Author: margento

TECHNOLOGY

The way you store your data is about to change.

For the last 60 years, increasingly vast amounts of data have been stored primarily on magnetic hard disk drives (HDDs). Hard drives are capable of storing a huge amount of information, but they are mechanical devices and can be more delicate and a lot slower than more recent NAND (stands for negative-and logic gate) flash memory, which has no moving parts. NAND flash memory, sometimes called a solid state drive (SSD), has become ubiquitous as a storage medium since it is a compact, fast and fairly inexpensive alternative to the noisy hard drives currently used in computers, mobile phones, USB flash drives and memory cards, among other things.

While hard drives and NAND flash memory are great for data storage, mobile devices and computers also have a smaller amount of super-fast short-term memory called DRAM (dynamic random access memory). DRAM is quite a bit more expensive and, unlike your hard drive or SSD, the contents in memory are “volatile”, meaning whatever is stored disappears when you turn off your device.

But what if long-term storage could be as snappy as DRAM?

The new technology does not use transistors.

“You Ain’t Seen Nothin’ Yet”

Sometime in 2017/2018, a new memory and storage technology called 3D XPoint (pronounced 3D cross point), developed by Intel and Micron, will hit the market. The new technology is different from both NAND flash memory and DRAM in that it does not use transistors; instead, it uses a three-dimensional checkerboard structure that allows each memory cell to be addressed individually. The ability to read and write data in smaller increments is a huge advantage over flash memory, which is only able to store information in blocks of data.

How Fast Is Fast?

What makes this new technology so incredible and likeable is that it allows the user to take stupendous amounts of stored data and treat it as if it were in active memory rather than in traditional storage such as a hard drive or SSD flash drive. 3D XPoint memory is expected to read data three times faster, write four times faster and use 30% less power than NAND flash memory. That means it is not only faster than your current SSD or flash storage, but will help manufacturers to stretch the battery life a bit further once it is available in laptops and mobile phones.

How Much, You Ask?

We all know that those who purchase the newest technology pay the higher price and pave the way for those who wait for the technology to become mainstream. At the moment, a fixed price point has not been set in stone, but it has been suggested that 3D XPoint memory will cost about four or five times the current price of NAND flash drives.

Do I Really Need 3D XPoint?

For most owner-managers, today’s computers with their hard drive or SSD will be sufficient for everyday use. However, if your business applications require rapid data storage and transmission, whether for extensive analysis, high-performance databases, or simply for fast storage of immense amounts of data, this new technology is a game changer that will undoubtedly be worth the cost.

Contact Argento CPA today!

Source: BUSINESS MATTERS

Disclaimer: BUSINESS MATTERS deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
BUSINESS MATTERS is prepared bimonthly by the Chartered Professional Accountants of Canada for the clients of its members.
Richard Fulcher, CPA, CA – Author; Patricia Adamson, M.A., M.I.St. – CPA Canada Editor.
Contact us: patricia@adamsonwriters.ca

MONEYSAVER

Playing Scrooge is not just for Christmas any more.

Even though penny-pinching is harder to do today without any pennies, the concept remains valid and is especially applicable to the expenses incurred by small businesses. Here are a few ideas to improve the bottom line.

Outsource

Employees require salaries and benefits as well as insurance, office space and equipment. Contracting out office tasks transfers these costs to a highly competitive third party and frees up your own premises for revenue-producing uses.

Negotiate with Suppliers

Contact your suppliers and see whether you can get a better deal. Far too often suppliers mechanically increase prices without recognizing the value of a long-term, reliable client. Why should rewards and discounts go to new clients while long-standing customers like yourself see costs go up? Call and make your pitch.

Use the Cloud

Using the Internet to send invoices and make and receive payments saves the cost of cheques, envelopes, letterhead and postage as well as the related labour. Further, cloud-based solutions for almost every manufacturing or accounting need are available for a reasonable “lease” rate. Such an approach reduces the cost of buying and installing software and assures you your cloud services will always have the latest updates.

Consider In-House Printers

Many businesses still need to print data to hard copy. Consider purchasing a laser or inkjet colour printer. Once templates for invoices, letterhead, or business cards have been installed, they can be printed as needed, thus eliminating large inventories of pre-printed forms. The templates can be adjusted for format changes or for staff and address changes.

Face-to-face meetings are not always necessary.

Meet with Telecommuting

For most business communication, a face-to-face meeting is not necessary. Virtual meetings will work if the number of participants is small, the meeting is kept short, and the agenda well planned. Establishing timelines, requesting daily updates and having access to work-in-process by the use of shared cloud facilities will ensure projects stay on time and on budget.

Maintenance

How often are the premises cleaned? Perhaps reducing the frequency of cleaning or having staff empty their own waste baskets at the end of the day are options that will reduce costs without impacting the tidiness of the office.

Go Paperless

Going paperless can be difficult for older employees used to paper trails. Paperless offices must establish a filing system suitable to everyone; this includes scanning every piece of paper that comes into the system and allocating it to the appropriate folder. Going paperless also means reviewing existing client files and purging data no longer required for taxation, legal or business purposes. This is the time to adopt standard records management practices for preserving, storing (onsite and offsite) and destroying documents. Scanning documents saves the cost of renting physical storage space, using employee time to file paper, and ultimately shredding and disposing of that paper.

