32,000 TAX FREE from your Corporation
Several clients asked me to blog about the different ways of extracting money from your company - Today I will only explain you one technique to take out cash from your company:
Let's take John, a consultant, incorporated under the name John Doe Inc. The company is making 200k of net profit per year - the Corporation will then pay roughly about 17% of corporate tax (CCPC - Ontario, fiscal year 2008). John is the sole shareholder of is corporation, he will either take a salary, declare a dividend to himself, a mix of both or he will let a portion of the profit in is company as retained earnings.
Let’s make it a little bit more complicated, John got married last year with Julie and they are planning to have a baby next year. Then Julie will stop working for 3-4 year to raise the kid. Did you know that while staying home, Julie could receive up to $32,000 TAX FREE…
How is that possible? Well, trough a series of legal and accountant transactions (namely an estate freeze - S.86 Income Tax Act) Julie would then acquire shares in John’s company and John would be able to issue a dividend to her… The first $32,000 would be non-taxable for Julie if she qualify under the different conditions - (email me to know more about these conditions...)
The important part to know if that If an individual does not have any other source of revenues, this shareholder can receive up to $32,000 Tax Free. As usual, I strongly suggest you consult your own professional advisor before proceeding with an estate freeze.
Too good to be true ?? Contact me and I will explain how we can change your corporate structure to ensure that you save taxes!!
Let's take John, a consultant, incorporated under the name John Doe Inc. The company is making 200k of net profit per year - the Corporation will then pay roughly about 17% of corporate tax (CCPC - Ontario, fiscal year 2008). John is the sole shareholder of is corporation, he will either take a salary, declare a dividend to himself, a mix of both or he will let a portion of the profit in is company as retained earnings.
Let’s make it a little bit more complicated, John got married last year with Julie and they are planning to have a baby next year. Then Julie will stop working for 3-4 year to raise the kid. Did you know that while staying home, Julie could receive up to $32,000 TAX FREE…
How is that possible? Well, trough a series of legal and accountant transactions (namely an estate freeze - S.86 Income Tax Act) Julie would then acquire shares in John’s company and John would be able to issue a dividend to her… The first $32,000 would be non-taxable for Julie if she qualify under the different conditions - (email me to know more about these conditions...)
The important part to know if that If an individual does not have any other source of revenues, this shareholder can receive up to $32,000 Tax Free. As usual, I strongly suggest you consult your own professional advisor before proceeding with an estate freeze.
Too good to be true ?? Contact me and I will explain how we can change your corporate structure to ensure that you save taxes!!
Friday, June 20, 2008
Kevin Dee's Blog: Helpful and really interesting...
I am a big fan of Kevin Dee's blog. Kevin is the CEO of Eagle, since starting the company in 1996 Kevin has led Eagle's growth from 10 employees, 3 offices and $10 million in revenues to become a $90 million company, employing more than 90 people, in 10 offices across Canada. In 2006, Kevin Dee was named CEO of the Year by the Ottawa Business Journal. Eagle has received numerous honours including being named one of Canada's 50 Best Managed Companies every year since 1999. In addition to his business success, Kevin is a terrific guy and I highly recommend that you read his blog, it is really interesting and informative - I promise that you will learn a lot. I am reading it every day !!!!
Wednesday, June 11, 2008
Have You Ever Had An Insurance Audit?
As a business lawyer, I am meeting a lot of entrepreneurs and I always suprised to see how many do not have proper insurance in place (life, critical illness, disability insurance, etc) -Especially when the corporation could pay for it, therefore it's a expense for the company. Today, I would like to share with you a great article from my good friend Milan Topolovec: Milan has more than 25 years of experience and he is providing a FREE Insurance audit for you and your partners - I highly recommend Milan, you only need to setup an appointment and he will review all your insurance policies for you ... in addition, you will have no further obligations. This 30 minutes can save you a lot money and could protect your family and yourself in case of ...
Have You Ever Had An Insurance Audit?
Each year, consumers spend billions of dollars on life insurance products, often needlessly. Many of these individuals could not tell you what type of coverage they have or the amount they pay in monthly premiums. Had they taken the amount they are paying in premiums and invested it, greater attention would have been paid.
We are often called upon to prepare insurance audits and create reports which show all the details of an insurance portfolio. Do you know the value of completing a detailed insurance audit?
Let me take you on a short journey where you will learn what can happen when things are left to chance.
Insurance audits provide you with peace of mind and provide your executors with a detailed summary of all your coverage. On occasion, we discover policies that are active but forgotten by the client. On one such occasion, monthly premiums were being withdrawn for policies no longer required. We were able to assist a client in saving well over $20,000. As the monthly withdrawals were spread over several policies, it remained undetected by the client. If this were a single lump sum, the client would have noticed.
When was the last time you reviewed the beneficiaries on your life policies? There have been documented cases where ex-spouses remained beneficiaries through oversight. In one corporation, the policy on death was being treated as a $10-million taxable benefit to the six shareholders. Ouch!
Recently we were called upon by an accounting firm to create an audit for one of their clients who happened to be a doctor. A number of problem areas were discovered which had nothing to do with amount or type of coverage. This client was using personal after-tax dollars, and through structural error, leaving the proceeds payable at claim to the professional services corporation.
There may be duplication of coverage where you are paying for coverage that you will never collect. Let's assume you have a disability program through your professional organization and a group plan. The coverage is offset at claim time.
Have you stopped smoking? If so, have you applied for NON-smoker rates? What is the difference of "own occupation" and "any occupation" in a disability policy? You say that the company owners have a shareholders' agreement and life insurance coverage. Who is the owner, premium payer and beneficiary on your policies?
You may feel overly secure in the fact that you have long term disability coverage under your group insurance plan. Group long term disability plans exhibit reverse discrimination against executives and shareholders. Show me a dedicated executive who would be able to stay home for 17 consecutive weeks in order to collect the payout under the LTD of a group policy.
Critical Illness and Long Term Care programs are the newest players in the life insurance arena.
Did you know that plans can be created where premiums are a tax-deductible expense to the corporation?
Operating Company, Holding Company, Family Trust or Spousal Trust can all be used to acquire tax-effective insurance solutions.
Work with an insurance professional that is experienced, deals with a number of leading insurers and also understands tax as well as legal structures.
To schedule a complimentary Insurance Audit, contact Catherine Pierre at ext. 231.
Milan Topolovec, BA, RHU, CLU. TEP is president and CEO of TK Group, recognized nationally as premier underwriters of insurance solutions from leading providers. Milan can be reached by e-mail at Milan@thetkgroup.com or by phone at ext. 223. For more information about TK Group visit http://www.thetkgroup.com/
Have You Ever Had An Insurance Audit?
Each year, consumers spend billions of dollars on life insurance products, often needlessly. Many of these individuals could not tell you what type of coverage they have or the amount they pay in monthly premiums. Had they taken the amount they are paying in premiums and invested it, greater attention would have been paid.
We are often called upon to prepare insurance audits and create reports which show all the details of an insurance portfolio. Do you know the value of completing a detailed insurance audit?
Let me take you on a short journey where you will learn what can happen when things are left to chance.
Insurance audits provide you with peace of mind and provide your executors with a detailed summary of all your coverage. On occasion, we discover policies that are active but forgotten by the client. On one such occasion, monthly premiums were being withdrawn for policies no longer required. We were able to assist a client in saving well over $20,000. As the monthly withdrawals were spread over several policies, it remained undetected by the client. If this were a single lump sum, the client would have noticed.
When was the last time you reviewed the beneficiaries on your life policies? There have been documented cases where ex-spouses remained beneficiaries through oversight. In one corporation, the policy on death was being treated as a $10-million taxable benefit to the six shareholders. Ouch!
Recently we were called upon by an accounting firm to create an audit for one of their clients who happened to be a doctor. A number of problem areas were discovered which had nothing to do with amount or type of coverage. This client was using personal after-tax dollars, and through structural error, leaving the proceeds payable at claim to the professional services corporation.
There may be duplication of coverage where you are paying for coverage that you will never collect. Let's assume you have a disability program through your professional organization and a group plan. The coverage is offset at claim time.
Have you stopped smoking? If so, have you applied for NON-smoker rates? What is the difference of "own occupation" and "any occupation" in a disability policy? You say that the company owners have a shareholders' agreement and life insurance coverage. Who is the owner, premium payer and beneficiary on your policies?
You may feel overly secure in the fact that you have long term disability coverage under your group insurance plan. Group long term disability plans exhibit reverse discrimination against executives and shareholders. Show me a dedicated executive who would be able to stay home for 17 consecutive weeks in order to collect the payout under the LTD of a group policy.
Critical Illness and Long Term Care programs are the newest players in the life insurance arena.
Did you know that plans can be created where premiums are a tax-deductible expense to the corporation?
Operating Company, Holding Company, Family Trust or Spousal Trust can all be used to acquire tax-effective insurance solutions.
Work with an insurance professional that is experienced, deals with a number of leading insurers and also understands tax as well as legal structures.
To schedule a complimentary Insurance Audit, contact Catherine Pierre at ext. 231.
Milan Topolovec, BA, RHU, CLU. TEP is president and CEO of TK Group, recognized nationally as premier underwriters of insurance solutions from leading providers. Milan can be reached by e-mail at Milan@thetkgroup.com or by phone at ext. 223. For more information about TK Group visit http://www.thetkgroup.com/
Tuesday, June 3, 2008
Ten habits of successful executive investors
Every entrepreneurs hope to turn a profit every year and therefore try to invest their money wisely hoping to double and triple their initial investment... My good friend Benoit Poliquin, VP & Portefolio Manager of Pallas Athena Investment Counsel wrote an excellent article regarding this topic, I would like to share it with you:
Ten habits of successful executive investors
Unless you're returning from a holiday on Mars, you have surely heard by now that the financial markets have had significant pullback over the winter months.
How bad has it been? For those of you with investments in stocks, you know the answer – severe. The S&P 500 was down over 20 per cent from peak (in October 2007) to trough (in March of this year), while the S&P/TSX Composite Index was down 18 per cent from its peak (in November 2007) to its recent bottom (reached in January).
