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Jun 26 2015

Top tax tips for business owners

gms final logo

  • Sole Proprietors should ensure that funds set aside aside for taxes include an amount for CPP, everyone has to pay CPP . Sole Proprietors pay their CPP at tax time, as opposed to salaried persons who pay theirs each pay period. A good estimate in year 1 is to set aside 25 to 30% of gross revenue to cover income taxes and CPP. After that the payments to be set aside will be determined based on your previous year’s filing
  • File on time, and pay installments on time. This saves on interest and penalties. Penalty is 5% of taxes owing. Ensure you discuss with your accountant your filing deadlines and the implications.
  • Keep business bank account separate from personal bank account.
  • Provide invoices for all work done and keep record of actual receipts for expenses incurred
  • Remember to maintain a mileage log – for shareholders, you can be paid mileage tax free from the corporation, as opposed to sole proprietors where the total mileage travelled is apportioned and then used as a deduction in calculating your taxes. In either case, a mileage log is important
  • HST input tax credit can be claimed on home office expenses and mileage reimbursements
  • Designate one credit card for business expenses (even if it is one you got in your name). That way the interest can be claimed easily
  • Wait until you have are just about to reach $30,000 in sales before you get a HST number. Once you have the HST number , you must start collecting taxes, and if your register too early, this might push forward a lot of administration that you didn’t bargin for
  • When signing up for HST, please ensure that the reporting period lines up with your business fiscal year. This makes record keeping much easier. So if your fiscal year end is Dec 31, then your HST should be Dec 31 st as well, or if quarterly, it should be calendar quarters, so that it will line up with the fiscal year end and recordkeeping
  • Ask your accountant if you qualify for using the Quick method to prepare your HST returns
  • Stay on top of your recordkeeping
  • Ensure you discuss the various compensation structure options (and implications) available to you as the business owner, with your accountant
  • Compensation via dividend is treated as investment income (as opposed to earned income), as such no CPP, EI, or health tax is payable on these. This compensation method can therefore result in good tax savings, however, the taxpayer will have no contributions to the CPP.

CRA Audit triggers (personal and business taxes)

 

  • Small business losses for more than 3 years
  • Specific targeted industries, which change from time to time – CRA is currently focussing on cash based businesses (eg., restaurants and tradespersons) and the underground economy, where money is passed “under the table”.
  • Certain personal tax deductions are often scrutinized – Moving expenses, tuition transfers, large medical expense claims, childcare expenses and donation receipts

Green Meikle & Smith Chartered Professional Accountants

Authorized to practice public accounting by the Chartered Professional Accountants of Ontario

 

1020 Matheson Blvd. E. Unit 10

Mississauga, ON L4W 4J9

905-919-3543 Ext 101

647-338-5306 (cell)

www.greenmeiklesmith.com

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Written by Dwania Peele · Categorized: Green Meikle & Smith · Tagged: bank account, business expenses, business owner, Canadian Small Business Women, compensation, CPP, CRA, credit card, deductions, economy, EI, Green Meikle and Smith, gross revenue, HST, income taxes, Investment, invoices, penalty, personal bank account, salary, Sole Proprietors, tax, tax credit, tax deductions, tax tips

Nov 19 2014

HOW TO REBUILD YOUR CREDIT AFTER IT HAS BEEN DAMAGED!

Amina

For the last few months I have been working with numerous other Rent-to-Own companies to help them qualify either potential tenant/buyers and/or potential investors.

One problem I have been coming across specifically is the lack of credit.  Too much credit can cause just as many problems as no credit or lack of credit.

Some people are in the enviable position of paying for every purchase with cash.  This is great – except for when it comes to establishing credit. The strength of your credit history determines if you qualify for a car loan, mortgage or even credit card and also at what interest rate you will pay.

Lenders will use credit reports and credit scores to quickly assess an applicant’s creditworthiness and to check their credit history.

For new or young borrowers or even borrowers who suffered damage to their credit and are now scared to have any credit, however, this poses a serious catch-22: How do you qualify for credit without a credit history, and how do you rebuild a credit history after it has been damaged.

