Anastasia Todamal,
Chartered Professional Accountant

Blog / News

Making a Payment to Canada Revenue Agency

In this weeks blog......

There are many ways that you can make a payment to Canada Revenue Agency (CRA) and with tax season coming up shortly it is a good time to review the most commonly used payment options that are available including online banking, in personal at your financial institution, or by mail.  Whichever method you choose, it is important to ensure your payment is made on time in order to avoid potential late payment penalties or interest charges.

Why Do Small Businesses Need Financial Statements?

There are only a few questions more shocking to an accountant than “Why do we need financial statements?” Years of specialization and familiarity lead most accountants to take the answer to this question for granted. Usually, when asked this question, many accountants only give a cursory answer that usually begins with muttering the phrase “performance measurement” and concludes with declaring small businesses need financial statements “because … well … they do.”

In our view “why does our small business need financial statements?” or in other words “why does our small business need your accounting services?” is the most basic and important question a prospective client can ask. We wanted to provide a more than cursory answer so here goes.

Budget Planning Tips for a Small Business

Below are 6 tips for small business budget planning.

But first things first...What is a budget?

The dictionary defines a budget as "...a plan for the coordination of resources and expenditures".

So a budget is sort of like a road map for your small business. A guide.

Creating your small business budget shouldn’t be something you look forward to with as much anticipation as a trip to the dentist. It is a workable document and you can set it up anyway that works for you. Whether you create your budget with a pencil and paper, a computer spreadsheet, or business accounting software, remember these simple small business budget tips...

Incorporating Your Business

It’s a jungle out there, and when starting a small business, you have a few choices on how to legally structure it. You can organize your business as a corporation, sole proprietorship, or a partnership. What you ultimately choose will have a significant effect on the amount you pay in taxes. This article will focus on the various advantages of incorporation vs. operating a sole-proprietorship or a partnership.

The Small Business Tax Rate

In Alberta, Canadian Controlled Private Corporations (CCPC) are taxed at a low effective rate of 14% on active business income (as opposed to inactive investment income). The specific breakdown is 11% federal and 3% provincial. This low rate is not available to sole-proprietors or partnerships as their business income is taxed at their personal marginal tax rates.

Calculating Start Up Costs

Start-up costs refer to the total cash amount needed to get your business up and running.  This is important because you don’t want to be caught short before your opening day! Here are some basic notes to consider before starting your business.

Calculate your costs: 

List everything that you will need to pay for up front prior to launching your business.  These can be separated into the following categories:

Initial operating expenses

It may be some time before your business generates a substantial profit.  So it’s important to have cash available for operating expenses in the meantime.  As a guide, calculate your operating expenses for one month, then set aside enough to cover you for six months. 

Making Your Business Stand Out!

What is it about your business that sets you apart from your competitors?

 Unique Selling Proposition

 What is your Unique Selling Proposition (USP)?  Your USP identifies what makes your business unique and what makes it distinct from other similar business types.  Your USP is your competitive edge; it is the reason people should deal with you rather than someone else.

Skills Needed to Run a Business

You have a great idea and some exciting marketing ideas.  You even have enough money to get started.  But what about the skills needed to actually run your own business?

Strengths -vs- Weaknesses 

Knowing your strengths and limitations will help you determine whether you’re likely to be suited to running your own business.  Here are just a few of many factors to consider:

  • Can you clearly communicate?
  • Are you able and willing to delegate tasks?
How to Pay Yourself  in a Small Business
Dividend vs. Salary

As a small business owner, you have two options to consider when it comes to paying yourself:

  • Dividend – an investment return paid out of the corporation’s retained earnings
  • Salary – an employment return paid out of the corporation’s net income

There is almost no short term difference between the total tax paid as a result of a dividend and the total tax paid as a result of a salary. Canadian small business and personal tax rates were designed with this outcome in mind.

So you want to start a New Business?

Before you Dive head first into the process of setting up your own business, read through some suggestions for some vital steps to consider:

 Is it right for you?

 It takes more than just a good idea to start a business.  Commitment and dedication are also important because getting your idea off the ground can often involve long hours and many sacrifices – well worth it if you are passionate about your business. Doomed to fail if you can’t spend the time/effort on the business.

You need to have good business management skills to keep the business running – especially since, according to Statistics, many new enterprises fail within their first five years of operation!

Debt Collection

It goes without saying that a business needs cash flow to keep operating.  If too many customers forget, delay or refuse to pay, your business potentially may end up in serious trouble!

Debt collection is an aspect of cash flow management where a lot of businesses underperform.  However, it doesn’t have to be difficult.  If you have the right person for the job and develop a workable protocol, the process of debt collection can be made easier and it will have a positive effect on your cash flow.