Even worse – or better – is that the markets have bounced back since then. The S&P 500 in the U.S. is up 11 per cent from its bottom, while the S&P/TSX Composite Index here in Canada is up 16 per cent from the January trough. This kind of volatility is, if nothing else, enough to pull your hair out.
It is during turbulent times like these that your success in investing will be determined. So what is an executive to do? After working for many years managing investments on behalf of executives, I have observed 10 habits that have greatly influenced their investment success.
1) What's the game plan?
As an executive, surely you have an up-to-date business plan. Well then, why shouldn't you have an investment plan? We can refer to your plan as your decision-making framework.
2) Establish and review your goals
You have a set of business goals, and if you don't, you should. Your investments should be considered an extension of your business, and so you should set rational and measurable goals.
3) Be honest with yourself
Can you live with the volatility? Does your mood follow the markets? You must avoid making emotional decisions, which usually entail a version of selling low after buying high.
4) Stop thinking like an executive
No matter how much coaching, mind space or pressure you have devoted to your investments, once the purchase is made, you have lost a great deal of control over the outcome.
5) Stay calm but be decisive
There will be investment mistakes. How you deal with these mistakes has a significant impact on your success. Storms always pass; you must use them to your advantage.
6) Do your homework
You need to understand what you are investing in. If you can't devote the time, or don't have the knowledge to do it properly, find someone who will. Investing on "gut" instinct doesn't work!
7) Quality always wins
An investment in stocks is in fact a partial ownership of a company. Make sure your investment demonstrates the quality you strive for in your own business. Consider the management, core competencies, competition and customers of the company you are considering.
8) Cash is king (or queen)
Avoid investments funded by borrowings. Losing your own money is one thing. Losing somebody else's is extremely harmful to your financial health.
9) Where's the income?
As an executive, you know that cash flow and net income are the lifelines of your business. Why should it be any different for your investments? Net income is great insurance in turbulent times.
10) Pay the tax
If you have taxes to pay on your investments, it means you have been successful. However, it doesn't follow that you should not look for ways to minimize your tax bill. Simply do not let tax questions drive your investment decision process.
The secret to turning volatile markets into fertile markets is to adopt these 10 habits. Volatile markets are a great time to "upgrade" your portfolio, as everything is on sale. As Warren Buffett once said: "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."
Ten habits of successful executive investors
Unless you're returning from a holiday on Mars, you have surely heard by now that the financial markets have had significant pullback over the winter months.
How bad has it been? For those of you with investments in stocks, you know the answer – severe. The S&P 500 was down over 20 per cent from peak (in October 2007) to trough (in March of this year), while the S&P/TSX Composite Index was down 18 per cent from its peak (in November 2007) to its recent bottom (reached in January).
Even worse – or better – is that the markets have bounced back since then. The S&P 500 in the U.S. is up 11 per cent from its bottom, while the S&P/TSX Composite Index here in Canada is up 16 per cent from the January trough. This kind of volatility is, if nothing else, enough to pull your hair out.
It is during turbulent times like these that your success in investing will be determined. So what is an executive to do? After working for many years managing investments on behalf of executives, I have observed 10 habits that have greatly influenced their investment success.
1) What's the game plan?
As an executive, surely you have an up-to-date business plan. Well then, why shouldn't you have an investment plan? We can refer to your plan as your decision-making framework.
2) Establish and review your goals
You have a set of business goals, and if you don't, you should. Your investments should be considered an extension of your business, and so you should set rational and measurable goals.
3) Be honest with yourself
Can you live with the volatility? Does your mood follow the markets? You must avoid making emotional decisions, which usually entail a version of selling low after buying high.
4) Stop thinking like an executive
No matter how much coaching, mind space or pressure you have devoted to your investments, once the purchase is made, you have lost a great deal of control over the outcome.
5) Stay calm but be decisive
There will be investment mistakes. How you deal with these mistakes has a significant impact on your success. Storms always pass; you must use them to your advantage.
6) Do your homework
You need to understand what you are investing in. If you can't devote the time, or don't have the knowledge to do it properly, find someone who will. Investing on "gut" instinct doesn't work!
7) Quality always wins
An investment in stocks is in fact a partial ownership of a company. Make sure your investment demonstrates the quality you strive for in your own business. Consider the management, core competencies, competition and customers of the company you are considering.
8) Cash is king (or queen)
Avoid investments funded by borrowings. Losing your own money is one thing. Losing somebody else's is extremely harmful to your financial health.
9) Where's the income?
As an executive, you know that cash flow and net income are the lifelines of your business. Why should it be any different for your investments? Net income is great insurance in turbulent times.
10) Pay the tax
If you have taxes to pay on your investments, it means you have been successful. However, it doesn't follow that you should not look for ways to minimize your tax bill. Simply do not let tax questions drive your investment decision process.
The secret to turning volatile markets into fertile markets is to adopt these 10 habits. Volatile markets are a great time to "upgrade" your portfolio, as everything is on sale. As Warren Buffett once said: "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well."
Friday, May 16, 2008
Elements of a Corporate Name
A corporate name should consist of 3 elements:
1)-a distinctive element;
2)-a descriptive element and;
3)-a legal element.
The distinctive element can be a dictionary word or a word thought of by the user in order to produce a unique name and distinguish it from others. It can consist of initials, a made-up word, a last name etc.
The descriptive element is a word or words that describe the type or nature of the business.
The legal element is mandatory and identifies the name as a corporation. You must use one of the following:
i) Limited, Ltd. or;
ii) Corporation, Corp., or;
iii) Incorporated, Inc.
1)-a distinctive element;
2)-a descriptive element and;
3)-a legal element.
The distinctive element can be a dictionary word or a word thought of by the user in order to produce a unique name and distinguish it from others. It can consist of initials, a made-up word, a last name etc.
The descriptive element is a word or words that describe the type or nature of the business.
The legal element is mandatory and identifies the name as a corporation. You must use one of the following:
i) Limited, Ltd. or;
ii) Corporation, Corp., or;
iii) Incorporated, Inc.
Saturday, May 10, 2008
Who Can Be a Director of a Canadian Corporation? *
A director must be:
- at least 18 years old;
- of sound mind (i.e. not a person a court has determined to be of unsound mind);
- an individual (a corporation cannot be a director); and
not in bankrupt status.
- of sound mind (i.e. not a person a court has determined to be of unsound mind);
- an individual (a corporation cannot be a director); and
not in bankrupt status.
Ordinarily, at least 25 percent of the directors of a corporation must be resident Canadians. However, if a corporation has fewer than four directors, then at least one of them must be a resident Canadian. In addition, corporations operating in sectors subject to ownership restrictions (such as airlines and telecommunications) or corporations in certain cultural sectors (such as book retailing, video or film distribution) must have a majority of resident Canadian directors. For these specific sectors, we strongly suggest that you see legal advise prior to incorporation.
Directors may hold shares of a corporation where they are directors. However, the directors of a corporation are not required to hold shares in the corporation unless the Articles of Incorporation make this a requirement for the directors.
* From the Guide to Federal Incorporation, please visit Corporation Canada website for more information.
Wednesday, May 7, 2008
Business Opportunities in Ougadagou, Burkina Faso
The last portion of my long business trip was to stop in the city of Ougadougou in Burkina Faso. Once again, I was pleased to see how people are welcoming and extremely nice. I had a chance to meet with several entrepreneurs and businessmen and I can assure you that they are looking forward to build strong relationship with Canadian entrepreneurs. The demand for technology is huge and really important in Burkina Faso (mostly to build intranet and network for commercial clients). Actually, I am currently looking for a Canadian company to introduce to one of my client there. If you think that the market is not big enough, well I would like to reassure you, this company is making 34 Millions US$ in revenue and its only in Burkina Faso... Further, one the of most successful industry of Burkina Faso is construction - (building roads, bridges, airports etc. etc.) Few clients of mine explained me that they are bidding on several projects across the country and the magical part is that if they win the tender, well they are directly paid by international organizations. Becaise, most of these projets are funded by organizations such as the UN, the African Development Bank, the African Central Bank and the International Monetary Fund, etc. Once again, these companies are looking for partnership with Canadian companies to learn new techniques and technologies. More importantly, you can rest in peace knowing that you will get paid directly by these reliable organizations. I am now back in Ottawa, and my next blog will talk about business law but I tought it would be great to share so tips and opportunities regarding my trip. I will go back in June, therefore; If you any comments and/or requests and/or questions regarding my trip, please do not hesitate to email me at hugues.boisvert@andrewsrobichaud.com
Wednesday, April 23, 2008
The Beauty of Abidjan, Ivory Coast
Further to my last blog, I am now in Abidjan, Ivory Coast, West Africa. Once again, I am here for the past 5 days for meetings with the Canadian embassy and with clients and prospective clients. First of all, the first thing that you notice when you get you from the plane is how people are - I mean, local, Ivorian people. They are actually extremely nice and helpful ... the first impression was great - as I blog before, I am a firm believer in building relationship and taking the time to have a genuine conversation. Throughout my stay here, I had the chance to meet several people. I had several meetings with the Canadien embassy here in Abidjan. These guys are doing a FANTASTIC job - they are offering incredible services for canadian businessmen. Further they are responsible for 8 countries on thebusiness development side and are responsible for 14 countries on the visas office. They are the liaison for most countries in West Africa. Once again, I would like to stress how these people are helpful on the ground - please do not hesitate to contact them if you need help in west Africa - you can reach them here .
