As we rapidly approach the new year, with all it's possibilities and uncertainties, it can be gratifying (and revealing) to appraise the current year. We can do this through various lenses. We can examine our accomplishments and failures. We can determine how much we have changed - are we more cynical or more hopeful than we were last year? We can review our goals from the beginning of the year and assess if we were able to achieve all or at least part of them.

Hobbies by definition can be deeply fulfilling. When engaging, you often lose track of time and while the outcome might be important, it is the journey that provides us with most satisfaction. There is a meditative aspect to being deeply immersed in doing something that you enjoy or love and might include knitting, playing video games, or taking photographs of nature.

For some of us, hobbies can actually turn into revenue generating activities which is (quite literally) an added bonus. It seems like the dream to actually earn some money or even make a career out of doing something that you love. Sadly, Revenue Canada (CRA) or whatever revenue agency you happen to be closest to, is in the business of marring perfection and demands closer scrutiny of any activity that brings in cash.

I was talking to a young business owner in the field of digital marketing recently where we shared information about our respective businesses. As I was trying to communicate to him what I did, I could see his eyes glaze over until I said that it was crucial that every business owner, whether or not they have an accountant, to understand their numbers. Amid the the barrage of information I had given him , it was this simple statement that resonated. For me, it was a revelation as I realized that I had work to do on both understanding and communicating my own value proposition.

A value proposition (VP) is a way of communicating the benefits that your business provides or the challenges that it solves, as succinctly and clearly as possible. Ideally, it should be no more than two or three sentences.

As discussed in previous newsletters business owners have a hard time. You are required to have a working knowledge of a variety of functions to run your businesses in addition to core work of creating and refining your product and/or service. As you grow you might find that you to start to feel overwhelmed and your work life balance is non existent. It is at this point that you realize you need help.

This is easier said than done as it can be difficult to relinquish control and change the mindset that tells you that no one else can do the job as well or in the same way as you do (which I am certainly guilty of). Of course, this is not true and there is a good chance that an employee will actually do the job better as they might have more expertise and a narrower focus.

There’s a quote from Carl Jung that I really like: “Where your fear is, there is your task”.

During a recent consultation, a client mentioned that she had been wanting to start a business, but was afraid and overwhelmed by the sheer amount of (sometimes conflicting) information available. This resonated with me, as there are numerous times that I have clung to the status quo due to the fear of the unknown.

So, perhaps it won’t be surprising that I’m a bit of an excel nerd. It’s capabilities are impressive and it can used by pretty much anyone who knows how to use a computer. Understandably, many business owners that I have spoken to are intimidated by it or are unaware of its functionality. The good news is that it is fairly simple to use and there are a limitless number of resources available to become better at it.

In my view, every business owner needs to have at least a working knowledge of spreadsheets. It is essential for almost any type of financial analysis as it can provide powerful insights and save you a great deal of time. There are numerous other types of ways in which excel (or google sheets) can help. Some of the ways in which I and my clients use excel include:

I was helping someone set up their accounting on QuickBooks recently and was asked about the purpose of the profit and loss statement and how it was relevant to their business. The question was surprising to me, but I quickly realized that many business owners while understanding that accounting is important often have to figure the why by themselves.

A large number of business owners believe that the primary purpose of an accounting system is to ensure compliance with tax obligations. This is correct, however, a well set up system can be much more than that. It can give you insights into numerous aspects of your business that ultimately ensure its success. Some examples of how it can help

In honour of Canada day, I thought it would be very exciting to discuss tax concepts that you can then share with your friends and family perhaps at a celebratory barbecue or party (this is particularly effective if you want some alone time:))

The idea of earned income is important largely as it relates to RRSP contribution room and is closely related to active income. RRSPs, as you might know, are the single most effective tax savings vehicle available to Canadians. As such, ideally, you want to maximize the amount that you can contribute each year. This is beneficial, even if you can’t contribute the full amount, as your contribution room is cumulative i.e. anything you don’t contribute gets carried forward to a future year.

The question that almost every small business owner wants to know, especially at this time of year , is what expenses can I deduct to lower how much I owe in tax. This newsletter is not going to reveal anything groundbreaking, but hopefully it is a useful reminder for expenses that you might have overlooked.

First, lets start by looking at what a business expense is. As defined by Revenue Canada it is “a cost you incur for the sole purpose of earning business income.”

Given my immersion in tax season, and since this is at its core a financial newsletter (despite my occasional meanderings), I thought it might be useful to address some common questions and issues:

As anyone who reads the news (or this newsletter) knows, tax time is upon us. Anyone can file their taxes from now until May 1st (since April 30th is a Sunday) without penalty. If you owe tax and don’t file by May 1st, a penalty based on the amount of tax that you owe will be charged. Additionally, you will have to pay interest. If you do not owe taxes or are expecting a refund, there are no penalties or interest but benefits to which you might be entitled (child care, gst credit etc.) will be delayed.

If you search for RRSPs vs TFSAs on the internet, there are about 3.6 million results (some of which I have linked to in the past). But, since the RRSP deadline is approaching and I have spent many hours contemplating and discussing the topic, I thought it might be an opportune time to have a brief discussion. Like most money topics, it isn’t necessarily super exciting , but a good decision can literally make you richer

As we approach the tax filing deadline for T4s (and RL1s in Quebec), I thought it might be useful to (briefly) explore salaries for small business owners, and their implications.

When you’re an employee of a business to whom you are not related, your salary is a representation of the value that you bring to the job that you are doing and is often based on a market rate. If you are a small business owner, you often do not have the luxury of paying yourself a market rate (especially in the early years).

In a recent consultation with someone who is just starting their business, I was asked (after we had discussed all the relevant financial issues) if I had any general tips for running a successful business. It is certainly something I have contemplated over time in relation to both my own business and to the many small business owners that I have come into contact with over the years. The answer, unlike many financial questions, is not necessarily straightforward and is certainly preceded by “it depends”. There are however certain characteristics that tend to be shared by those who run successful businesses.

Over the years, I have given advice to numerous business owners. Each of you has a unique set of circumstances and I endeavour to customize my guidance to the specific situation. There are however a number of commonalities and the one piece of advice that I find myself giving to almost everyone in a professional (and often personal) context (and this might be obvious) is to be reasonable.