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Tag Archives: small business

All Talent Development Centre posts for Canadian technology contractors relating to small business.

Canada’s Small Business Tax Changes from the New Federal Budget

Morley Surcon By Morley Surcon,
Vice-President, Western Canada at Eagle

Canada's Small Business Tax Changes from the New Federal BudgetI thought I would write this blog entry as a follow up to another that I’d written a number of weeks ago entitled, “Canada’s Proposed Tax Changes for Small Business” where I encouraged the contracting community to take notice, get educated and have their voices heard.  With the presentation of the new Federal Budget, these are no longer “proposed changes” but are, in fact, the new reality of the corporate tax system and its policies.

What was presented was a good news/bad news story for the small business owner. Finance Minister Bill Morneau was forced to consider the backlash from the policy changes that he and his government proposed several months ago, resulting in a somewhat softened stance when it came to Small Business Tax policy.  The final policy, presented along with the rest of the Federal Budget, took some of the sharp edges off their plans for reform, but it will still have its impact felt by the small business owner.

The following are some of the take-aways from the new budget as it pertains to Small Business Taxes and their implementation:

  • Income splitting has now been addressed and curtailed
  • New passive income taxation rules won’t have much of an effect on newer businesses or very small businesses starting out; but will impact older, better established and/or highly successful businesses whose passive earnings are already built up and substantial. Any company earning $50,000 or less in passive income will qualify for the Small Business Tax Rate but, once more passive earnings are reported, the tax rate will gradually increase until the point where passive income equals $150,000 (or more) and at that point passive income will be taxed at the General Corporate Tax Rate levels.
  • A concern that is getting a lot of attention is the widening gap between Canada and the USA’s corporate and personal tax environments. With the new tax reforms south of the border, there is a more significant tax advantage in doing business as a US-based entity; and this provides their companies with economic advantages over Canadian businesses. Investment becomes more difficult to attract which impacts Canadian companies’ ability to innovate and build. Moreover, there is a growing fear that mobile professionals such as doctors, scientists and technology professionals may choose to relocate state-side to take advantage of higher wages (paid in US$) and lower taxes.

There’s quite obviously a lot more to it than the above three points.  You can read more about it by following the links below:

If you have ideas, comments or opinions about the new Federal Budget that you would like to share with our readership, please leave a comment below!

Want to Start a Business While Working Full-Time?

You Can — Just Keep These Tips in Mind

This post by Nellie Akalp first appeared on the Freshbooks Blog on October 20th, 2016

Want to Start a Business While Working Full-Time? You Can—Just Keep These Tips in MindWhether you’re about to venture out on your own as a solo professional or launch a new business, it’s often easier to lay the groundwork while still employed. The stability and steady paycheck associated with full-time employment comes in handy when you’ve got real-world responsibilities like a mortgage and student loans—or you just want to eat something other than ramen every day.

Working on a business or freelancing while still at a full-time job builds your experience, confidence and project pipeline. You get to explore the different aspects of solo work and see if you enjoy wearing all the hats that come along with business ownership. As they say, you need to learn to walk before you can run. And staying employed while you learn the ropes can help you do this.

Balancing a job and a budding business is possible, but it does take some careful consideration—including legal, personal and professional matters. If you’re thinking about starting a business while keeping your day job, here are 5 things to keep in mind.

  1. Check Your Employee Contract

Before you begin taking on side projects, you should become very familiar with your employee contract and/or handbook. Some companies include non-compete clauses, which can mean you aren’t allowed to accept work on the side. The strictest clauses are usually found in ad and creative agencies who don’t want their employees to poach company clients.

Poring over legal fine print is no one’s idea of a good time, but it is essential. If you’re caught breaking the terms of your contract, you can be fired—even sued. Fighting a lawsuit while unemployed isn’t the best way to help get your small business off the ground. So, read your employment agreements carefully. If the wording seems vague, you can decide for yourself whether you’d like to approach your boss or HR for clarification, or keep your plans to yourself.