As mentionned before, the Ivorian are extremely nice and are always willing to help. Obviously, doing business here is qutie different than back home. First of all, beeing patient is a verty that is absolutely required here. Indeed, its really similar than Latin America, (see here my blog on that topic) First of all you need to establish true relationship - discuss real things: (i.e. family, wife, soccer etc. etc.) at least for the first 15-20 minutes. I had several conversations with them on that topic and the told that trey truly believe in living the moment. Further, I can tell you that the opportunities for businesspeople are enormous here ... its incredible - For instance, the private sector are madly looking for providers of intranet and internet. I give you a practical experience, I just paid more than $CDN 8 for only 2 hours of internet... Since I arrived here, I probably paid more than $250 on internet ticket - I've asked several times for a price for the week - however it is impossible, I've been told that the maximum was 2 hours... quite frustrating and expensive at the same time... For the majority of people, Africa is quite scary, however, I can tell you that if you are genuine and that you intend to do business here - I suggest that you fly here and meet face to face - if they feel that you are genuine and truly invest and do business in their country- you will be successful !!!!
I now have to go because I am at the airport here in Abidjan and I am flying in less than 30 min. to Ougadagou, Burkina Faso. I will resume my trip next Monday by flying back to Dubai and after flying back to Ottawa.
As mentionned before, the Ivorian are extremely nice and are always willing to help. Obviously, doing business here is qutie different than back home. First of all, beeing patient is a verty that is absolutely required here. Indeed, its really similar than Latin America, (see here my blog on that topic) First of all you need to establish true relationship - discuss real things: (i.e. family, wife, soccer etc. etc.) at least for the first 15-20 minutes. I had several conversations with them on that topic and the told that trey truly believe in living the moment. Further, I can tell you that the opportunities for businesspeople are enormous here ... its incredible - For instance, the private sector are madly looking for providers of intranet and internet. I give you a practical experience, I just paid more than $CDN 8 for only 2 hours of internet... Since I arrived here, I probably paid more than $250 on internet ticket - I've asked several times for a price for the week - however it is impossible, I've been told that the maximum was 2 hours... quite frustrating and expensive at the same time... For the majority of people, Africa is quite scary, however, I can tell you that if you are genuine and that you intend to do business here - I suggest that you fly here and meet face to face - if they feel that you are genuine and truly invest and do business in their country- you will be successful !!!!
I now have to go because I am at the airport here in Abidjan and I am flying in less than 30 min. to Ougadagou, Burkina Faso. I will resume my trip next Monday by flying back to Dubai and after flying back to Ottawa.
Monday, April 14, 2008
The magic of DUBAI!!!
As you might know, I am currently in Dubai - visiting new and prospective clients. I can tell you one thing - thie city is BOOMING and GROWING.... as my friend Adrian Salamunovich, co-founder of DNA11 would say: "the vast majority of entrepreneurs in Ottawa think small, they forgot the importance of thinking BIG!!!". Well, I can tell you that Adrian would be satisfy and happy here in Dubai. Upon my return to my hotel earlier today, I was asking myself what is so magic in Dubai? Obviously, I visited the main commercial attractions of Dubai: 7 stars hotel Burj al Arab , Mall of the Emirates (containing Ski Dubai - I really enjoyed skiing when its like 35' C. outside). You can also envision probably 50-60 new buildings in construction. What is really striking me is the rapidity of how the business is done in Dubai. Dubai is THE financial hub of the Middle East. Therefore, people fly from all over the world to have a piece of the pie. I have met this british who flew here 6 years ago and now runs 6 condo-hotel projects. (e.i. $250 millions worth of investment) - however by Dubai standard, this amount is so small and often qualify as peanut....therefore I am sure that you can imagine the rest...
The population of Dubai only is 1,4 million - 80% of people are expats. Can you imagine 80% !!! As someone told me today, the british are the one who conceive and fund it and the indians are the one building it... For instance in my hotel, more than 90% are the staff are either chinese or indian. Moreover, because of the venue of so many expats (more than 70 nationalities) it's extremely diffficult to realize that you are in the Middle East.
Wednesday, April 9, 2008
Children's Fitness Tax Credit *
Starting with the 2007 tax year, the Government of Canada allows a non-refundable tax credit based on eligible fitness expenses paid by parents to register a child in a prescribed program of physical activity. The following information is for parents of children who are, at the beginning of the year in which an eligible fitness expense is paid, under the age of 16 or, if eligible for the disability tax credit, under the age of 18.
Information for parents
Amount of the tax credit
The children's fitness tax credit lets parents claim up to $500 per year for eligible fitness expenses paid for each child who is under 16 years of age at the beginning of the year in which the expenses are paid.
If a child qualifies for the disability tax credit, parents can claim up to $500 per year in eligible fitness expenses paid for the child who is under 18 years of age at the beginning of the year. Also, if at least $100 in eligible fitness expenses has been paid for the child, an additional amount of $500 can be added to the eligible fitness expenses actually incurred.
As with most other non-refundable tax credits, the children’s fitness tax credit is calculated by multiplying the total expense by the lowest marginal tax rate (the rate for 2007 is 15%).
Prescribed programs of physical activity
An eligible fitness expense must be for the cost of registration or membership of an eligible child in a prescribed program of physical activity. Generally, such a program must:
be ongoing (either a minimum of eight consecutive weeks long or, for children's camps, five consecutive days long);
be supervised;
be suitable for children; and
include a significant amount of physical activity that contributes to cardio-respiratory endurance, plus one or more of: muscular strength, muscular endurance, flexibility, or balance.
Under the Income Tax Regulations, the definition of physical activity includes:
horseback riding; and
if the child is eligible for the disability tax credit, activities that result in movement and in an observable use of energy in a recreational context.
An activity for which a child rides on, or in, a motorized vehicle as an essential part of the activity does not qualify for the children’s fitness tax credit.
Since certain expenses paid by parents for the registration or the membership of a child in a prescribed program of physical activity are not eligible for the children’s fitness tax credit, organizations offering such prescribed programs should determine the part of the registration or membership fee that is eligible for the credit. For more detailed information about the criteria for prescribed programs of physical activity and the fees that qualify for the credit, see the regulations.
Claiming the tax credit on your 2007 income tax return
You can claim the children’s fitness tax credit for each child who was, at the beginning of the year in which the registration or membership fee was paid, under 16 years of age or under 18 years of age and eligible for the disability tax credit (as long as another person has not already claimed the same eligible fitness expenses and that the total amount claimed is not more than the maximum that would be allowed if only one of you were claiming the credit). Eligible fitness expenses include amounts paid by you or your spouse or common-law partner in the year, regardless of when the activity takes place. Amounts paid before 2007 do not qualify for the credit.
Example Mary registered:
her daughter Julie in a prescribed program of physical activity and paid fees of $750 on August 30, 2006. The program started on September 15, 2006, and ended on April 21, 2007.
Mary’s husband registered:
their son Eric in a prescribed program of physical activity and paid fees of $750 on December 20, 2006. The program started on January 6, 2007, and ended on April 28, 2007;
and
their daughter Samantha in a prescribed program of physical activity and paid fees of $750 on January 2, 2007. The program started on January 6 and ended on April 28, 2007.
On her 2007 income tax return, Mary can only claim the maximum amount of $500 for Samantha's program (if her husband is not claiming this amount) because the fees for the other two children were paid in 2006.
If you or your spouse or common-law partner paid amounts that could be claimed on an income tax return as either child care expenses (line 214) or the children’s fitness amount (line 365), the amounts must first be claimed as child care expenses. Any unused part can be claimed for the children’s fitness tax credit, as long as the requirements are met.
You or your spouse or common-law partner may be entitled to a reimbursement, allowance, or other form of assistance for all or part of the eligible fitness expenses. If so, you can only claim the amount equal to the difference between the amount paid and the amount of assistance received. However, the full amount of the eligible fitness expense can still be claimed if the reimbursement, allowance, or other form of assistance has been included in income and not deducted elsewhere on the income tax return.
You can get information about how to claim the tax credit in the General Income Tax and Benefit Guide for 2007 (see the instructions for line 365, Children’s fitness amount).
Don't forget to ask for a receipt
You should receive, or ask for, a receipt from organizations that provide prescribed programs of physical activity for which you paid to have your child enrolled. The organizations will determine the part of the fee that qualifies for the children’s fitness tax credit.
Note It is not an organization’s responsibility to determine whether or not a child is eligible for the disability tax credit. If a parent tells an organization that a child is eligible for the disability tax credit, the organization should issue a receipt accordingly.
Keep the receipts issued by the organizations that deliver the programs. Do not include the receipts when you file your income tax return. However, keep the receipts in case we ask for them to verify your claim. Keep receipts for six years.
* From CRA's Website, Click HERE for more information and for the interpration bulletin of CRA
Information for parents
Amount of the tax credit
The children's fitness tax credit lets parents claim up to $500 per year for eligible fitness expenses paid for each child who is under 16 years of age at the beginning of the year in which the expenses are paid.
If a child qualifies for the disability tax credit, parents can claim up to $500 per year in eligible fitness expenses paid for the child who is under 18 years of age at the beginning of the year. Also, if at least $100 in eligible fitness expenses has been paid for the child, an additional amount of $500 can be added to the eligible fitness expenses actually incurred.
As with most other non-refundable tax credits, the children’s fitness tax credit is calculated by multiplying the total expense by the lowest marginal tax rate (the rate for 2007 is 15%).
Prescribed programs of physical activity
An eligible fitness expense must be for the cost of registration or membership of an eligible child in a prescribed program of physical activity. Generally, such a program must:
be ongoing (either a minimum of eight consecutive weeks long or, for children's camps, five consecutive days long);
be supervised;
be suitable for children; and
include a significant amount of physical activity that contributes to cardio-respiratory endurance, plus one or more of: muscular strength, muscular endurance, flexibility, or balance.
Under the Income Tax Regulations, the definition of physical activity includes:
horseback riding; and
if the child is eligible for the disability tax credit, activities that result in movement and in an observable use of energy in a recreational context.
An activity for which a child rides on, or in, a motorized vehicle as an essential part of the activity does not qualify for the children’s fitness tax credit.
Since certain expenses paid by parents for the registration or the membership of a child in a prescribed program of physical activity are not eligible for the children’s fitness tax credit, organizations offering such prescribed programs should determine the part of the registration or membership fee that is eligible for the credit. For more detailed information about the criteria for prescribed programs of physical activity and the fees that qualify for the credit, see the regulations.
