3rd edition of 2009

February 2nd, 2009

Q & A

As the owner of a small business, should I pay myself a salary? What deductions would apply?

If your business is not incorporated, whether or not you pay yourself a "salary" is irrelevant for tax purposes because you and your business are considered a single entity by Canada Revenue Agency (CRA). You will be taxed on your net earnings from the business, which you will include on your personal tax return as self employment income. Thus, there are no "deductions" to be taken from payments you make to yourself. You are not eligible to be covered by Employment Insurance, but you will have to pay income tax and Canada Pension Plan (CPP) premiums on the self employment income reported on your tax return.

Depending on the province in which you operate, Workers' Compensation premiums may be payable. When you file your tax return for your first year of self employment, you will have to pay any income tax and CPP premiums payable on your self employment income. If your net taxes owing (excluding CPP premiums) exceeded $3,000 in either of the past 2 years, and will exceed $3,000 in the current year, you should be paying instalment payments to CRA for the current year. Thus, you should plan ahead so you will ensure you have funds available if installment payments are necessary.

If your small business is incorporated, whether or not you pay yourself a salary is a tax planning decision. Another option is to pay yourself (and other shareholders, depending on share structure) a dividend, which is not deductible for the corporation.

There are many factors to consider, and professional advice in this area is recommended. If you decide to pay yourself a salary, you will be required to deduct income tax and CPP premiums from your salary, but as owner of the business you will not be eligible to be covered by Employment Insurance. Depending on the province in which you operate, Workers' Compensation premiums may be payable, even if you do not pay yourself a salary.

What books and records must be kept for a business?

Any person (individual, partnership, corporation, trust, etc.) carrying on a business must keep books of accounts and records which provide the ability to calculate taxes payable. These books and records must be supported by "source documents" which substantiate the amounts in the books of account. Source documents include (but are not limited to) invoices for purchases and sales, deposit slips, cheques, and contracts. These books and records are used to prepare financial statements of the business, which must be prepared according to generally accepted accounting principles (GAAP).

For purposes of income tax, many books of accounts, records, and source documents have to be retained for a minimum of six years after the end of the last tax year to which they relate. In the case of records regarding capital purchases, the last tax year to which they relate would be much later than the acquisition date. It would be the tax year in which a disposal of the capital property occurred, because the purchase records would be required to calculate the gain or loss on disposal. Thus, records regarding capital property should normally be kept until six years after the end of the tax year in which the capital property was sold.

Some books and records of the business of a person (other than a corporation) must be retained until six years after the tax year in which the business ceased. These books and records include, according to Regulation 5800:

(i) the general ledger or other book of final entry containing the summaries of the year-to-year transactions of the business, and

(ii) any special contracts or agreements necessary to an understanding of the entries in the general ledger or other book of final entry referred to in paragraph (i)

Some corporate records must be kept until two years after the day the corporation is dissolved. These records include:

(i) minutes of the meetings of directors of a corporation,

(ii) minutes of meetings of the shareholders of a corporation,

(iii) any record of the corporation containing details with respect to the ownership of the shares of the capital stock of the corporation and any transfers thereof,

(iv) the general ledger or other book of final entry containing the summaries of the year-to-year transactions of the corporation, and

(v) any special contracts or agreements necessary to an understanding of the entries in the general ledger or other book of final entry referred to in paragraph (iv).

The books and records may only be destroyed earlier than this with the permission of the Minister. This can be requested by filing CRA's form T137, Request for Destruction of Books and Records.

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At the Watercooler

1-800-goog411

Remember when the telephone company charged $1.50 to find a number for you? Well, Google now offers this service free of charge. Here's a number worth putting in your speed dial: 1-800-goog411 (1-800-466-4411). When I'm driving and I need a number for any business--a restaurant, or doctor, or store and so on--I hit the speed dial, and the voice at the other end says, 'City?' I reply, 'Langley, BC.' The voice says, 'Business, Name or Type of Service?' I say, 'Milestones Restaurant.' The voice says, 'Connecting,' and Milestones answers the phone. I don't even have to dial. And it's nationwide. And it's free!"

Is Your Website Earning Its Keep?

One of the strongest and most versatile tools a business owner can have working for them to bring in new customers is a good website.