Review the Cost of Your Premises

Signing a long-term lease may lock your business into a lease cost that will not be acceptable in the future. Look ahead and determine how your business will evolve over the next five years. If your strategic plan includes increasing or decreasing your space, consider signing shorter-term leases that allow an exit with, for example, three months’ notice.

If you own your building but no longer need all the space, consider subletting. You might also think of selling or leasing the entire property and moving to a smaller space. Such a move would provide proceeds from the sale of the building or lease income while reducing your own rental costs.

Think about Your Future

Taking an hour or so with your CPA to look at your current business model and associated costs will help you think about changes that will positively impact the bottom line and ensure that your business keeps on going.

Contact Argento CPA today!

Source: BUSINESS MATTERS

Disclaimer: BUSINESS MATTERS deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
BUSINESS MATTERS is prepared bimonthly by the Chartered Professional Accountants of Canada for the clients of its members.
Richard Fulcher, CPA, CA – Author; Patricia Adamson, M.A., M.I.St. – CPA Canada Editor.
Contact us: patricia@adamsonwriters.ca

MANAGEMENT

An insurance plan today can support your business and family tomorrow.

No one, with the possible exception of a professional gambler, expects to build a reserve of funds by gambling. Nevertheless, purchasing or not purchasing life insurance is a gamble in itself. If you buy life insurance, you only win if you die early because the insurance pays off your debts; if you don’t purchase life insurance, you only win if you live a very long life and pay off your debts without having paid life insurance premiums. What you must decide is whether you want to gamble that you will live to pay off all your obligations, or take a more conservative position and accept that you might die younger and be willing to pay the insurance premiums to ensure that your debts will be paid off at your early death.

Facts to Consider

To understand why you would need to provide these funds, ask yourself: Will my spouse be able to pay for:

• my funeral?
• our home (including any outstanding mortgage) and way of life for the children?
• outstanding credit card debt?
• funds borrowed from the RRSP to put a down payment on the house?
• the monthly mortgage/rental, utility and maintenance?
• mood changes
• day care?
• my personal income tax liability as an owner-manager if I have not repaid draws or have not deducted sufficient taxes at the source?
• short-term loans from the company?
• personal guarantees to financial institutions if there is no other source of income?
• our children’s future education or future medical costs should they currently have special needs or develop them in the unforeseeable future?
• RRSPs, investments or TFSAs for the future needs of our family?
• the capital gains tax (if) the second residence (e.g., a cottage) has to be sold?
• an equalization of my estate? For example, the family cottage has been left to three survivors, but only one has a real interest in preserving it. What will happen to the cottage if that person does not have the financial means to pay out the two other survivors? Does that mean the property would have to be sold to meet the terms of the will? Should life insurance be purchased to provide a cash payout to the other two beneficiaries to prevent the sale of the property and therefore keep it in the family?

Entrepreneurs should not defer purchasing life insurance.

What about Now?

Term life insurance provides coverage at a fixed premium for a limited period of time (i.e., the term). After the term expires, coverage at the previous rate is no longer guaranteed. Term insurance is usually the lowest-cost way to purchase a substantial death benefit.

Putting off purchasing life insurance is not an option entrepreneurs should consider because (in the event of your passing):

• your business associates will need cash flow to fill your vacancy
• Tlife insurance becomes more expensive as you get older: your province of residence, your life style, the amount of the payout and your gender will impact the insurance premium; for a non-smoking 25-year-old man, for example, the yearly premium for $600,000 of renewable five-year term life insurance may cost you $600* per year; however, as you age, the amount goes up: at age 46 (around $900) and age 55 (around $1,500); the problem with term life insurance is that, after the term expires, the policy has no value.
  *Please note that all amounts and calculations are generic estimates. Each individual’s circumstances will impact the premium.
• even if you paid an annual premium of $1,500 (hypothetically) from age 25 to 55, the total cost of your premiums would be only $45,000, but the payout would be $600,000, which is an excellent return on your investment
• conversely, if you invest $1,500 per year at 5% compounded annually for 30 years, you would have only about $100,000 at age 55
• if you incur serious physical problems or develop a medical condition, you may not be able to purchase life insurance.

Key-Person Insurance

Key-person insurance is paid for by the company, with the company as beneficiary. This type of insurance is designed to cover the consequences of losing an indispensable person such as the founder or owner who can no longer contribute to the business through death or disability. Funds will be available to keep the operation going while restructuring is taking place after your death.

Key-person insurance can provide funds to buy your share from your survivors without the business assuming additional debt. A key person payout can be used to back your personal guarantees on business loans as well as pay deferred taxes and other regulatory deductions.

How Much Should You Buy?

How much insurance you need depends upon what you need to insure: self-employed earnings, current assets, debt, savings, cost of living, business and family structure, as well as the future needs of family and the business. To determine this amount, first put together a summary of the collective assets and debts of your business and your family unit along with details of the cost of your current life style and future expectations. Contact an insurance agent, discuss your situation and design a policy that will meet your needs.

Something to Think about

Don’t gamble with your future. Accidents and illness happen. Hope for the best but plan for the worst. Think about your business and family situation and what would happen if you were not there. Do not leave your survivors in jeopardy when you can take care of their futures today.

Contact Argento CPA today!