Claiming the tax credit on your 2007 income tax return
You can claim the children’s fitness tax credit for each child who was, at the beginning of the year in which the registration or membership fee was paid, under 16 years of age or under 18 years of age and eligible for the disability tax credit (as long as another person has not already claimed the same eligible fitness expenses and that the total amount claimed is not more than the maximum that would be allowed if only one of you were claiming the credit). Eligible fitness expenses include amounts paid by you or your spouse or common-law partner in the year, regardless of when the activity takes place. Amounts paid before 2007 do not qualify for the credit.
Example Mary registered:
her daughter Julie in a prescribed program of physical activity and paid fees of $750 on August 30, 2006. The program started on September 15, 2006, and ended on April 21, 2007.
Mary’s husband registered:
their son Eric in a prescribed program of physical activity and paid fees of $750 on December 20, 2006. The program started on January 6, 2007, and ended on April 28, 2007;
and
their daughter Samantha in a prescribed program of physical activity and paid fees of $750 on January 2, 2007. The program started on January 6 and ended on April 28, 2007.
On her 2007 income tax return, Mary can only claim the maximum amount of $500 for Samantha's program (if her husband is not claiming this amount) because the fees for the other two children were paid in 2006.
If you or your spouse or common-law partner paid amounts that could be claimed on an income tax return as either child care expenses (line 214) or the children’s fitness amount (line 365), the amounts must first be claimed as child care expenses. Any unused part can be claimed for the children’s fitness tax credit, as long as the requirements are met.
You or your spouse or common-law partner may be entitled to a reimbursement, allowance, or other form of assistance for all or part of the eligible fitness expenses. If so, you can only claim the amount equal to the difference between the amount paid and the amount of assistance received. However, the full amount of the eligible fitness expense can still be claimed if the reimbursement, allowance, or other form of assistance has been included in income and not deducted elsewhere on the income tax return.
You can get information about how to claim the tax credit in the General Income Tax and Benefit Guide for 2007 (see the instructions for line 365, Children’s fitness amount).
Don't forget to ask for a receipt
You should receive, or ask for, a receipt from organizations that provide prescribed programs of physical activity for which you paid to have your child enrolled. The organizations will determine the part of the fee that qualifies for the children’s fitness tax credit.
Note It is not an organization’s responsibility to determine whether or not a child is eligible for the disability tax credit. If a parent tells an organization that a child is eligible for the disability tax credit, the organization should issue a receipt accordingly.
Keep the receipts issued by the organizations that deliver the programs. Do not include the receipts when you file your income tax return. However, keep the receipts in case we ask for them to verify your claim. Keep receipts for six years.
* From CRA's Website, Click HERE for more information and for the interpration bulletin of CRA
Sunday, April 6, 2008
Required Clearance Certificate and Section 6 Retail Sales Tax
Persons who sell their business or business assets (known as an Asset Purchase Agreement), in whole or in part, through a sale in bulk to which the Bulk Sales Act applies, are required to obtain a Clearance Certificate from the Ministry of Revenue. A Clearance Certificate certifies that all Retail Sales Tax (RST) collectable or payable by the seller has been paid or secured. It also protects the purchaser from the responsibility for the outstanding RST liabilities of the seller. Where the Bulk Sales Act applies to a sale in bulk, the purchaser is required to obtain from the seller a copy of the Clearance Certificate obtained by the seller (As purchaser, I highly recommend that you receive such certificate PRIOR to closing). If the purchaser fails to obtain a Clearance Certificate from the seller, the purchaser may be held liable for any RST owing by the seller at the time of the sale.The Bulk Sales Act may apply where there is a sale of stock (i.e., fixtures, goods, chattels) in bulk out of the usual course of business or trade of the seller. To determine whether the Bulk Sales Act applies to a particular situation, sellers and purchasers should consult their respective legal advisor or contacting me should they have any questions.
In certain circumstances, such as where RST is owed by the seller or where an audit has been scheduled but not completed prior to the closing date of the sale, the Ministry of Revenue may require funds to be held back from the proceeds of the sale prior to issuing the Clearance Certificate or the seller may be asked to agree in writing to a condition being placed on the certificate.
All requests for Clearance Certificates must be made in writing, at least two weeks before the sale takes place, and signed by the seller or the seller's authorized representative. The request should be sent by mail or fax to their nearest Ontario Ministry of Revenue Tax Office.
Our local office:
Ottawa Tax Office
Ontario Ministry of Revenue - MOR
1400 Blair Place, Suite 300Gloucester, Ontario
K1J 9B8
Telephone: 613-746-9200
Fax: 613-842-3593
Toll-free (information):1-800-461-4909
In certain circumstances, such as where RST is owed by the seller or where an audit has been scheduled but not completed prior to the closing date of the sale, the Ministry of Revenue may require funds to be held back from the proceeds of the sale prior to issuing the Clearance Certificate or the seller may be asked to agree in writing to a condition being placed on the certificate.
All requests for Clearance Certificates must be made in writing, at least two weeks before the sale takes place, and signed by the seller or the seller's authorized representative. The request should be sent by mail or fax to their nearest Ontario Ministry of Revenue Tax Office.
Our local office:
Ottawa Tax Office
Ontario Ministry of Revenue - MOR
1400 Blair Place, Suite 300Gloucester, Ontario
K1J 9B8
Telephone: 613-746-9200
Fax: 613-842-3593
Toll-free (information):1-800-461-4909
Friday, April 4, 2008
13th annual OCRI Awards
OCRI, Ottawa's economic development agency honoured Ottawa's best and brightest companies, executives and students for their innovative work and contributions to the city's knowledge-based sector at the 13th annual OCRI Awards gala and dinner. The awards celebrate excellence in the areas of research, technology, entrepreneurship, leadership, partnership development and student accomplishments. Nominations for the nine categories were solicited from Ottawa's business and education community last December. These companies are the future ... you should keep an eye on them. Congrats to the winners!!!
The following awards were presented:
Technology Company of the Year:
Awarded to Bridgewater Systems in recognition of the company's ongoing commitment to be the top provider of subscriber-centric service control solutions to a growing number of partners world-wide as well as their successful initial public offering and Toronto Stock Exchange listing which contributed to their status as an industry leader.
Next Generation Executive of the Year:
Awarded to John Roese, Chief Technology Officer, Nortel Networks, for the role he has played in the major transformation of the company's global R&D engine that ensures the company is well positioned to take advantage of opportunities in the rapidly changing (and converging) worlds of telecom and IT.
Most Promising Start-Up of the Year:
Awarded to Menova Energy Inc. for the work they have done to change the economics of solar energy with their entirely scalable, flexible deployment of a unique solar concentrating system.
Financial Deal of the Year:
Awarded to Mitel in recognition of their successful bid and acquisition of U.S. based Inter-Tel. The $729 million acquisition represents one of Ottawa's biggest financing deals in over 10 years and has created a company well on its way to achieving an international market leadership position.
Technology Partnership Commercialization:
Awarded to Communications Research Centre Canada (CRC) in recognition of their significant contribution to Canada's communications sector and their ongoing commitment to innovation and research over the past 50 years which includes spinning out more than 50 Ottawa based start-ups.
Service of the Year:
Awarded to bitHeads Inc. in acknowledgment of the considerable success achieved by the HeadGames division and the company's innovative service offering that helps clients get award-winning software and games to market faster.
Product of the Year:
Awarded to Ross Video Limited for their state-of-the-art, continually evolving product line which is used in broadcast, live event and production applications in over 100 countries, 24 hours a day, 365 days a year.
Student Researcher of the Year:
Two awards were presented in this category. The first award was presented to Atif Shamim and Muhammad Arsalan of Carleton University for their research work in the field of wireless
The second award recipient is David Nadeau from the University of Ottawa for inspired research resulting in a more intelligent on-line search engine and his commercialization efforts which launched yooname.com last November and immediately led to a contract with a Montreal start-up.
High School Technology Innovator of the Year:
Awarded to Daniel André Vienneau from École secondaire catholique Garneau, Conseil des écoles catholiques de langue française du Centre-Est for his creation of 'Fotek' a very successful, non-profit, computer repair enterprise. Fotek's services are available to Garneau teaching staff, students and their families as well as residents of the Orléans area. Students who work for Fotek earn valuable community service hours which are applicable toward their high school diploma.
Friday, March 28, 2008
Exemption from audit requirements
As you might be aware, Under the Canadian Business Corporations Act ("CBCA") and the Business Corporations Act it is possible to waive the audit requirements. For SME's (small & medium entreprises) it can be costly to have audited financial statements (minimum $5000- $7,500 up to $100,000 and more...) Therefore, it's possible to pass a annual resolutation to waive the obligation of appointing an auditor. The resolution MUST be signed by ALL the shareholders of the corporation (please see below for the listed conditions). Further, Please ensure that you review your minute book and that you have a resolution for EACH year since the incorporation date of your business. Once you have your annual resolution signed by all the shareholders, it will give you the options of getting notice to reader statements or engagement review, these 2 options are cheaper.
Here are the proper sections of each Act (federal and provincial):
Canada Business Corporations Act ( R.S., 1985, c. C-44 )
Dispensing with auditor
163. (1) The shareholders of a corporation that is not a distributing corporation may resolve not to appoint an auditor.
Limitation
(2) A resolution under subsection (1) is valid only until the next succeeding annual meeting of shareholders.
Unanimous consent
(3) A resolution under subsection (1) is not valid unless it is consented to by all the shareholders, including shareholders not otherwise entitled to vote.
Business Corporations Act
148 . In respect of a financial year of a corporation, the corporation is exempt from the requirements of this Part regarding the appointment and duties of an auditor if,
(a) the corporation is not an offering corporation; and
(b) all of the shareholders consent in writing to the exemption in respect of that year. 1998, c. 18, Sched. E, s. 23.