Step 1 – CHECK YOUR CREDIT RATING
Credit bureaus will open a legitimate credit file in your name when a creditor (bank, credit card company or other lender) reports that you’ve had an active credit account for at least six months. All borrowers, not just first-timers, are encouraged to check their credit reports at least once a year and scan them for errors.  Mistakes can damage your credit score for years — up to 5 years for negative information like late loan payments and 7 years for a serious default like bankruptcy. If you find a mistake, contact the credit reporting agencies immediately and have the mistakes corrected.

Step 2 – PAY YOUR BILLS ON TIME
Whether it is a credit card, utility bill or any other type of bill, get into the habit of paying your bills on time. While your utility bills are not recorded on your credit bureau, lack of payment that goes to collections, is recorded and that can affect your credit score and your ability to get a good interest rate on a credit card.

Step 3 – GET A CO-SIGNER
Most lenders will allow someone with an established credit history to co-sign the credit application with you.  This can include your parents, older siblings or family friend. As with any financial transaction, you should be careful when co-signing for credit. First of all, make sure that your co-signer actually has a good credit history. If your older brother tends to exaggerate, don’t take his word for it. In the eyes of the lender, you are only as good as your brother’s credit score, so ensure that you see it in writing and you can only get that through their credit bureau report.

The most important thing to understand is that co-signing for credit means that both parties are now responsible for its timely repayment. If your dad co-signs your credit card application and you run up hundreds of dollars in late payment fees, both of your credit scores are going to take a hit.

Step 4 – START WITH A SECURED CREDIT CARD
Secured credit cards are a great way to establish credit or even rebuild your credit, when it has taken a hit.  Unlike regular credit cards, secured credit cards are tied to collateral in your bank account.  In other words, your credit limit equals your checking account balance or another amount required by the card company — although payments for purchases made with this card won’t be drawn from your bank account. If you have $500 in the bank, then your credit limit for the card is $500. If you try to charge more than $500 on the secured card, the transaction simply won’t go through.

Be careful of the distinction between secured credit cards and prepaid credit cards. Prepaid cards are not really credit cards. They’re actually debit cards in disguise. Because it’s not real credit, your activity on your prepaid card won’t be reported to the credit bureaus.

In addition, some secured credit cards carry higher interest rates and fees but with good history, most lenders will let you graduate to an unsecured credit card, which will increase your credit limit and help you establish a better credit rating.

Step 5 – APPLY FOR A SMALL LOAN
A loan is also known as installment credit, since you pay back the loan, with interest, in set monthly installments. A mortgage or a car loan is a good example of installment credit. If you want to make one of these major purchases someday, it’s a good idea to show lenders that you have some positive experience with installment credit.

Student loans are just one type of installment loan. Banks and other lenders allow you to take out small loans for just about anything: a used car, an appliance, a vacation or even a personal loan.

Where most people get in trouble is when they cannot make their monthly installment repayments, which in some cases leads to bankruptcy.  It is important to remember to only borrow what you can repay.

Step 6 – GET A GOOD JOB!
If you apply for a mortgage, salary history is one of the most important considerations that lenders will make. Usually, you’ll be asked to supply income tax forms for the past two years and current pay stubs as proof of your earnings.

When lenders examine a borrower’s employment history, they’re looking for stability. If you’ve been at the same job for years and your salary has continually risen, then you’re a good prospect for credit. If you constantly jump from job to job and your salary has been erratic, that puts you in a less desirable position for lenders.

Your employment history is also a good indication of your capacity to repay credit. A person with a low average annual salary wouldn’t have the same capacity to repay a large credit card balance than someone with a higher salary.

Step 7 – DON’T MESS UP!
One of the best ways to build good credit over the long term is to avoid the small and large mistakes that can stain your credit report for years.

Pay all of your bills, loan installments and credit card payments on time. Not only will you pay a fortune in late fees, as most credit cards charge over $30 for late payments – but lenders will raise your interest rates for future credit.

Avoid bankruptcy at all costs; it’s the credit equivalent of death. Bankruptcies will mar your credit report for 7 years. Keep in mind that letting a debt go into collections is just as damaging as it also stays on your credit report for 7 years.

Establishing your credit can be done with due diligence and also making regular payments on time.  Rebuilding your credit can also be done after it has been damaged – make sure to take great care and seek advice if you are unsure about the necessary steps.  It will be time well spent!