Source: BUSINESS MATTERS

Disclaimer: BUSINESS MATTERS deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
BUSINESS MATTERS is prepared bimonthly by the Chartered Professional Accountants of Canada for the clients of its members.
Richard Fulcher, CPA, CA – Author; Patricia Adamson, M.A., M.I.St. – CPA Canada Editor.
Contact us: patricia@adamsonwriters.ca

MONEYSAVER

Look beyond revenue for profit growth.

Businesses are already looking toward 2017 and considering what has to be done to keep profits growing. The Canadian economy is expected to grow at only 1.5% according to a prediction by the Conference Board of Canada, which claims that “…there are plenty of headwinds for Canada’s economic growth prospects:

• Investment in the oil and gas sector is still falling.
• Non-energy investment is lacklustre, so Canada may soon face lack of capacity in manufacturing.
• Canadian consumer spending may not improve because incomes aren’t rising sufficiently.
• Consumers are also stretched thin with debt.
• Growth prospects for the global economy remain poor.
• U.S. growth this year is also tepid.

Preparing for 2017

In a slow-growth environment, the best way to maintain or improve the bottom line is to reduce expenses. Now is the time to look at year-to-date financial figures and establish budget goals for the next fiscal year.

Start with zero-based budgeting.

Consider the Following

Start with zero-based budgeting rather than simply adding a percentage to last year’s expensed figures. Every item of revenue and expense in the general ledger is reviewed and the revenue and expense items are justified with realistic assumptions.

1. Consider the possibility of having employees work from their homes in order to:

• reduce the cost of lease space
• reduce travel allowances or reimbursement costs
• reduce in-house cost for utilities, telephones, taxes, maintenance, and interest

2. Review the communications system. Determine whether a separate facsimile line is necessary. Consider using an Internet system that connects to each employee’s smart phone rather than using the traditional land line.

3. Consider whether the cloud would reduce computer, printing and communication costs and still enable employees to find data from one source.

4. Purge old documents. Much data older than eight years can be shredded to free up space.

5. Review the age and condition of your work vehicles. Should you buy a new vehicle or spend money on repairs and maintenance?

6. Can some vehicles be sold to reduce the cost of insurance, licences, repairs, maintenance and fuel?

7. Review the budget for snow removal and ground maintenance. Perhaps a flat rate per snow removal would be cheaper than a contract. Could ground maintenance be performed less frequently?

8. Review electricity consumption. Can work schedules be altered to take advantage of lower, off-peak rates? Is it time to update the lighting systems, both in the warehouse and in the yard, to higher-efficiency lighting?

9. Consider whether “just in time” delivery is a better way to manage inventory. Delivery “only as needed” reduces the amount of space devoted to storage and frees up working capital by cutting inventory costs.

10. Examine your lines of credit, credit cards, mortgages and loans. Perhaps interest costs can be reduced, advance payments made, and credit cards paid off with lines of credit at lower interest rates.

11. Determine whether it is necessary to maintain all full-time personnel. Could their jobs be done by part-time employees or contract workers?

12. Evaluate employees on performance and return on investment. Give raises simply based on productivity, quality of work, interaction with clients and staff. Have candid interviews with employees to obtain feedback on how they view their performance.

13. Ask all employees how they would improve their expertise to increase productivity or reduce costs.

14. Examine the time taken to collect receivables. If your company is not receiving payment within 30 to 45 days, perhaps it is time to implement a COD policy for late payers. If a large part of a delinquent client’s bill is, for example, machine parts, then perhaps you should have a deposit-for-parts policy in place. Otherwise, your business is acting as a bank for your clients but it is you who is paying your bank or supplier for overdraft or overdue accounts payable.

15. Examine credit card costs. If the cost of collecting credit card payments is excessive, consider switching to a debit card or e-transfer.

16. Going paperless can save funds. Establish a system of filing for incoming email; items received by surface mail should be scanned, filed, and then discarded. Use the Internet to transmit information related to invoices, payroll and payments. Consider e-transfers to clients rather than cheques.

17. Apply the 80/20 rule. Evaluate your customer base and determine the top 20% of your clients. Stratify the remaining 80% and determine which are the most aggravating to deal with. Stop dealing with them and concentrate on the best 20%. Work on improving your relationship with those in the remaining 80% who show promise.

Budget Like a Start-Up

Ensuring a solid continuous bottom line in times of economic uncertainty requires owner-managers to veer away from the traditional budget process. Management must look at all revenue opportunities and expenditures as if their business were still in the start-up phase and justify the figures for the following year on a line-by-line basis. This will give a better understanding of how to build opportunities and reduce costs.

 

Contact Argento CPA today!

Source: BUSINESS MATTERS

Disclaimer: BUSINESS MATTERS deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
BUSINESS MATTERS is prepared bimonthly by the Chartered Professional Accountants of Canada for the clients of its members.
Richard Fulcher, CPA, CA – Author; Patricia Adamson, M.A., M.I.St. – CPA Canada Editor.
Contact us: patricia@adamsonwriters.ca

TECHNOLOGY

Innovative software relieves the burden of looking after elderly parents.