Here are the proper sections of each Act (federal and provincial):
Canada Business Corporations Act ( R.S., 1985, c. C-44 )
Dispensing with auditor
163. (1) The shareholders of a corporation that is not a distributing corporation may resolve not to appoint an auditor.
Limitation
(2) A resolution under subsection (1) is valid only until the next succeeding annual meeting of shareholders.
Unanimous consent
(3) A resolution under subsection (1) is not valid unless it is consented to by all the shareholders, including shareholders not otherwise entitled to vote.
Business Corporations Act
148 . In respect of a financial year of a corporation, the corporation is exempt from the requirements of this Part regarding the appointment and duties of an auditor if,
(a) the corporation is not an offering corporation; and
(b) all of the shareholders consent in writing to the exemption in respect of that year. 1998, c. 18, Sched. E, s. 23.
Wednesday, March 26, 2008
The Importance of the Capital Gains Exemption for Owner-Managers *
Since 1985, the capital gains exemption has been available to Canadian business owners.
The concept is simple—if you sell shares of a qualifying corporation for a profit, the first $750,000 of your gain on a lifetime basis can be received on a tax-free basis. The rules are complicated and it is quite possible that your shares may not qualify by not meeting one of the detailed conditions that apply. While shares of some corporations may never qualify for the exemption (for example, shares of many investment companies won’t qualify), other share investments that are currently offside can be put back on track with advance planning. Since the conditions are detailed, very simple steps can often make the difference between qualifying and not qualifying for the exemption when you dispose of your shares.
How do I qualify for the Capital Gains Exemption?
If you sell shares of a small business corporation (SBC), and meet the conditions for the exemption, then the gain from the sale of your business will qualify for the capital gains exemption. To qualify for the exemption, the first condition is that your corporation must be an SBC at the time of sale. That means that it must be a Canadian-Controlled Private Corporation (or CCPC) and all or substantially all of its assets must be used in an active business carried on primarily in Canada. The Canada Revenue Agency interprets “all or substantially all” to mean that assets representing at least 90 per cent of their fair market value of all corporate assets must be used for business purposes. If you hold shares of an SBC, there is a second set of conditions which you must meet to qualify for the exemption:
1) More than 50 per cent of the corporation’s assets (again on the basis of fair market value) must have been used in an active business carried on primarily in Canada throughout the 24-month period immediately before the sale; and
2) The shares must not have been owned by anyone other than you or someone related to you
during the 24-month period immediately before the sale.
* this article was written by Bruce Ball, CA, CFP, TEP - Bruce is a Partner in the National Tax practice of BDO Dunwoody LLP, where he develops tax planning strategies for clients. He is also a co author of the Guide to the Family Business, Canadian Edition.
The concept is simple—if you sell shares of a qualifying corporation for a profit, the first $750,000 of your gain on a lifetime basis can be received on a tax-free basis. The rules are complicated and it is quite possible that your shares may not qualify by not meeting one of the detailed conditions that apply. While shares of some corporations may never qualify for the exemption (for example, shares of many investment companies won’t qualify), other share investments that are currently offside can be put back on track with advance planning. Since the conditions are detailed, very simple steps can often make the difference between qualifying and not qualifying for the exemption when you dispose of your shares.
How do I qualify for the Capital Gains Exemption?
If you sell shares of a small business corporation (SBC), and meet the conditions for the exemption, then the gain from the sale of your business will qualify for the capital gains exemption. To qualify for the exemption, the first condition is that your corporation must be an SBC at the time of sale. That means that it must be a Canadian-Controlled Private Corporation (or CCPC) and all or substantially all of its assets must be used in an active business carried on primarily in Canada. The Canada Revenue Agency interprets “all or substantially all” to mean that assets representing at least 90 per cent of their fair market value of all corporate assets must be used for business purposes. If you hold shares of an SBC, there is a second set of conditions which you must meet to qualify for the exemption:
1) More than 50 per cent of the corporation’s assets (again on the basis of fair market value) must have been used in an active business carried on primarily in Canada throughout the 24-month period immediately before the sale; and
2) The shares must not have been owned by anyone other than you or someone related to you
during the 24-month period immediately before the sale.
* this article was written by Bruce Ball, CA, CFP, TEP - Bruce is a Partner in the National Tax practice of BDO Dunwoody LLP, where he develops tax planning strategies for clients. He is also a co author of the Guide to the Family Business, Canadian Edition.
Saturday, March 22, 2008
The biggest advantage of beeing a Canadian-Controlled Private Corporation (CCPC)
What is a CCPC?
As the name implies, a Canadian-controlled private corporation has to be private. It also has to meet all of the following conditions:
•it is a corporation that was resident in Canada and was either incorporated in Canada or resident in Canada from June 18, 1971, to the end of the tax year;
•it is not controlled directly or indirectly by one or more non-resident persons;
•it is not controlled directly or indirectly by one or more public corporations (other than a prescribed venture capital corporation, as defined in Regulation 6700);
•it is not controlled by a Canadian resident corporation that lists its shares on a designated stock exchange outside of Canada;
•it is not controlled directly or indirectly by any combination of persons described in the three previous conditions;
•if all of its shares that are owned by a non-resident person, by a public corporation (other than a prescribed venture capital corporation), or by a corporation with a class of shares listed on a designated stock exchange, were owned by one person, that person would not own sufficient shares to control the corporation; and
•no class of its shares of capital stock is listed on a designated stock exchange.
As the name implies, a Canadian-controlled private corporation has to be private. It also has to meet all of the following conditions:
•it is a corporation that was resident in Canada and was either incorporated in Canada or resident in Canada from June 18, 1971, to the end of the tax year;
•it is not controlled directly or indirectly by one or more non-resident persons;
•it is not controlled directly or indirectly by one or more public corporations (other than a prescribed venture capital corporation, as defined in Regulation 6700);
•it is not controlled by a Canadian resident corporation that lists its shares on a designated stock exchange outside of Canada;
•it is not controlled directly or indirectly by any combination of persons described in the three previous conditions;
•if all of its shares that are owned by a non-resident person, by a public corporation (other than a prescribed venture capital corporation), or by a corporation with a class of shares listed on a designated stock exchange, were owned by one person, that person would not own sufficient shares to control the corporation; and
•no class of its shares of capital stock is listed on a designated stock exchange.
The biggest corporate tax advantage of being a Canadian-controlled private corporation is being eligible for the small business deduction. This corporate tax deduction is calculated as 17% (as of January 1, 2008) of the least of a corporation's active business income, taxable income or business limit for the year. The small business deduction applies to the first $400,000 of active business income. Therefore, you company would only pay $17,000 on $100,000 of business income- on the other hand, and individual would pay $29,017 on the same $100,000 (fiscal year 2007 and Ontario resident)
Thursday, March 20, 2008
Tax Free Savings Account
I would like to share with you some information regarding the new tax free saving account. I have asked to my friend David Brighten, CGA, CAFM and managing director of the accounting firm Andrews & Co. - his firm wrote an excellent article on this topic.
Tax-Free Savings Account – 2008 Federal Budget
The Budget introduces the Tax-Free Savings Account (TFSA), effective for 2009. The TFSA will allow Canadian resident individuals to earn investment income, including interest, dividends, and capital gains, on a tax-free basis. Contributions to the TFSA will not be deductible, but the income in the account will not be subject to tax, either while in the account or upon withdrawal.
The annual contribution limit for a TFSA will be $5,000 and will be increased annually to inflation, and rounded to the nearest $500. Unused TFSA room can be carried forward indefinitely. In addition, withdrawals from the account will free up more TFSA room. Excess contributions will be subject to a 1% tax per month. Qualified investments will be similar to those of an RRSP.
Interest on borrowed money used to invest in a TFSA will not be deductible, as is currently the case for borrowings used to invest in other tax-sheltered accounts, such as an RRSP. However, the assets in the TFSA can be used as collateral for a loan of the individual.
One of the relative advantages of the TFSA (especially compared to an RRSP) is that withdrawals from the TFSA will not be included in income for the purpose of determining eligibility for various income-based credits and benefits, including the Age Credit and OAS benefits. In other words, unlike withdrawals from an RRSP or RRIF, which can effectively create an additional “tax” by reducing the individual's Age Credit or by clawing back OAS benefits (and certain other credits and benefits), withdrawals from the TFSA will have no effect on such credits or benefits.
Furthermore, unlike an RRSP, there is no time limit at which the TFSA must be wound up or converted into another investment vehicle. Thus, the TFSA can be used to fund pre-retirement years or post-retirement years, and there are no limits on either withdrawals or the use of the withdrawn funds.
The attribution rules will not apply to income earned in a TFSA. Therefore, one spouse can contribute to another spouse's TFSA and the investment income remains tax exempt and not subject to attribution.
Upon death, the value of the TFSA is not included in income (unlike an RRSP or RRIF), although any income that accrues after death will be subject to tax. To retain the tax-free status of the account, it may pass to the deceased's spouse or common-law partner, or the assets of the account can be transferred to a TFSA of the spouse or common-law partner.
Tax-Free Savings Account – 2008 Federal Budget
The Budget introduces the Tax-Free Savings Account (TFSA), effective for 2009. The TFSA will allow Canadian resident individuals to earn investment income, including interest, dividends, and capital gains, on a tax-free basis. Contributions to the TFSA will not be deductible, but the income in the account will not be subject to tax, either while in the account or upon withdrawal.
The annual contribution limit for a TFSA will be $5,000 and will be increased annually to inflation, and rounded to the nearest $500. Unused TFSA room can be carried forward indefinitely. In addition, withdrawals from the account will free up more TFSA room. Excess contributions will be subject to a 1% tax per month. Qualified investments will be similar to those of an RRSP.
Interest on borrowed money used to invest in a TFSA will not be deductible, as is currently the case for borrowings used to invest in other tax-sheltered accounts, such as an RRSP. However, the assets in the TFSA can be used as collateral for a loan of the individual.
