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Cash is King, Build your pile of Cash! Lisa Patrick

“Cash is King”, how many times as an Entrepreneur have you heard that?  It is true, when you run out of cash - you are out of business.

You can make sure that your business survives by strategizing to ensure you are maximizing on all the corporate income tax deductions available and ensuring that you are aggressively monitoring and allocating your cash flow appropriately to grow that pile.

Many sole proprietors and partnerships use the strategy to incorporate their businesses because of the tax advantages that an incorporation will provide when their business has grown large enough for the incorporation to be worthwhile. The best known of these tax advantages is the Small Business Tax Deduction.  Income of a Canadian corporation is taxed at a special “reduced” rate.  The small business Corporate net tax rate is 11%.  Other types of corporations that don’t qualify for the small business rate are taxed at 19.5%.

When is it worthwhile to incorporate? When you have a significant income that offsets the costs or expenses of the corporation, BUT you need to leave enough cash/revenue of your earnings to benefit from the corporate tax deferral.

Secondly, in order for businesses to strategize and ensure that they have all their tax advantages available to them - below are some opportunities to maximize on deductions for consideration:

Home based businesses can utilize the business use of home deduction and deduct a portion of many home related expenses, your property and your mortgage interest by comparing the time you spend in your home as an office and the amount of space that you utilize in that time.

Collect ALL your receipts that you spend money on – this includes the parking meter, the bag of coffee, the 10 pencils you bought, all those little things will add up at the end of the year.  Account for ALL the money you spend on purchases that are business related.   Ensure that you have the appropriate receipts to record and file to maximize on your business income tax deductions.

Your vehicle is viable to your business. Without vehicles you and your employees would have a hard time getting to work and your business might not be able to function. By planning ahead and preparing a strategy for your vehicles you will ensure that you are maximizing on the deduction and ensuring you increase your pile of cash.  Remember to record your receipts and your kilometers so your bookkeeper & your accountant have all the information they require.

A convention provides you the opportunity to work on your business in an environment where you are not caught in the day-to-day life of managing your business.  Critical aspects of your business are overlooked and you could be missing out on tax-deductible savings you could be enjoying.  In fact, if you don't take the time to analyze your business you could be missing out on thousands of dollars in business tax deductions and the opportunity to increase that pile of cash. 

Revenue Canada states that you can attend 2 conventions a year.  What if I don’t have the opportunity to attend an organized convention?  Now you can.   Your intent must be business and you need to create an itinerary based on the needs of your business. Follow your itinerary; use pre-designed convention agendas for the different departments and needs of your business.  Analyze, strategize and problem solve those areas of your business and you will ensure that you are not missing out on thousands of dollars in business tax deductions while you create a new perspective and strategy for your business.

Bookkeeping is often overlooked as an opportunity to maximize on business tax deductions. Why? Bookkeeping management of finances is more than merely harmonizing the bank accounting.  The objective of any small business owner is to achieve success in both the marketplace as well at a financial level. However as easy as it may sound, it isn’t a task each one of you may be competent to accomplish.  Your bookkeeper must ask the right questions from you, be able to communicate to you and your tax accountant, and understand their job description to ensure they are providing tax compliant bookkeeping.

For more information and tools to analyze your business, ensure proper bookkeeping and maximize on your business deductions to ensure your pile of cash keeps growing and you are the King, contact us today.

Meals for Staff? What is eligible? Lisa Patrick

a.   if any work shift exceeds 12 hours (that would include travel time to job site) = one meal a day write “shift over 12 hours” on receipt
It is expected after a 12 hour work shift, the employer provide 1 meal to the employee.
The income tax act allows this meal to be a company expense with out consideration to including it as income to the employee.
Write “job site or contract or maintain day planner, ensure employees time sheet reflects the shift period.
b.   if any client visit included a meal:
write “client name, agenda, time” on receipt
 if any over night travel includes a meals:
 write “client name, agenda (purpose)” on receipt

Go to our free product and learn more.

Darlene Lafond C.P.C., R.P.A.

Lost money on a business venture? Lisa Patrick

1.                  certificate of incorp
                 share allotment schedule
                 articles of incorp
                 annual return from province
                 provincial or legal document indicating dissolved or involuntary dissolved company
                 shareholder /  loan ledger is adequate for initial claim…
you do not have to submit receipts but obtain copies of the initial receipts or disbursement that indicate the reason the money was advanced to the corp…
this would have to indicate the business purpose…
consider keeping control of the receipts & paperwork  for 7 years…
a CRA auditor would love you if you provided a binder indicating the bundle of receipts or the receipt matching the actual journal number for each fiscal period where an amount is owed.
                 tax schedules of corporation
The form that is necessary to file it on your person taxes would be available from your tax professional when they claim it on your personal taxes..
Tax details…abil (allowable business investment loss)
50% of amount is deduction against all other income but it may be restricted by the amount you claimed for capital gains deduction and investment losses that exceed investment income in the past.
Tax savings of the claim depends on your Tax margin in Alberta:
$40,000 at 25%
$41,000 to $82,000 at 32%
$82,000 to $127,000 at 36%
over $127,000 is at 39%

Darlene Lafond, R.P.A., C.P.C.

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