Many owner-managers in their thirties and forties or even older not only have to run their businesses but also have to look after growing children as well as aging parents. These owner-managers are part of the so-called “sandwich generation,” trying to be successful business people but also caught between two levels of family responsibility. First, they have to cope with the physical and mental exhaustion of the job, then take on the responsibilities of caring for parents who might have reached the “critical-needs” point in their lives. Add to that the potential high costs associated especially with seniors’ residences and the time-consuming responsibilities of being power of attorney and it is little wonder the sandwich generation is looking for help. There are, of course, marginally beneficial tax breaks and social programs that assist, but these cannot meet the 24/7 on-call requirements needed by a concerned child of elderly parents.

New Software Available

Innovative software is now providing the means for many seniors to monitor their own activities without making a telephone call to their adult children. Most of these innovations require the seniors to have a properly installed computer or device with access to the Internet. An unlimited Internet service will avoid surprise overage charges.

An abundance of health-tracking software and apps are available to monitor their health, remind them of medications, and even track their nutritional needs. Setting up an easy-to-follow, step-by-step repetitive regime makes them more aware of their health needs and provides an easy tool to permit them to take charge of their own wellness. Caregivers can also use the program to determine whether the parent is following the program or medication set out by health providers.

New software can dispense medication and monitor its use.

Medication Management Software

Medication management systems can remind the user, dispense the medication and alert you, the caregiver, whether medications are being properly administered. The program can be set up to be accessed remotely by the adult caregiver. The base unit is installed in the senior’s home and can dispense medication at the proper dosage. Medication is inserted by the caregiver or a pharmacist into the cartridge. As many as 13 medications can be dispensed either singularly or in multiple doses. Within each cartridge is a memory chip that permits the pharmacist to access and enter each customer’s medical information when the label is generated. At the predetermined time, the medication is dropped into a cup for the individual to take. The system alerts the caregiver so the caregiver can phone the senior to make sure the medication has been taken. As well as dispensing medication, the system records information on compliance (i.e., how much of each medication is left). This information is accessible by the caregiver through a secure Internet connection.

Monitoring Devices

Smartphones combine the ability to chat back and forth and even face to face through Skype or Facetime so that you can more readily determine their physical state. Apps are also available that monitor the senior’s movements and enable you to know where they are at any time. Indeed, you can set geographic boundaries within which you feel the senior should travel, which can be tracked with an on-screen map. Software can be programmed to email you when they exit the area and when they return. Similar systems exist that allow monitoring of text messages and telephone calls to determine whether the senior is being “scammed” by a con-artist. It goes without saying that it would be wise to seek consent before installing such a procedure.

In cases of extreme dementia, monitoring with a smart phone may not work if the individual does not remember to carry the device with them. There are GPS trackers that are embedded in wrist bands, watches or devices that attach to clothing. The latest device embeds a tracker in the shoe that allows you to set the perimeters of travel so that the individual can be tracked once the perimeter is breached.

Medical Alert Systems

Medical alert systems enable elders to live within their own environment knowing that at the push of a button, an operator will respond. These systems are relatively inexpensive, from $28 to $33 per month. Live, two-way communication is provided through “emergency buttons” that can be worn on a belt, as a pendant or on a wrist band. The more sophisticated systems are equipped with waterproof sensors that can detect when an individual may have fallen. If the senior is unable to respond to the call-centre enquiry, the call-centre can immediately cont

Living at Home in Old Age

The insertion of unobtrusive and easy-to-use technology into seniors’ regular patterns of daily life allows the sandwich generation to softly interact with the senior(s) in their life while constantly monitoring the elders’ degree of need. The instant feedback provides the caregiver with the ability to make decisions to assist a senior who may not remember appointments, bills to pay, medication to take, or even the date of your next visit. Because time and financial resources available from caregivers are limited, any technology that extends an elder’s ability to stay within their home and live a happier life not only alleviates their anxiety about leaving the neighbourhood but allows caregivers to monitor and participate in the lives of elderly loved ones without always being on their doorstep.

 

Contact Argento CPA today!

Source: BUSINESS MATTERS

Disclaimer: BUSINESS MATTERS deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
BUSINESS MATTERS is prepared bimonthly by the Chartered Professional Accountants of Canada for the clients of its members.
Richard Fulcher, CPA, CA – Author; Patricia Adamson, M.A., M.I.St. – CPA Canada Editor.
Contact us: patricia@adamsonwriters.ca

TAXATION

Before choosing a date for your year end, think about the date that works best for your kind of business.

When entrepreneurs incorporate their businesses under their respective provincial articles of incorporation, often, little thought is given to the date for the fiscal year end. Many company founders unconsciously identify the company’s fiscal year end with the calendar year end of December 31, and therefore automatically select this date. After the articles of incorporation have been issued, the business may choose any date as year end provided the number of days of the fiscal year do not exceed 371. Conventional wisdom suggests, however, that the last day of the chosen month is the most practical date since most businesses and financial institutions process client data on a month-end basis. Setting the year end date at the end of your chosen month permits an easier cut-off and reconciliation process.

Factors to Consider

Inventory

If, for example, you are a retail business, physically counting inventory during your busiest sales period (i.e., Christmas) would disrupt business, so January 31 would be a good date for your year end. Inventory, as well as the level of in-store activity, will be at their lowest in January when your staff can count, price and value inventory without taking time away from selling. For a service industry such as landscaping, work-in-progress may have to be calculated. It may be best to have a year end such as November 30, after the bulk of the contracts are finished.