One of the relative advantages of the TFSA (especially compared to an RRSP) is that withdrawals from the TFSA will not be included in income for the purpose of determining eligibility for various income-based credits and benefits, including the Age Credit and OAS benefits. In other words, unlike withdrawals from an RRSP or RRIF, which can effectively create an additional “tax” by reducing the individual's Age Credit or by clawing back OAS benefits (and certain other credits and benefits), withdrawals from the TFSA will have no effect on such credits or benefits.
Furthermore, unlike an RRSP, there is no time limit at which the TFSA must be wound up or converted into another investment vehicle. Thus, the TFSA can be used to fund pre-retirement years or post-retirement years, and there are no limits on either withdrawals or the use of the withdrawn funds.
The attribution rules will not apply to income earned in a TFSA. Therefore, one spouse can contribute to another spouse's TFSA and the investment income remains tax exempt and not subject to attribution.
Upon death, the value of the TFSA is not included in income (unlike an RRSP or RRIF), although any income that accrues after death will be subject to tax. To retain the tax-free status of the account, it may pass to the deceased's spouse or common-law partner, or the assets of the account can be transferred to a TFSA of the spouse or common-law partner.
Monday, March 17, 2008
Mad Money, Jim Cramer... and Bearn Stearns
I really enjoy reading and learning a lot of new things. One of my passion is finance and the magic of the stock markets, I am a huge fan of Warren Buffet. Once in a while, I watch the show Mad Money with Jim Cramer, for me - it's more a reality show than anything else - BUT don't take this guy seriously ... Once again, here is a good proof: Last week comments on Bearn Stearns from Jim Cramer
Please do your homework ... or if you are unable, hired a professional to do so...
Friday, March 14, 2008
YBN-NC Entrepreneurship Forum Next Week
My group is organizing an entrepreneurship forum and I would like to invite you:
Participate in YBN-NC's very first Entrepreneurship Forum. Come hear from guest speakers specialized in various areas of business while networking with other business professionals. Don't miss this valuable opportunity to increase your knowledge and skills in the business field.
When? March 18th, 2008, 6:00-10 p.m
Where? World Exchange Plaza, 45 O'Connor, Suite 350, EMBA room (http://www.emba.uottawa.ca/)
Cost? Free for YBN-NC members. $15 for non members. Register today by emailing your name, title and organization at events@ybn-nc.ca. Only 40 spots available.
Agenda:
- The importance of a well constructed business plan, presented by Entrepreneurship Centre (www.entrepreneurship.com)
- Structuring your new business venture, presented by Andrews Robichaud (www.andrewsrobichaud.com)
- How will I finance my new business, presented by Royal Bank Canada (www.rbc.com)
- Why proper insurance should be a priority for all entrepreneurs, presented by TK group Inc. (www.thetkgroup.com)
- The power of positive thinking in business, presented by Lorena Heletea (http://www.lorenaheletea.lifesuccessconsultants.com)
Participate in YBN-NC's very first Entrepreneurship Forum. Come hear from guest speakers specialized in various areas of business while networking with other business professionals. Don't miss this valuable opportunity to increase your knowledge and skills in the business field.
When? March 18th, 2008, 6:00-10 p.m
Where? World Exchange Plaza, 45 O'Connor, Suite 350, EMBA room (http://www.emba.uottawa.ca/)
Cost? Free for YBN-NC members. $15 for non members. Register today by emailing your name, title and organization at events@ybn-nc.ca. Only 40 spots available.
Agenda:
- The importance of a well constructed business plan, presented by Entrepreneurship Centre (www.entrepreneurship.com)
- Structuring your new business venture, presented by Andrews Robichaud (www.andrewsrobichaud.com)
- How will I finance my new business, presented by Royal Bank Canada (www.rbc.com)
- Why proper insurance should be a priority for all entrepreneurs, presented by TK group Inc. (www.thetkgroup.com)
- The power of positive thinking in business, presented by Lorena Heletea (http://www.lorenaheletea.lifesuccessconsultants.com)
Tuesday, March 11, 2008
Offer to Lease & Commercial Lease
A client came to see me this morning with the intention to rent a commercial space on Elgin Street. His business is doing great and he needs to expand. So far, it is a great story, however he showed me the offer to lease that he already signed with the broker representing the Landlord. Obviously, after a brief review of the offer to lease, I noticed substantial amount of issues and the client asked me to fix these issues. However, the offer was already signed and the broker was not ready to change the terms of the offer to lease. Therefore, the lease will be based on this offer to lease.
Usually, when someone is interested in renting a commercial space, they call the broker/agent or the Landlord directly.... they go visit the space and if they are interested, the Landlord or is representative will draft a offer to lease. If the offer to lease is acceptable for both parties, it will be signed. The lease will be based on the signed offer to lease, however (most of the time) is the parties disagree with some clauses in the lease, the offer to lease will remain valid for the duration of the lease.
Therefore, it is really important that you seek legal advice BEFORE signing the offer to lease.... your business lawyer will be able to point you out any pitfalls contained in the offer to lease. Don't forget, once the offer to lease is signed, it nearly impossible to make any changes and the offer will be binding and you will be liable.
Friday, March 7, 2008
Succession planning dilemna
Last night, I hosted a private dinner with few seniors entrepreneurs in the city. Our main topic of discussion became succession planning... should I transfer and/or sell my shares to my childrens, should I sell the business, should I look for a successor inside my company - Everyone had their own idea and beliefs. It was such a great night - 3 hours of genuine conversation and passion about business. Few weeks ago, I came accross this excellent article from Mark Wardell, President of Wardell Professional Development Inc.
I believe it will be helpful to you:
Succession Dilemna
I believe it will be helpful to you:
Succession Dilemna
Hardly a day goes by without my coming face-to-face with the issue of business succession. Every banker, lawyer, accountant, and financial planner I know talks about it. Seminar after seminar deals with this issue, and all for good reason. After all, thanks to the baby-boomer generation, more than two thirds of independent Canadian business owners are planning to exit their businesses in the next 10 years (Canadian Federation of Independent Business, 2006).
But what we aren't hearing about so much is who is going to buy these businesses. Certainly some will be picked up by competitors, some will be bought by managers, and some will be passed on to future generations. However, the grim reality is that the product of many an entrepreneurs' blood, sweat and tears will simply cease to exist.
But what we aren't hearing about so much is who is going to buy these businesses. Certainly some will be picked up by competitors, some will be bought by managers, and some will be passed on to future generations. However, the grim reality is that the product of many an entrepreneurs' blood, sweat and tears will simply cease to exist.
To avoid this fate, many entrepreneurs across the nation have begun succession planning. And while planning of this kind is absolutely necessary, it's also absolutely pointless unless the business owner truly understands what effective planning looks like for their business. In my experience, many don't.
Succession planning done right, requires that the business owner develop and execute a road map that proactively "productizes" his or her business into a self-sustained, truly valuable organization. Value. This is indeed an elusive word and one that is much more difficult to measure than the revenues, assets and profits we're all used to reading on our financial statements. It is, however, the key to what makes a succession, successful.
So how do we identify and ultimately drive value? To answer this question, we first need to understand that a valuable organization is one that is independent of its ownership. Therefore, the goal of an effective succession plan must be to transform a business from an owner-reliant organization into a genuine investment. After all, as a potential buyer, which would you pay more for?
So how do we identify and ultimately drive value? To answer this question, we first need to understand that a valuable organization is one that is independent of its ownership. Therefore, the goal of an effective succession plan must be to transform a business from an owner-reliant organization into a genuine investment. After all, as a potential buyer, which would you pay more for?
Consider the following concept I call the "value pyramid."
It consists of four stages, or levels, of business development. As a business moves from one level to the next, risk is reduced, and the business takes a corresponding leap in value. The pyramid is designed to help a business owner, during the process of succession planning, consider the value of his or her business from the perspective of a potential buyer.
It consists of four stages, or levels, of business development. As a business moves from one level to the next, risk is reduced, and the business takes a corresponding leap in value. The pyramid is designed to help a business owner, during the process of succession planning, consider the value of his or her business from the perspective of a potential buyer.
Level One: an owner driven business. In this type of business, the owner makes it all happen. Because this level of business is highly reliant on its owner, the risk of a business losing its profitability following a succession is highest.
Level Two: a people driven business. In this scenario, key people in the company, other than the owner, make the business happen. At this level, succession-related failure is reduced, but still plays a role due to the fact that the key people could leave, and thus take valuable information, and even customers, with them.
Level Three: a process driven business. This type of business is run by systems, which greatly reduce the risk of failure after a succession. At this level, systems are in place to ensure that operations continue according to plan, with or without the owner or key employees, so the business is set up fairly well to run itself. This type of business has more inherent value than the first two levels.
Level Four: a culture driven business. In this environment, the culture (driven by both people and systems) make the business happen. Level Four is considered as close to a pure "investment" as a business can come. Its culture indoctrinates new hires into an environment of continuous improvement, based on systems. The result is a "culture of excellence". This type of business has the least chance of succession-related failure, and is therefore considered the most valuable.
Once a business owner determines which of the four levels they are at, they can then move forward in developing and executing a succession plan that will get them as close to a culture-driven business as possible. Exactly how to go about doing that will be the subject of future articles, but you can start right now by asking yourself, "Am I ready to give up some of my control?" It's a tough question for many entrepreneurs, but it's impossible to move your business up the value pyramid without addressing it. Once you're comfortable, however, you may be surprised at how quickly the value of your business will grow.
How to find the help you need to grow your business
How to find the help you need to grow your business
When environmentally-minded Scott Bryk joined his brother T.J. in 2005 as co-owner of Jemev Waste Recycling, www.jemev.ca, he was convinced that their eco-friendly wood processing firm was on the verge of a major market breakthrough.
A series of factors tipped him off, including Ontario's desperate need for solutions to its landfill crisis. Most of that province's garbage was—and still is—being hauled over the border to Michigan. The Walkerton water disaster and an increase in public concern about climate change were other telling signs that a market breakthrough in waste-recycling was at hand.