The following links will assist you with establishing your credit.
There are two Credit Reporting Agencies:
-Equifax Canada – www.equifax.ca
-TransUnion – http://www.transunion.ca

You can read more about it here at Office of Consumer Affairs – Government Agency http://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/ca02178.html

Amina Mohamed is a Mortgage Agent and Real Estate Investor who believes in helping other investors look at all of their options when it comes to finding a mortgage.  She writes a weekly blog on her own website and for other investors as well and is keen on helping people fix their credit issues so that they too can become homeowners and possible real estate investors.  Amina can be reached through her website at https://www.aminasmortgageservices.ca  or on Facebook here or on Twitter here

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Written by Dwania Peele · Categorized: Amina Mohamed · Tagged: account, Amina Mohamed, bank, bankruptcies, bills, business development, Business Woman, buyers, Canadian Small Business Women, co-signer, credit, credit application, credit card, credit cards, credit history, credit rating, credit report, equifax, Government Agency, installment, investors, lender, loan, mortgage, office of consumer affairs, pay, Real Estate, rebuild credit, Rent-to-Own, salary, secured credit card, small business development, tenants, transunion

Aug 16 2014

Identifying your ideal customer

sandra

 

“What’s your niche?” It’s become one of the most common questions at networking events after “what do you do?” Some of us are clear on who it is we want to work with, others are still a bit foggy. When I first started out in my coaching practice, I thought I wanted to serve everyone who needed my help. The thought of narrowing it down gave me anxiety. I didn’t want to limit my base of potential clients!

The reality is that we can’t serve everyone. When we try to appeal to the masses, our message gets lost. Who are you targeting your products and/or services to? In a perfect world, who would you enjoy working with? These are the types of questions that can help you to narrow down your niche.

Why do we need a niche? Have you ever watched a commercial or seen an advertisement and felt that it was made for you? It’s probably because it was. Good marketing is about knowing who you want to attract and speaking their language in a way that allows them to identify with it and feel like it is the answer they’ve been looking for. Imagine being able to have people come to your website or hear your elevator pitch and immediately say I need to work with her/him!

While your niche is your area of focus, your avatar is the profile of your ideal client. The more detailed you are in your avatar, the better. Consider age, marital status, education, type of employment, salary, and what kinds of challenges they’re facing that your business can help them with. When you’re clear on these areas, it makes everything else that much easier. Your website design is done in a way that your target will find appealing, your blog posts will cover topics of interest to them, and your marketing for products and services will speak to them in a way that makes it a no-brainer for them to make the decision to buy.

Clarity on your niche and an avatar of your ideal client allow you to create marketing messages that speak to your audience. If you aren’t clear on who you want to work with, then your marketing message may be all over the place. To quote my business coach “a confused mind does not buy”. If you’re ideal client isn’t clear on what you can do for them or why they should work with you, you’re going to have a difficult time generating the kind of revenue that’s going to help you build a sustainable business!

It can be scary to feel like you’re narrowing your pool of potential customers, especially when you’re first starting out. No matter what kind of business you’re in, the competition out there for a client’s attention and their business is fierce. You need to stand out; you need to identify with your potential clients. It’s impossible to be everything to everyone, so think about who you really want to work with and start to develop an action plan to get their attention and help them realize that you’re the answer they’ve been looking for.

Sandra Dawes is a certified life coach specializing in helping women who feel unfulfilled with their 9-5 follow their dreams and pursue their passions. She holds an Honours BA, an MBA as well as a certificate in Dispute Resolution.She has completed her first book,Embrace Your Destiny: 12 Steps to Living the Life You Deserve!
Connect:
www.embraceyourdestiny.ca
www.facebook.com/embraceyourdestiny
www.facebook.com/embraceyourdestinythebook
www.twitter.com/sandradawes

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Written by Dwania Peele · Categorized: Sandra Dawes · Tagged: advertisement, age, avatar, Canadian Small Business Women, client profile, coaching, commercial, education, Embrace Your Destiny, entrepreneur, Ideal Customer, identify, marital status, marketing, networking, networking events, niche, potential clients, salary, Sandra Dawes, small business, type of employment, what do you do?

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