  1. Give 110% to Your Day Job

No matter how excited you are about your new venture, you’re still committed to your current job and company. It will be obvious relatively quickly if you aren’t holding your own in the workplace. This means staying on top of deadlines, getting to meetings on time, being enthusiastic—basically just doing your job as well as you always have. Underperforming at the office can hurt your professional reputation and long-term prospects.

There’s one important difference now. Since your new business is going to take up most of your spare time, you can’t stay late or work weekends for your “day job.” This means you need to make every minute in the office count. Master the arts of prioritization and delegation in order to get as much done as possible during your normal work hours. These are essential skills for being a freelancer and entrepreneur, anyways.

  1. Create a Disciplined and Regular Routine

There are only 24 hours in a day, so you’ll definitely be feeling a scheduling crunch when you first start out. Try to develop a steady rhythm for working on your new business, setting time aside in the evening, early in the morning and on your days off. Creating a regular schedule will help you stay disciplined. You need to make time to work on the business whether you have projects or not—there’s always important work to do such as creating your business’ website, networking or hustling for new business.

If you are struggling to find time to work on your business, take a careful look at the root cause. It could be circumstantial; for example, you’re just really busy right now for a major project at work, but things will quiet down soon. Self-employment requires a lot of discipline, self-direction and self-motivation. It’s very different than previous experiences with a boss or professor. This means it is important to identify early on if the solo work style is right for you.

  1. Treat Your New Venture as a Legitimate Business

You may still be a full-time employee, but the minute you accept money for your work, you’re also a business owner and entrepreneur. This means you need to treat your side work as a legit business—and learn all the responsibilities that come along with owning a business, including how to organize your finances, report your income and pay your taxes.

This would be a good time to meet with a CPA or tax advisor who is familiar with the needs of small business owners and freelancers. Setting up good practices early will help you scale later. One interesting point is that if you form a business and it takes a loss during the first year, you can actually deduct that loss to offset your income from your regular job (talk to a CPA/tax advisor for the details).

In addition, consider creating a formal business entity (such as a Limited Liability Company) to help lower your personal liability should your side business be sued or can’t pay its liabilities.

  1. Determine When You’ll Dive into Solo Work Full-Time

As your business grows, you’ll surely experience periods of intense work overload. At this point, you will need to decide if it is better to quit your job or turn down new client projects. How do you know if it’s time to start working on your own full time? It’s not an easy question to answer, but here are a few thoughts…

Unless you’re willing to blow through your savings or take out a line of credit, you shouldn’t consider leaving your job until your business can bring in as much income as your current job (or close to it or at least enough to meet your needs). That’s the practical consideration.

In addition, it may be time to rethink your situation if you find yourself so excited about your new business that it’s hard to muster any enthusiasm for your day job. This can drain you personally and professionally and you don’t want to just stick around until your employer kicks you out. If you’re having a hard time going to work each morning, then it’s time to accelerate your new business. Figure out how to build a runway of clients and have some cash flowing in—then take the jump.

About the Author: Nellie Akalp is a passionate entrepreneur, small business expert, professional speaker, author and mother of four. She is the Founder and CEO of CorpNet.com, an online legal document filing service and recognized Inc.5000 company. At CorpNet, Nellie assists entrepreneurs across all 50 states to start a businessincorporateform an LLC, and apply for trademarks. She also offers free business compliance tools for any entrepreneur to utilize. Connect with Nellie on LinkedIn.

Accounting Basics for the Independent Contractor (Video)

Independent contractors are essentially a small business with one employee – yourself. For that reason, you need to follow all of the same accounting principles as any other small business. The good news is: it also means that any accounting tips and tricks for “small businesses” can be applied to your independent contracting business.

Especially if you’re just starting out as a freelance IT professional in the gig economy, the accounting side of the business can be intimidating. To help ease the stress, check out this video from Patriot Software that runs through some basic accounting tips for small businesses.

If you’re still unsure about these tasks, we strongly recommend you engage a professional accountant. Avoiding tax complications and properly planning your finances will be well worth the money you pay.