But what Jemev's co-owners didn't know was how to effectively evolve their wood grinding services into a broader offering. To meet the emerging market need, they would need to venture into organics processing and biofuel development. The necessary developments would be complicated.
But what Jemev's co-owners didn't know was how to effectively evolve their wood grinding services into a broader offering. To meet the emerging market need, they would need to venture into organics processing and biofuel development. The necessary developments would be complicated.
They needed a team of senior-level advisors who could guide them through technical and engineering problems, confusing regulatory approval processes, and finding access to new financial resources. They also needed to know how to distinguish between companies in their potential market space that were "green-washing" (a term used to describe insincere environmental efforts) and those actually willing to implement change (i.e. their target market).
Two years later, Scott admits the process of finding and putting in place the right type of working advisory board wasn't easy, but it was definitely worth it. Before 2006, Jemev's revenues were in the $430,000 range. By the end of 2007, business had soared to nearly $800,000.
If you find yourself at a similar crossroads, and are looking to install a committed group of advisors to help your business through a critical transition, chances are an advisory board could be a good solution for you, too. But first you must…
1. Admit you need help.
During their "Eureka" moment of 2005, Scott & T.J. recognized they weren't reaching their market potential and they needed direction on all fronts.
For a proud entrepreneur, admitting you need help can be a tough pill to swallow. But once you do, you may be surprised at the quality of people who are willing to step forward and offer their support.
During their "Eureka" moment of 2005, Scott & T.J. recognized they weren't reaching their market potential and they needed direction on all fronts.
For a proud entrepreneur, admitting you need help can be a tough pill to swallow. But once you do, you may be surprised at the quality of people who are willing to step forward and offer their support.
If you know you need help, it's likely because you have a picture of what you want your business to look like but you can't get there on your own.
Scott, for example, recognized his tremendous need for technical assistance. To get an organic processing facility up and running, he faced challenges from a project management perspective, in addition to the numerous regulatory hurdles he would need to overcome. These challenges were further complicated by, as he calls it, "the difficulties involved in being a company capable of generating greenhouse gas credits in an environment where various levels of government are still unwilling to aggressively deal with climate change issues."
Scott, for example, recognized his tremendous need for technical assistance. To get an organic processing facility up and running, he faced challenges from a project management perspective, in addition to the numerous regulatory hurdles he would need to overcome. These challenges were further complicated by, as he calls it, "the difficulties involved in being a company capable of generating greenhouse gas credits in an environment where various levels of government are still unwilling to aggressively deal with climate change issues."
Jemev's advisory board provided the expertise that reshaped the company's service offering. Most significantly, the board advised Jemev to focus its services on core business activities, rather than following industry trends and trying to offer a broader recycling focus.
In Scott's words, "They guided us to use existing wood waste as an input to products and services with a greater profit margin."
In Scott's words, "They guided us to use existing wood waste as an input to products and services with a greater profit margin."
Combining the wood they processed with organic material from grocery stores, food processing plants and other industries, Jemev has harnessed a powerful, much-needed waste processing capacity in a province that is in desperate need of waste diversion. As a result, the company has enjoyed greater operational efficiencies and increased profit. Thanks to its advisors, Jemev is on-track to reach $2.0 million in annual revenues by the end of 2008.
2. Consider your options
An advisory board may be a good option for your business. But how do you go about finding one and how do you know they will actually provide the careful, helpful advice you are looking for?
For Scott, the process was much longer and more convoluted than he anticipated. And, this is what you can expect as well. Don't let that stop you, though. I've guided many business owners through this process and the benefits are always worth the effort.
An advisory board may be a good option for your business. But how do you go about finding one and how do you know they will actually provide the careful, helpful advice you are looking for?
For Scott, the process was much longer and more convoluted than he anticipated. And, this is what you can expect as well. Don't let that stop you, though. I've guided many business owners through this process and the benefits are always worth the effort.
Start by writing a list of dream advisor candidates. These could be industry celebrities, local experts, or even unknown geniuses. They might be people you've known about, come across at an event, read about in an industry paper, or met personally at some point.
Once you have a list of potential candidates, pick up the phone and start talking. In Scott's case, he shared his dreams and goals with his prospective advisors. He told them what he was trying to achieve (mission, vision, values) and gauged their reactions. Were they also committed to the environment? What were their experiences personally and professionally regarding the environment? Were they excited about what he was planning to do?
As a general rule, it's important to get a good feeling that you'll have a few things in common with these people outside of their professional competencies, as well. Because your goal is to build a trusted team you will work with for as long as you need advice, which, lets face it, is likely going to be a long time!
3. Find people you trust
The most valuable advice you'll receive from your advisory board will probably be in response to questions that you won't really want to ask.
That's because questions regarding competencies, expertise, and finances make most business owners feel a bit uncomfortable, maybe even embarrassed. We feel we should already know these things.
The most valuable advice you'll receive from your advisory board will probably be in response to questions that you won't really want to ask.
That's because questions regarding competencies, expertise, and finances make most business owners feel a bit uncomfortable, maybe even embarrassed. We feel we should already know these things.
At an advisory level, you need to find people whom you can really trust, so that in spite of any embarrassment, you can rest assured they will keep your confidence and provide you with the most honest and valuable advice they have to give.
Scott decided to develop a combination of paid and volunteer advisors. Choosing to hire a financial team, Toronto-based Quest Partners Ltd., has helped him feel freer to discuss some of the more confidential financial aspects of his development.
Scott decided to develop a combination of paid and volunteer advisors. Choosing to hire a financial team, Toronto-based Quest Partners Ltd., has helped him feel freer to discuss some of the more confidential financial aspects of his development.
4. Listen
As a group, entrepreneurs tend to be an opinionated bunch. After all, it's their company and they can do whatever they like. The problem with this type of attitude, of course, is that it diminishes the board's value to the company it is trying to serve, causing members to eventually loose interest.
As a group, entrepreneurs tend to be an opinionated bunch. After all, it's their company and they can do whatever they like. The problem with this type of attitude, of course, is that it diminishes the board's value to the company it is trying to serve, causing members to eventually loose interest.
So the best advice I have for someone considering setting up an advisory board is to make sure you are ready to hear what your board has to say. Advisory boards can be enormously helpful to those with an open mind. They can help you see trouble before it hits you, they can open otherwise locked doors, they can bring credibility to an emerging business, and they can help resolve issues with which you have limited experience. But all of this only matters if you are ready to listen.
5. Do it now!
If you know you need advice, find it now. Don't delay.
Begin the process with one or two advisors and build your "dream team" from there. You'll make a few mistakes along the way and not all of your advisors will work out the way you planned, but if you persevere, you'll end up with a powerful resource for taking your business places you once only dreamed of.
If you know you need advice, find it now. Don't delay.
Begin the process with one or two advisors and build your "dream team" from there. You'll make a few mistakes along the way and not all of your advisors will work out the way you planned, but if you persevere, you'll end up with a powerful resource for taking your business places you once only dreamed of.
Turning personal goodwill into professional profits
Description: When a business owner begins to feel like they have bought themselves a job, something isn't right. That's what the owner of Globe Printers, Ken Giesbrecht, determined in May, 2003 when he realized the non-stop demands of owning his small Vancouver-based commercial printing business were more than he had bargained for. After nine years and many self-described "near fatalities" as the owner-operator, Giesbrecht decided to seek out professional help. His motivation for change came mostly, he says, from fatigue. He was tired of being at the constant beck and call of his business and wondered how "real business owners" were doing things differently.
What's confusing to most business owners is that, in the vast majority of cases, the company's financials paint only a partial picture when it comes to demonstrating true business value. They are important of course, but the main difference between someone who is self-employed and someone who owns a sellable business is not net profit; it is the distribution of goodwill.
Goodwill is a major component of the value of a typical business and forms the better part of its owner's "profit" when it's time to sell. Personal goodwill is the portion of that value that is associated with the owner's name, reputation, contacts, skills and abilities. Personal goodwill, however, is not transferable. And unfortunately, it is extremely common to find that the majority of a business's goodwill value is linked directly to the owner and therefore tied up in un-sellable, personal goodwill.
Goodwill is a major component of the value of a typical business and forms the better part of its owner's "profit" when it's time to sell. Personal goodwill is the portion of that value that is associated with the owner's name, reputation, contacts, skills and abilities. Personal goodwill, however, is not transferable. And unfortunately, it is extremely common to find that the majority of a business's goodwill value is linked directly to the owner and therefore tied up in un-sellable, personal goodwill.
When I first met Ken back in the fall of 2003, he had two basic goals.
1. He wanted to take more time off in the near future so he and his wife could start a family.
2. He wanted to transform his business into a vehicle for his eventual retirement. At this point it wasn't clear to him whether that meant selling the business or simply using it as an income source.
1. He wanted to take more time off in the near future so he and his wife could start a family.
2. He wanted to transform his business into a vehicle for his eventual retirement. At this point it wasn't clear to him whether that meant selling the business or simply using it as an income source.
In the real world, not everything goes according to plan and Ken still has a ways to go if he wants to be completely free of his business. But as the before-and-after stats listed below illustrate, he has made some measurable progress towards his goals and is clearly on the right track.
Globe Printers Vital Stats (over 3-year period)
Revenue Growth: From 1.5 to 3 Million
Net Margin Growth: From 10% to 15%
Number of Employees: Increased from 10 to 21
Number of Managers employed: Increased from 0 Managers to 4
Ken's weekly hours running the business: Reduced from 60 to 30 hours/week
Following is an outline of the main steps necessary for transferring your personal goodwill to your business goodwill.
Revenue Growth: From 1.5 to 3 Million
Net Margin Growth: From 10% to 15%
Number of Employees: Increased from 10 to 21
Number of Managers employed: Increased from 0 Managers to 4
Ken's weekly hours running the business: Reduced from 60 to 30 hours/week
Following is an outline of the main steps necessary for transferring your personal goodwill to your business goodwill.
Step One: Begin with the end in mind
A healthy business is made up of two main things… people and processes. So the challenge of transferring goodwill value is really the challenge of transferring your business skills, contacts, reputation and so forth, from yourself to these two important assets.