Choose a year-end date that works with your accounting cycle.

Accounting

Choosing an arbitrary year end such as December 31, which may not match your accounting cycle, could create issues for your in-house accounting staff as well as your CPA. Internal staff is often overwhelmed with completing year-end procedures for payroll, government reports, and finalizing year-end inventory, not to mention cut off of receivables and payables or budgeting for the coming year. Such stress can lead to errors, increased overtime and frustration.

Also, if your year end is December 31, your CPA may not be as available as you would like because they are consumed by tax planning and tax preparation for individuals and may be in no state of mind to work with staff that is already frustrated by their own year-end requirements. (This is not the best of formulas for getting quality time with your CPA to analyze your financial results.)

Start-up capital

When a business starts up, cash flow difficulties are common, given the need to borrow working capital for start-up costs and capital assets. If, by good fortune, the business does extremely well in its first year and substantial taxable income materializes, a year end set 365 days from the date of incorporation may be advisable. Since there is no requirement to pay monthly or quarterly instalments in the first year of operations, the business gets the maximum tax deferral by setting the first year end as late as possible. A later year end would lessen the actual cash outflow for corporate income tax and provide additional working capital in the start-up period.

The requirement to pay monthly or quarterly instalments begins in the second year, the payment amounts are determined by the taxable income reported in the first year. In case the first year end was shorter than 365 days, the taxable income is normalized to reflect the income had it been for the full 365 days. This may be helpful for seasonal businesses, to set a year end prior to the peak income period because that would not only defer the tax liability of the first year but also reduce the required instalments in the second year. This allows businesses to have more working capital during the start-up phase.

Tax Deferral

Choosing a year end of July or later allows tax deferral of corporate profits. Suppose, for a moment, that the corporate profit is $150,000. Rather than pay the corporate tax on the $150,000, management may decide to pay out the $150,000 in bonuses to various employees of the company. If the bonus is declared for the July 2016 year end but not paid until January of 2017, the income tax expense for the corporation is nil and the tax on the bonuses is not taxed in the hands of the recipient until it is paid in January of 2017. This approach provides working capital for the corporation that otherwise would have gone to the Canada Revenue Agency (CRA).

Changing Your Year End

Your business may have changed over the years so that now there are compelling reasons to change its current year end, such as staffing or administration issues that make it impossible to complete the year-end process in a timely fashion. If, for instance, your business now has a high sales volume or high inventory at the current year-end date, it might be less disruptive to end the year on another date. If you are a subsidiary or highly dependent on another business such as a supplier, there could be administrative and accounting advantages to aligning year ends.

A request to change the year end must be sent to the CRA. Changes can only be made for sound business reasons (i.e., not for the purpose of an income tax benefit). A request for a change is not required if:

• the corporation is wound up and the final return is filed with a shorter fiscal year
• the corporation is emigrating to another country, is becoming exempt from tax or will cease to be exempt from tax
• persons or a group of persons acquired control of the corporation under subsection 249(4) of the Income Tax Act.

Owner-managers should keep in mind that, if a change in year end is granted, it will be necessary to produce financial statements and tax returns for the shorter period. Further, depending upon your accounting system, there may be additional cost in establishing the new year-end protocols.

Check with Your CPA before Making a Change

Decisions about establishing a year end or changing a year end can be fraught with unforeseen income tax consequences for both the corporation and owner-managers if personal and corporate tax issues are not considered. Entrepreneurs should meet with their CPA to discuss tax consequences; seasoned owner-managers should consider meeting with their CPA if making a change to the business year-end seems to be more and more necessary.

Contact Argento CPA today!

Source: BUSINESS MATTERS

Disclaimer: BUSINESS MATTERS deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
BUSINESS MATTERS is prepared bimonthly by the Chartered Professional Accountants of Canada for the clients of its members.
Richard Fulcher, CPA, CA – Author; Patricia Adamson, M.A., M.I.St. – CPA Canada Editor.
Contact us: patricia@adamsonwriters.ca

TRADEMARKS

Protect your business by registering proprietary names as trademarks.

If you want to protect the unique name of your business, website or domain name, logo, product or service name, or company slogan, you may wish to apply for a trademark.

What Is a Trademark?

According to the Canadian Intellectual Property Office:

“A trademark is a combination of letters, words, sounds or designs that distinguishes one company’s goods or services from those of others in the marketplace. A trademark is unique. It is important to a company because over time, a trademark comes to stand not only for the actual goods and services you sell, but also for your company’s reputation and brand.”

There are three types of trademark registrations available to protect your business name:

• A logo trademark: protects the design element that identifies the goods or services of a business or an individual. For example, an apple with a bite out of it immediately brings Apple computers to mind. A logo is protected by its unique artistic and layout elements.
• If your business name: is important as an identifier to your product or service you can protect it by registering. If you do not register your name someone else can use it and force you to change your business name. If such were the case you would have to change everything in your business that contains the words registered by another party. There is no protection offered by placing a (™) beside the name.
• our Website domain name: can also be trademark registered. It should be noted that registering the domain name with an Internet registration authority does not provide any protection or right to use the domain name commercially in Canada.

Registration of a trademark can take 12 to 18 months.

