Stock Mania: Newsletter February 5, 2021

Hello All,

Anyone who has a social media account or listens to the news has likely heard about GameStop (or GameStonk as Elon Musk affectionately refers to it). To many, its a story of the little guy fighting back against the big bad Hedge Funds. To others, it is a story of manipulation on both sides. Either way, the story has captured the collective imagination and intrigued enough people that supposedly it is on its way to being made into a movie.

So are there any lessons to be learned from this? For one, we have once again seen the power of social media. This time the platform is Reddit which helped move a stock, that is at best worth about $20-$30, to an all time high that was close to $500 (and some claim it isn’t over yet!). A bunch of strangers collaborated, ostensibly to topple the 1% and while doing so, make money in the process. What could be better? The problem, unfortunately, is that someone (to use stock market terminology) is always left “holding the bag”. A few investors made millions while many others lost the majority of what they invested. The lesson from this is that if it seems too good to be true, it probably is and just because someone is trying to pit you against a common enemy it doesn’t mean that they aren’t trying to manipulate you for their own gain. Finally, I think we need to listen to our instincts. No matter how technical the jargon and complex the concepts every problem has a simple solution at least at a high level. If your instincts tell you that something doesn’t make sense, you should probably stay away no matter how credible the source.

As I talk about in the first part of the post below, I was asked by CBC radio to talk about home office expenses for employees. There is a link to my interview in the post. As I did quite a bit of research, it made sense to turn it into a blog post even though it doesn’t directly relate to small business.

For small business owners nothing changes with respect to home office expenses for 2020. I have also included another post from the archives that discusses what home office expenses specifically for small businesses.

Small Business Articles/Tips

Annual Declarations: Pay attention to annual filing declarations for both your corporation and registered business. If you are federally incorporated you need to renew your annual declaration that is completely separate from your corporate tax returns. They usually send you an email or letter with instructions on how to do it online (which is very easy) and the cost is about $20.

If you are a registered business in Quebec there is a place to enter your NEQ and business info on your personal tax return.

Tax Tip - GST-QST Quick Method: Using the Quick Method of filing GST-QST can you save you money if the tax you pay on expenses are low, however, this should be examined annually as your circumstances change. If your business changes so that the tax on expenses is higher than when you decided to use the QM, then you can revoke the election. There is a deadline to do this, however. More details on revoking the election here

QBO Tip - Credit Memos: Sometimes you invoice a customer but realize that you have to reduce the amount of their invoice for a variety of reasons (refunds, goods no longer available, deciding you won’t be providing a specific service or they are just refusing to pay). You have a couple of options here - either you can just change the amount of the invoice or if you want to keep a record of the credit, you would create a credit memo. This can be done either in the + section of QBO or within the customer section. I personally prefer credit memos as I like to keep track of transactions and the dates on which they happened. You can then apply the credit to future invoices or give them a refund.

Product Updates

Dividend Guide: I have completed My Guide to Dividends for Small Business Owners. The guide is fairly comprehensive for anyone who wants to know more about the terminology, dividends vs salary, how taxes work on dividends, and step by step instructions on how to prepare your dividend slips either on paper or online. Also, there a few bonus chapters on capital dividends, how to invest in your corporation etc.

It is currently on sale - you can check it out here and let me know if you have any questions. There is also a dividend checklist along with an additional discount code that you can download here.

Start Your Business: If you’re thinking about starting a sole proprietorship (or if you already have one) then this ebook helps you along the process. So far everyone who has responded to my request for feedback has found it useful for starting their businesses. I’ve added some of these review to the page, which you can check out here.

Feedback Form: I have created a feedback form for anyone who would like to provide their insights into blog posts, topics for new blogs, feedback on my products or anything else. I’m always looking for ways to improve or provide value (to the extent possible) and this will be helpful.

That’s all for now. Hope everyone has a great weekend!

Ronika