A healthy business is made up of two main things… people and processes. So the challenge of transferring goodwill value is really the challenge of transferring your business skills, contacts, reputation and so forth, from yourself to these two important assets.
If you're like most business owners, you likely already know this intuitively but have struggled with implementation. After several years of owning a business, it's common for an entrepreneur to get caught up in the daily running of the business, and thus lose track of the bigger picture.
The best way I know to get past this is to take a short trip into the future. Get a picture in your mind of what your business will look like once it is running like a Swiss watch, and write it down. Not only will this help motivate you into action, it will form a measurable target that you and your team can shoot for.
How big a company do you want? How profitable do you want to be? How many locations would you like to have? What type of service offering would you like to develop? What will your corporate culture be like? These types of questions can be extremely powerful.
For example, Giesbrecht wanted Globe Printers to become the Fraser Valley's largest commercial printer, without sacrificing his family life. It was a simple goal, but by clearly articulating it, he took the first step towards building the business he'd always wanted.
Step Two: Get the right people in the right seats on the bus
Dr. Anthony Williams, VP Corporate Learning for Coast Capital Savings, once told me that "people eat process for breakfast". What he meant, was that your people have a greater impact on the success of your business than anything else, including your systems. And I agree.
So once you're clear on where your business is going, take a good look at the people on your team. Are they the right people to take your business to the next level? If you're not sure, ask yourself this question honestly about each of your employees.
"Given the chance to start over, would I hire them again?"
Dr. Anthony Williams, VP Corporate Learning for Coast Capital Savings, once told me that "people eat process for breakfast". What he meant, was that your people have a greater impact on the success of your business than anything else, including your systems. And I agree.
So once you're clear on where your business is going, take a good look at the people on your team. Are they the right people to take your business to the next level? If you're not sure, ask yourself this question honestly about each of your employees.
"Given the chance to start over, would I hire them again?"
If the answer is "no", then make plans to replace them as quickly as possible. If the answer is "yes", then make sure they are all working in the right positions and that they have all of the support and training they need.
With Globe, for example, we developed an organizational chart with clearly defined roles and responsibilities. This process then led to several personnel adjustments including the exiting of some employees and the redeployment of others. Some changes, such as the development of new management positions, had to be carefully timed so as not to cause cash-flow problems. Personnel changes are never easy, but if they are made for the right reasons and if they are made in a respectful, open and honest environment, the results can be spectacular.
Step Three: Document your processes
As important as it is to build a company of great people, every once in a while one of those great people is going to leave. And if Mr. Murphy has anything to do with it, it will happen just as you're about to take your first vacation in 10 years.
As important as it is to build a company of great people, every once in a while one of those great people is going to leave. And if Mr. Murphy has anything to do with it, it will happen just as you're about to take your first vacation in 10 years.
The only way to ensure that a business will continue to run independently, in spite of the inevitable comings and goings of employees is to systemize it. In other words, to take the knowledge stored inside your head, and inside the heads of your key employees, and to write it all down.
First, develop a picture of the operational workflow of your business from start to finish. This picture will be used to help you analyze your infrastructure in order to determine what systems, strategies and infrastructure will need to be changed or implemented in order to get your business running more efficiently.
Next, begin designing and implementing your individual systems. I suggest beginning with the areas of your business that will give you the "biggest bang for our buck". In Ken's case, we started with his hiring process. It was a labour intensive and overly expensive procedure that was not giving him the results he needed. So we knew any improvement here would have a big impact on the business right away.
Once you develop a clear overview of what it will take to turn your business into a well oiled machine, it's only a matter of diligently putting aside some time each week toward making the transformation happen.
Previous Case Study: How to introduce a brand new service
Description: In the ever-changing world of SEO (search engine optimization), gone are the days when you could fool the search engines into giving your site a high ranking simply by repeating key words over and over again in hidden text. Search engines, especially Google, have advanced to the point where they now look for legitimate content and even penalize sites for cheating to get past the system.
For Rick Sloboda, this smelled like an opportunity. So in early 2006, he left his position as communications specialist and managing editor with Air Canada and took the entrepreneurial plunge to start Webcopyplus, a Vancouver-based business specializing in writing website content designed to appeal to both humans and search engines at the same time, or as they say in the biz, they write for both "humans and spiders".
Sloboda is now facing his key challenge—to make his market position known to the right type of customers. A challenge compounded by the fact that his industry is still relatively new. In response, Sloboda has taken a personalized, targeted approach to networking and resource-sharing. And it seems to be working, as this company is fast becoming recognized as a leader in its on-line world.
Vital Stats:
1. Location: Vancouver
2. Website: www.webcopyplus.com
3. Launch date: 2006
4. Revenue growth rate: average of 10% per month since inception
5. Customer breakdown: 56% in Canada, 25% US, 13% Europe, 6% Asia.
1. Location: Vancouver
2. Website: www.webcopyplus.com
3. Launch date: 2006
4. Revenue growth rate: average of 10% per month since inception
5. Customer breakdown: 56% in Canada, 25% US, 13% Europe, 6% Asia.
From the beginning, Sloboda has utilized networking, both on and off-line, as his primary business building tool. He has dedicated a great deal of time and energy to connecting with copywriting experts, SEO experts, and marketing experts, in an effort to piece together the knowledge he needed to enter into his newly chosen field.
In my opinion, one of the most important attributes for successful networking is the ability to focus one's efforts. And this is especially true for businesses that pursue untested markets. Not trying to tap every resource available frees a business owner to focus more thoroughly on the researched options that are a good fit. For example, on-line, Sloboda has focused exclusively on Facebook, LinkedIn and Digg to effectively find many partners, employees and clients, leaving MySpace, YouTube, and others to one side for now. And he's taken a similarly targeted approach to networking offline as well.
For example, whenever Rick meets someone who is working with his target market in a complementary manner (i.e. a great web designer or programmer), he learns as much about them as he can. He then looks carefully through his own list of contacts to see who might be a good fit for this person, and makes an introduction. The result is the development of a finite number of "networking cells" made up of complementary businesses and individuals, who are all comfortable working with each other on various projects. Rick then introduces his clients into whichever "networking cell" is most appropriate for their particular needs. In return, of course, Webcopyplus is often automatically included in his networking partners' projects and kept top of mind for referrals.
Following are several business networking lessons, drawn from the case of Webcopyplus.
1. Your reputation precedes you: Your reputation is the reason people choose to do business with you—or don't. So, even though you may feel anonymous when you're online, you really aren't.
Being an effective resource-builder means starting with the knowledge that everything you do is a reflection of your business. Or in other words, your reputation never sleeps. Ask yourself, is your business a good representation of your message? Webcopyplus, for example, specializes in SEO. If they didn't turn up on Google's top rankings, that would be a major red flag to their business colleagues and customers.
1. Your reputation precedes you: Your reputation is the reason people choose to do business with you—or don't. So, even though you may feel anonymous when you're online, you really aren't.
Being an effective resource-builder means starting with the knowledge that everything you do is a reflection of your business. Or in other words, your reputation never sleeps. Ask yourself, is your business a good representation of your message? Webcopyplus, for example, specializes in SEO. If they didn't turn up on Google's top rankings, that would be a major red flag to their business colleagues and customers.
2. Start by giving Networking, as a form of prospecting, is a relatively ineffective approach to lead generation. Pitching people in a social environment can work occasionally, but the medium simply doesn't lend itself well to being used for direct marketing. That doesn't mean it can't be a great source of new business, however. It's all in how you approach it.
Networking works best when you approach it with an attitude of helping others build their own networks first. In other words, your job is to connect great people to other great people. When you develop a reputation for helping others, people will slowly but surely turn to you as their "go-to" person… someone who always knows the right person for the job. And when the job calls for someone with your expertise, it's highly likely you'll be the first who gets that call as well.
3. Don't waste your time As Sloboda quickly discovered, it's impossible to stay on top of every trend that comes along. Save yourself time and energy by developing a list of experts in every industry you work with, who you can refer to as needed. For example, do you know a great lawyer with industry experience? Do you know a skilled marketer who's earned your trust? Do you know an experienced accountant who understands more than just the numbers? Contacts like these are an invaluable resource for you, your network, and your clients. The trick is to make a list of the types of individuals you are looking for first. That way, when you meet them, you'll recognize them right away as someone you want to get to know.
4. Be systematic and stay organized While networking groups are a great way to get started, long-term success will come from nurturing your own networks. As I alluded to above, the best way to achieve your goals is to invest your time in fostering a referral system that offers real value to all involved. This means connecting with people having mutually beneficial goals and, whenever possible, becoming the go-to person in your network.
At Wardell, we use the term CIA (Centers of Influence Advocates) as a fun way to describe the key people and organizations we're surrounded by or work alongside. These are also the people who can introduce us to potential new clients. Take the time to create a system that leverages your CIA's in the most effective and mutually beneficial way possible. This can be as simple as scheduling that person's name to show up on your contact management software at regular intervals, say quarterly, to remind you to contact them. Then, each time their name shows up, find some small way to do something for them. For example, you might send them an interesting article, you might send them a referral, or you might invite them out to an upcoming networking event.
Another great tool is something we call a referral tracking tree. This is an organizational chart that plots your clients back to their original referral sources. For example, you may meet Bob, an accountant, at a networking event. Bob then refers you to two of his clients who become clients of yours. One of these clients then sends you two referrals, while the other sends you none. In a referral tracking tree, you'd show Bob at the top, connected to his two referrals below him. One of these referrals would be connected to her two referrals directly below her. And so forth. A tool like this makes it easy to see that Bob is either a direct or an indirect source of four clients… and someone you might want to invite out for lunch sometime soon.
4.5 And finally, don't forget your manners Webcopyplus automatically sends a note to say "it was nice to meet you" after meeting a new business contact. It's a nice touch. Recently, the owner of a graphic design firm was so impressed by this gesture that they hired Webcopyplus to assist with a project the very next day.
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