Registration Takes Time

The registration process can take anywhere from 12 to 18 months. But, once you register your trademark, it:

• is irrefutable proof that the trademark belongs to you
• provides you with exclusive rights to use the trademark in Canada for 15 years
• provides comfort that others cannot use a similar confusing trademark
• allows monitoring of infringements by others
• allows you to license the trademark and provide a boost to your company brand
• should be noted that, if you need to protect your trademark in other countries, it will be necessary to register the trademark in each country in which you wish protection

Trademarks are good for 15 years in Canada. The Canadian Intellectual Property Office (the Canadian registry for trademarks) sends a notice when the 15-year period is about to expire. If the renewal application and payment are not received, the trademark is expunged. This means effectively that someone else could adopt your original logo.

Who Knew?

Interestingly, a trademarked name can become so entrenched in our culture that they become generic. For instance the following words are all trademarked but are used in our everyday conversations: Aspirin, Band-Aid, Jeep, Kleenex, Lycra, Popsicle, Taser, Vaseline, Velcro, Zipper.

It May Be Worth Your While

Because of the time, effort, expertise and cost required to register a trademark, owner-managers wishing to register a trademark should seek counsel. The Internet lists organizations willing to assist for a fee.

Contact Argento CPA today!

Source: BUSINESS MATTERS

Disclaimer: BUSINESS MATTERS deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
BUSINESS MATTERS is prepared bimonthly by the Chartered Professional Accountants of Canada for the clients of its members.
Richard Fulcher, CPA, CA – Author; Patricia Adamson, M.A., M.I.St. – CPA Canada Editor.
Contact us: patricia@adamsonwriters.ca

MANAGEMENT

Make time for strategic planning.

Strategic planning is not usually a strong suit of most entrepreneurs. They have a great initial idea and know how to turn it into a business. But then, they become too involved in day-to-day affairs and do not take the time to plan where they have to be in five, 10, or even 20 years to stay competitive. No one should start a business without a vision of what their company should be at some point in the future. Unfortunately for many businesses, the intermediate stages do not get planned, goals get forgotten in the details of everyday life, and suddenly the calendar reads 2036 instead of 2016.

There is no magic formula that will provide specific steps to achieve personal and business goals; each individual and each business has different needs and abilities that must be factored into the desired results. The starting point, however, is the same for everyone since there is a symbiotic relationship between a business and its owner.

Taking the First Step

First, determine your personal objectives and needs: current income requirements, retirement savings plans, the future for your spouse and children inside or outside the business, and the amount of personal vacation time you want. If personal goals are set too high, disappointment will stifle forward momentum; conversely, if goals are set too low, underachievement may stall growth.

Specific achievable targets are essential. Common quantifiable goals include sales volume, gross margin, profit before income taxes or debt repayment. Other goals that are quantifiable but may be somewhat subjective include attaining specific market share or increasing a client base.

Because most businesses are cyclical, it is essential to establish three-to-five-year goals that take into account how progress is going to be made in smaller periods, such as each quarter. Frequent reviews will monitor progress and allow any redefinition of the goals to meet the changing reality.

Make a CPA part of your team.

You Are Not Alone

You will not be able to achieve your business goals without considering your own abilities and shortcomings, future staffing needs, and any assistance from outside consultants to supplement missing skills. You will need inputs from all current staff members to determine whether existing equipment, hardware, software, physical location, transportation, financial services and communications can handle the future projections.

Objectivity is essential to good planning. A Chartered Professional Accountant (CPA) who understands your personal needs, your business, and the financial information required to produce meaningful projections should be part of your team. Not only will your CPA help map the future, but also will be able to support any application for external financing.

Who Are We?

Businesses often try to be everything to everyone. Thus, clients and customers become unsure of the ability of the business to support all the products they sell. As part of the planning process, it is essential to ask yourself:

• What business are we in?
• What business do we want to be in five years from now?
• What do we do best?
• Who are our main customers and what do we provide to them?
• What services or products provide the most return on investment of staff and production facilities?

Analysis of these five areas should show you where to concentrate your production and marketing energies. Such analysis will help define achievable goals and guide your planning for the next three to five years.

Projecting Costs

Once the goals have been determined, it is necessary to project costs and the need for funds. Such information includes:

• Production costs, either by unit or as a percentage of sales, include labour, material, transportation and amortization of equipment.
• Selling costs as a percentage of sales include marketing, advertising, entertainment and travel expenses.
• Administration costs generally include all costs not directly tied to production.

A good starting point for making three-to-five-year projections is a line-by-line review of financial results for the last three to five years. This will provide insight into annual sales, expenses, profit and taxes and show yearly changes in sales and costs as well as the ratio of costs to sales revenue. Management can use these ratios to predict the proportional contributory costs of many expense areas to the realization of projected sales. For example, if over the last five years advertising represented about 2% of sales, you could use this figure to estimate the cost of advertising needed to produce your sales projections.

Personal Time Matters

Success in business depends upon maintaining a balance between time spent in business and time spent satisfying personal needs. Therefore, when establishing goals, consider how your personal needs will impact your business and its long-term strategy.

Anticipating Change

You also need to consider the impact of changes such as a divorce or the loss of a key business associate or important customer. You must have a fallback plan and sufficient resources to navigate through the hard times.