Unfortunately, though, many business owners and entrepreneurs are duped into paying hundreds (or even thousands of dollars) on something that has no possible chance of ever bringing them a steady supply of new clients. If you're currently in the market to have a new site put together for you, or you're sick and tired of having a site that doesn't do anything except take money out of your pocket, consider this...

The goal (and only goal) of your website should be to either:

1) Get an interested prospect to raise their hand and tell you in some way that they want to hear more about you (called lead generation) or

2) Get an interested prospect to buy something.

That's it. Your web site is not supposed to just build brand, or "respect the profession", or look cool, new and fresh. It is supposed to sell, plain and simple.

Anything that any other "expert" in the industry tells you is wrong.

Here are 3 Ways To Create A Website that Sells

1) It should be especially easy to use

The easier, the better. One reason that Yahoo lost out to Google in the search engine wars was because of how complicated Yahoo got over time. Their home page eventually had a hundred links or more - all really small and difficult to see. It became confusing and time-consuming for viewers to go through and eventually they gave up. Google, on the other hand, is simple. You have the search box and a few buttons. We know what we're supposed to do and we do it.

Your website should be the same. In the first few seconds, you need to identify to the viewer why they should care about what you have to offer and what you want them to do. Don't make them hunt for the reason. Most often, they won't bother. They will just go to the competition.

2) Get to the point

No "splash pages" or excessive flash. We're all busy and even though web developers love to put them together (and charge a lot for it), the majority of Internet surfers don't want to wait for your carefully crafted, high-quality flashy introduction. The faster you are at giving the viewer what he wants, the longer he will stick around.

3) Make a free offer

Most importantly, always make a free offer on any site you create. Because it's so easy for your potential customer to leave for the next page, you will want to try and capture their information as quickly as possible for follow-up by e-mail, phone or mail later. A free offer that gives your first time visits some really good information that will help accomplish that.

For example, my own special report for small business owners and sales professionals is called "How To Double Your Profits in 90 Days Or Less". It's a free report with the potential to change someone's business for the better in a very short period of time. When someone visits my page (brandonroe.com), they are immediately invited to get it, in exchange for name, e-mail, city and how they heard about us. Now I have the opportunity to follow up with them in the future with an invitation to attend one of my meetings.

Pretty simple, but very important. Good luck!

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Brandon Roe is a "direct-response" marketing consultant that specializes in helping small and medium-size business owners get more bang for their marketing buck, especially in difficult economic times. Visit his web site to receive a free special report entitled, How To Double Your Profits In 90 Days or Less. It's available at www.brandonroe.com.

IPBC NEWS DESK

From The Executive Director's Desk

Imagine networking with some of the top bookkeepers in the country. Imagine the chance to be on the fast track to a more lucrative practice . . . to being a certified professional bookkeeper (CPB) . . . and to receiving greater professional recognition inside and outside of this network. Regional Meetings are a vital part of that formula for success.

They're a unique chance to combine learning - a guest speaker shares expertise that's sure to make your work a bit easier - with fun and powerful networking. Every meeting is free to attend.

UPCOMING MEETINGS

Regional meetings are being organized in Vancouver, Edmonton, Windsor, Ottawa, Toronto, Calgary, Guelph, Halifax, and Truro, NS. If you are interested in facilitating a meeting in your area, please email info@ipbc.ca for an information package. Please include your full contact details.

Next Regional Meetings

TRURO, NOVA SCOTIA

Date: February 16th, 2009

Time: 7 PM to 8:30 PM (We start and end precisely on schedule.)

Location: Classroom of Simply Financials

20 Willow Street, Truro, Nova Scotia, B2N4Z4

(Willow Street is a main Street in Truro which has the Best Western, Hospital, and bus terminal. We are beside old Willow Street School near Prince Street)

Facilitator: Diana Read-Miedema, CPB

Guest Speaker: Jeffrey Hunt, LLB (Mr. Hunt is a lawyer for Patterson Law in Halifax & Truro)

Topics: Farm Debt Mediation; T4s and T4 Summary due Feb 28th (presenter: Mrs. Read-Miedema); and T2125 replaces T2124 & T2032 (presented by Mrs. Read-Miedema)

To register, please send an email to info@ipbc.ca

EDMONTON, ALBERTA

Date: February 19th, 2009

Time: 6 PM to 8:30 PM (We start and end precisely on schedule)

Location: The Business Link

Boardwalk Place, #100, 10237-104 Street, Edmonton AB, T5J1B1

Facilitator: Jacqeline (Bernal) Andriet

Topic: Business services and tour of The Business Link --"No matter what stage of business you're at, or where you live in the province...The Business Link is your first stop for business information and service in Alberta." Find out about their seminars and brown bag sessions, business library, e-business and the internet, the global marketplace, start-up, incorporation, financing, and so much more.

