The Opinions of Others
Hello All,
Hope everyone is having a lovely start to the new year! As a gift please find a mild rant below (please feel free to email me with your own opinions on this):
I’ve had various conversations with people on the subject of small business and personal finance which start with “my friend told me”. This can be compared to a game of broken telephone where the original knowledge is interpreted by the various recipients and often results in amalgam of truth and opinion, presented as fact.
In the broad area of finance, there are certain knowns eg. tax rates, how taxes are calculated, the definition of a debit and a credit or profit (for the accountants out there), interest rates, how a balance sheet works etc. There is however a massive grey area which does require some interpretation. This might include whether something can be expensed, how to classify a certain transaction, do you have too much debt, should you do your accounting, can you afford to buy a house etc.
You might contemplate these quandaries on your own as they come up but most of us seek out a second opinion. Hearing someone else’s insight on somewhat complex decisions can help us to organize our own thoughts (speaking or writing are both excellent ways to do this) and gain some knowledge that we might not already have.
When soliciting other people’s opinions we often rely on the experience and confidence of presenter of the “facts”. And while confidence sometimes comes from expertise, we have all met know it alls who might know less than their demeanour seems to imply. As an example, I recently spoke to a consultee who has a profitable and growing service based business. She was told by various people that she needs to hire a bookkeeper despite the fact that she is competent with numbers, has a perfectly good (spreadsheet) system, a great accountant and only a handful of transactions. She knows all of this to be true but was second guessing herself because other people seemed quite confident that once you have reached a certain level of revenue, you must need a bookkeeper.
Finance and tax are particularly tricky because, unlike rocket science or brain surgery (which most of us know literally nothing about), they are areas where we all have some knowledge. But for those who aren’t in the field, this knowledge is often imperfect. We have a portion of the picture and ask others to fill in the blanks. Because we might lack confidence in ourselves, we give more weight to what others say. This can lead to bad decisions.
Of course there is no way to avoid all bad decisions. Accepted wisdom tells us that we learn from our mistakes. So a bad decision can actually be a good thing as it contributes to our experience which in turn improves our critical thinking skills. Instinct can be a great guide as long as we continue to hone and develop it, and have confidence that in many cases we know our own situation better than anyone else.
Blog Post
I’ve received a number of questions relating to GST/HST and I thought I’d compile them into a blog post (as some of you might be contemplating whether to register or need to brush up your knowledge)
Frequently Asked Questions About GST/HST By Business Owners
For those of you who are starting a new business, it is essential to know your tax obligations. Every business owner must report their net profits on a either their personal tax return if they are
Small Business Articles/Tips
Looking to brush up on your financial literacy? These videos from CPA, that provide both personal finance and business advice, Canada can help.
Planning to Sell Your Business?: A reader asked me for some resources on this. I always find the articles at BDC quite useful. Note that when selling a business, it is good to consult with a tax advisor as there might be ways to minimize taxes.
Tax Stuff:
Automobile Limits Increase: For those of you who have corporations and take a fixed per km rate for your car travel, CRA has increased the per km rate from $0.61 to $0.68 which is fairly substantial.
My New Year CBC Chat : This one is short and focuses on some personal finance tips to start the new year
MultiGenerational Home Reno Tax Credit: A tax credit, up to a maximum of $7,500, is available for expenses relating to building a suite in your home for a senior and related adult.
QuickBooks Tip: Sales Tax Zero Rated or Exempt or Out of Scope?
When you set up sales tax, QBO includes these Zero Rated, Exempt or Out of Scope as an option. Each of these choices in the sales tax dropdown results in $0 of additional sales tax. So,since they all have different meanings, which should you choose? Zero rated will often apply to sales made to international customers while exempt applies to services that are exempt such as bank charges or insurance. Out of scope refers to transactions such as transfers between accounts where sales tax is irrelevant. That being said, as long as you are fairly small, it is probably fine to choose exempt and stick with it.
Books and Resources:
Small Business Tax Facts(Sole Proprietorships/Registered Businesses/Self Employed Workers)
This book helps you have a better understanding of tax (brackets, tax rates, deductions etc), how it applies to your unincorporated small businesses and how to do your own tax return (or at least understand what your accountant does). It also includes a comprehensive breakdown of deductible expenses, by category with special sections on more complex deductions such as home office, vehicle and capital cost allowance.
FastStart Your Corporation(Corporations)
A step by step guide to starting your small business corporation, including what you need to know about incorporation, setting up your accounting and tax considerations.
QuickStart your QuickBooks(Sole Proprietorships and Corporations)
A comprehensive guide that takes you through the many features of QBO and gives you step by step instructions on how to setup and work with QBO day to day. It is ideal for beginners who have never used QBO before and also for those who are currently using it, but have questions or need guidance.
FastStart Your Business (Sole Proprietorships)
A step by step guide for anyone who is planning to start a Canadian business or become self employed (and does not want to incorporate) and wants to know what they need to do or simply has questions.
Small Business and Your Dividends (Corporations)
For incorporated small business owners who want to know more about small business dividends, the differences between salary vs dividends and which is better and step by step instructions on how to file your own dividend declarations (T5s).
Use discount code “special” to save 20% on any (or all) book(s) when you purchase from the website.
Please note that all books on my website are in PDF format.
If you prefer a print version, all books are also available at Amazon . Note that print versions purchased on Amazon include a complimentary PDF - you just need to email me and include proof of purchase.
Free Resources
Business 2023 Tax Deadline Calendar Coming Soon
Business 2022 Tax Deadline Calendar
Starting A Corporation Checklist
Start Your Business Checklist
Dividend Declarations Checklist
Small Business Tax Return Checklist
QBO Set Up Checklist.
Small Business Calculators
Previous newsletters.
Consultations
I also provide consultation services where I can answer your specific questions relating to your small business and/or finances, provide clarity and give you guidance. Additional details can be found here and here.
Note that I no longer provide ongoing accounting or tax preparation services.
Reviews/Feedback
I would love to hear your comments on my current blog posts, topic ideas for new blogs, book feedback or anything else that you want to talk to me about. You can use my feedback form or email me directly at ronika@montrealfinancial.ca.
For anyone who has purchased my books through Amazon or directly and found them useful, I would be very grateful for a review on Amazon (to leave a review you only need to have an account with Amazon even if you did not purchase the book from there).
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Wishing everyone a scare free (unless you’re into that sort of thing) Friday the 13th :)
Ronika