Review both the short-term and long-term plans on a regular basis and adjust the expected outcomes to the new information. It is doubly important to review and update plans in the event of dramatic life changes or opportunities.

Let the Business Work for You

Time and resources are limited. Proper planning is the best method of ensuring the business is working for you rather than you working for the business.

 

Contact Argento CPA today!

Source: BUSINESS MATTERS

Disclaimer: BUSINESS MATTERS deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
BUSINESS MATTERS is prepared bimonthly by the Chartered Professional Accountants of Canada for the clients of its members.
Richard Fulcher, CPA, CA – Author; Patricia Adamson, M.A., M.I.St. – CPA Canada Editor.
Contact us: patricia@adamsonwriters.ca

TAXATATION

Complete, accurate and readable records will make a CRA audit less onerous.

Regardless of whether your business is a proprietorship, a partnership or an incorporated company, the Canada Revenue Agency (CRA) requires the business to maintain financial books and records. Here are a few of the CRA’s record-keeping requirements you should know.

Only in Canada, eh?

The CRA requires that records must be kept in Canada, either at your place of business or your residence. If your head office is in Canada and your books and records are stored electronically outside the country and accessed by your Canadian-based operation, these records are not considered to be maintained at your head office. Thus, if you are currently running cloud-based accounting software that is storing data in a foreign jurisdiction, your business is in violation of CRA requirements. If you wish to keep records in a jurisdiction other than Canada, you must seek written permission from CRA to keep them elsewhere.

Your Responsibility

Your business must assure the books and records are protected and available for inspection even if a third party is processing or storing the information. The third party must have adequate security and backup to be able to provide information when requested.

Records must be complete and unabridged.

Complete and Unabridged Records

Records must be complete and unabridged, have sufficient information to support your tax liability or claim to funds owing to you, be supported by documentation and be maintained in English or French, or a combination of both languages.

Electronically stored data must be readable by CRA software.

CRA Request

In the event the CRA requests information, it is your responsibility to:

• produce books and records (general ledger, accounts payable/receivable/payroll, etc.) requested, whether those records are in electronic form or hard copy: It is not your responsibility to provide data that is not requested. Thus, it is prudent to request written documentation outlining specific requirements for your particular business.
• ensure documents supporting the books and records are available: Mainly, the CRA would like to see original-source documents such as expense receipts, contracts, sales receipts, etc. With most businesses opting for electronic processing of sales invoices, taking pictures of expense invoices, or receiving images of suppliers’ invoices, hard-copy data is rapidly disappearing. Nevertheless, the transition to electronic copies does not diminish the responsibility to keep and be able to produce records upon request from the CRA.
• make sure your employees or the third-party record keeper is available when an audit or examination of records is required: Co-operation in accessing and providing information means the CRA will be in and out of your office quickly.
• allow the CRA to make copies of the data or provide copies to the agent as requested: Under normal circumstances, a business should not allow original-source documents to leave with a CRA agent.
• be able to decrypt encoded information in order to provide the data to the CRA: If you change service providers, ensure that all data is readable.

Factors to Consider

• If data is maintained on a remote server, whether inside or outside Canada, ensure original data can be downloaded to an in-house computer or to another server.
• If you use a cloud-based accounting service, make sure your business can download data in a user-friendly format. You should also consider whether you will be able to produce current data if you stop using your service provider or it goes out of business.
• Before upgrading or changing computers, ensure all data is backed up in at least two locations.
• Ensure software is available to open historical data.
• Store older computers with historical software and data.
• Keep a written record of all software and data access codes by year, device, software, and data base. Without such a record, you may not be able to access information five years from now.

Record Format

Original paper documentation must be kept in paper format unless it is converted to and stored in an accessible and readable electronic format. CRA guidelines suggest that microfiche and/or microfilm can be used as well; however, most businesses would probably opt for a high-speed scanner to store historic data. The CRA insists that any reproduction must provide the same detail as the original paper document without issues of “resolution, tonality or hue”.

Length of Storage Period

The CRA requires that all records and supporting documentation must be kept for six years from the end of the last tax year. The tax year is considered the fiscal year end for a corporation and the calendar year for an individual. This retention period is also required by the Employment Insurance Act, the Canada Pension Plan, and the Excise Tax Act (GST/HST).

Other Retention Issues

Documents concerning long-term acquisitions and disposal of property, the share registry, or other historical information that would have an effect on the sale, liquidation or wind‑up of the business must be maintained indefinitely. CRA may ask you to maintain records for longer periods. If an income tax return is filed late, the destruction date is six years from the date the return was filed.

In the event of an objection or appeal, all data must be maintained until the latest of the:

• a. date the objection or appeal is resolved
• b. date for filing further appeals has passed
• c. six-year record-keeping period has expired.

If you are a sole proprietor or in a partnership, records must be kept for six years after the end of the taxation year of ceasing business. If a company is dissolved, keep all records and supporting documents for two years after the date of dissolution.

Before You Destroy Records

Legal representatives of a deceased taxpayer should obtain a clearance certificate before they destroy records that show how property of the deceased was distributed.

When concerned about GST/HST issues, it is advisable to ask for and fill out form GST352 Application for Clearance Certificate. If you wish to destroy records before the mandatory retention period, complete form T137 Request for Destruction of Records or apply in writing to your local tax service office.