Sponsored by the Government of Canada and the Government of Alberta

To register, please send an email to info@ipbc.ca

HALIFAX/DARTMOUTH, NOVA SCOTIA

Date: Feb 20, 2009

Location: Quality Inn Dartmouth

313 Prince Albert Road, Dartmouth, NS B2Y 1N3

Ph: (902) 469-5850

Time: 6:30 PM

Name of Speaker: Sharon Skaling

Title: President

Speakers Company: Total You

Website: www.totalyou.ca

Topic: Total You - More than personal branding

To register, please send an email to info@ipbc.ca

Meetings in the works:

Ottawa, ON- scheduled for Feb. 18th

Guelph,ON- being planned for early in May

Vancouver, BC- Feb 12 --Speaker: David B. Wende (from Alexander Holburn Beaudin & Lang LLP); Topic: Review of Engagement letters; For location, email to info@ipbc.ca

Victoria, BC- being planned for early in March

Kelowna, BC- being planned for early in April

Calgary, AB- month to be advised soon (will probably be April or May)

Meetings are starting soon in the following cities:

Oshawa,ON

Sudbury,ON

Winnipeg,MB

Welcome New IPBC Members

Alberta

Marlene Fargey, Fort McMurray

Rosemarie Coyne, Ardrossan

Jeanette Bergersen, Sherwood Park

Leanne Boskers, Airdrie

Juanita Nott, Medicine Hat

Trudy Ressler, Edmonton

British Columbia

Bill James, Montrose

Maureen MacLellan, Vanderhoof

Cathy Gillett, Nanaimo

Ken Richardson(CGA), Coquitlam

Shawn Sulaimaan, Surrey

Tammy Ayre, Kelowna

Nova Scotia

Amanda Dobson, Brookfield

Shari-Lynn Hiltz, Halifax

Ontario

Cindy Schoenrock, Uxbridge

Sandy Gill, Peterborough

Tahsine Samara, London

Sandi Holst, Hamilton

Sue Newhouses, Oshawa

Mary Stephenson, Chesley

Esmat Damji, Mississauga

Sana Khoshaba, Woodbridge

Valeri Oparychev, Toronto

Congratulations to the Newest CPB Grads

Alberta

Joan McLean, CPB, High River

Melissa Connors, CPB, Calgary

British Columbia

Noel H. Murray, CPB, Cache Creek

Saskatchewan

Alison Wright, CPB, Saskatoon

Words to inspire

Here's a quote to take with you as you make your way through tax season:

The ability to concentrate and to use your time well is everything if you want to succeed in business--or almost anywhere else for that matter.

-Lee Iacocca

Do you have a website?

If you are an IPBC member, you should proudly be displaying the IPBC logo along with a link, so your visitor can learn a little about your professional association. Membership in IPBC gives you an edge over your competition.

Show the world that you belong to a professional association for professional bookkeepers by adding a short informational video about IPBC to your signature line in your email program. The link, entitled 'View this short informational video about IPBC' is found below.

In Outlook, click 'Tools', followed by 'Options', 'Mail format', 'Signatures', and 'New' or 'Edit', depending if you already have a signature. Then copy and paste the link, "View this short informational video about IPBC", into this spot. Click OK.

Feel free to contact us at info@ipbc.ca with any questions.

View this short informational video about IPBC

Do you have a story to share, or words of wisdom?

The purpose of the IPBC newsletter is to assist Canadian bookkeepers with tools, ideas, and resources to make your business efforts easier, and to help your business grow by delivering timely and thoughtful information. Do you have a story to share? Words of wisdom? Pass them along to us.

Email to: karenl@ipbc.ca