If you have made electronic copies of the original paper books of account and supporting documents and the CRA considers the images to be representative of the original documents, you can destroy the original paper documents.

Tax regulations suggest that destruction of records in advance of mandatory retention dates or before receiving official written permission may result in prosecution.

An Important Business Procedure

Records must be kept in a format and for the time period prescribed by the CRA and other regulatory bodies. Meeting regulations is an important business procedure that will ensure that any review of historical records by the CRA will be as effortless as a review of today’s information.

Contact Argento CPA today!

Source: BUSINESS MATTERS

Disclaimer: BUSINESS MATTERS deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
BUSINESS MATTERS is prepared bimonthly by the Chartered Professional Accountants of Canada for the clients of its members.
Richard Fulcher, CPA, CA – Author; Patricia Adamson, M.A., M.I.St. – CPA Canada Editor.
Contact us: patricia@adamsonwriters.ca

HEALTH AND SAFETY

Bad posture and overuse of smartphones and other devices can cause unexpected health problems.

A recent British study of smartphone use showed that young adults checked their smartphones 85 times a day and used them for a total of five hours of use per day. The long-term effects of such constant smartphone use are not yet known but, if current studies and reports by the medical profession are any indication of the future, it would be advisable for all users to consider the impact smartphones and similar devices can have on their health.

In the Short Term

Text neck: a neck strain resulting from hunching over smartphones, tablets, or laptops for prolonged periods. Stress on the neck and upper back muscles causes pain because the body is subjected to an unnatural position for extended periods of time.

Computer vision syndrome (CVS): eye strain resulting from constant staring at small text or from scrolling through articles, messages or tweets. Common symptoms are dry eyes, blurred vision, headaches, and dizziness.

Phantom pocket vibration syndrome (“ringxiety”): the belief that your smartphone is vibrating when it is not. Studies show that some individuals may experience increased anxiety levels when they go an extended period without receiving a notification.

Nomophobia: (“no-mobile-phone-phobia”) is a term coined to describe the anxiety of individuals to be without a smartphone. Sufferers obsessively check to ensure the smartphone is present and constantly worry about misplacing it.

A recent study in the U.K. determined that 66% of the user population may suffer from this “ailment.” Symptoms include increased anxiety, which can manifest as a variety of physical symptoms including headaches, intestinal troubles, and muscle tension.

In addition to the more obvious outward physical pains and strains, there might even be a hidden tax on your health.

The Long Game

Medical specialists have determined that the poor posture caused, in part, by use of smartphones may cause excessive wear on the cervical spine (the neck) which can result in permanent degenerative changes including arthritis. The neck is designed to support the weight of your head (10 to 12 pounds) in an upright posture. Bending your head forward to text or read can place up to 60 pounds of stress on your neck muscles. This excess strain on your cervical spine over the years can increase the risk of cervical degeneration.

In addition to the more obvious outward physical pains and strains, there might even be a hidden tax on your health; when individuals use a smartphone, they tend to slump forward and curl their shoulders in toward their chest, thus restricting lung capacity. This, in turn, reduces oxygen intake and forces the heart to work harder to get oxygen to the brain. A lifetime of poor posture can have a negative impact on your cardiovascular health.

Preventing Injury

The best way to ensure these potential symptoms do not affect you is to stop using these devices completely. Since this is not possible, given our increasing dependence on technology, experts suggest the following may relieve symptoms and prevent long-term problems:

• Reduce eye strain by using larger fonts. Hold the device at least 16 inches from your face. Look up and away from the screen frequently. Scroll by page and not by line. Blink to ensure your eyes stay moist.
• During your next visit to a physician, physiotherapist, or chiropractor, ask about neck exercises you can do during work to help alleviate neck strain.
• If your wrists and hands feel sore or weak, try flexing your wrists or pushing down on a flat surface to stretch your fingers. If pain persists, talk to your doctor or physiotherapist.
• Improve your posture by evaluating the ergonomic setup of your work or home office. You can find an online self-assessment tool from the Ontario Ministry of Labour at: www.labour.gov.on.ca/english/hs/pubs/comp_erg
• Take regular and frequent stretch breaks (every 15 minutes or so), following the stretching guidelines provided by your doctor or physiotherapist. If you are prone to forget, set a reminder on your phone, computer or personal fitness tracker.
• If you have any of the symptoms associated with nomophobia or phantom pocket vibration, consider placing your device in a location more difficult to access when you’re not using it and scheduling specific times to check and respond to messages. For more serious symptoms, consider seeking professional counselling.

Be Tech-Strain Aware

Communication devices have provided benefits beyond our wildest expectations. While those benefits cannot be denied, they have brought with them other unforeseen issues that may have a long-term impact on personal health and welfare. Recognition of these issues should lead management and staff to work to prevent future personal health issues and to maintain the productivity of the entire workforce.

Contact Argento CPA today!

Source: BUSINESS MATTERS

Disclaimer: BUSINESS MATTERS deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
BUSINESS MATTERS is prepared bimonthly by the Chartered Professional Accountants of Canada for the clients of its members.
Richard Fulcher, CPA, CA – Author; Patricia Adamson, M.A., M.I.St. – CPA Canada Editor.
Contact us: patricia@adamsonwriters.ca