“It's better to look ahead and prepare than to look back and regret”

Jackie Joyner-Kersee

“Nothing is impossible, the word itself says 'I'm possible'! ”

Audrey Hepburn

“Though no one can go back and make a brand-new start, anyone can start from now and make a brand-new ending.”

Carl Bard

Business Advisory, Personal and Corporate Taxes, Business Start-Up, Bookkeeping

News You Need to Know

Canadians and the State of Our Finances

Posted December 24, 2018

Holy Cow, That’s a Large Debt Load!

Canadians are carrying a large amount of debt; 75% of it is mortgages, but 25% of it is credit card debt, auto loans, etc.

As noted by the Bank of Canada, “At the end of last year, Canadian households owed just over $2 trillion. Mortgages make up almost three-quarters of this debt… A common way to measure household debt is to compare it with the amount of disposable income people have. In Canada’s case, household debt is around 170 per cent of disposable income. In other words, the average Canadian owes about $1.70 for every dollar of income he or she earns per year, after taxes.”

We Don’t Understand Money as Much as We Think We Do

The second aspect of the Canadian relationship to money is that Canadians are not as financially literate as we think we are. LowestRates.ca says:

“…Canadians vastly overestimate their financial literacy. In the survey, we defined financial literacy as the ability to understand how money works in the world.

“When we asked if Canadians think they are financially literate, 78% said yes—14% rated their financial literacy as excellent, while 64% rated it as good.

“But then came our 15 questions. They focused on some of the most common financial products Canadians buy and use—mortgages, car insurance, chequing accounts. The results of the survey show that Canadians are confused about how some of these work.”

Regrets; We Have a Few

A distressingly high percentage of Canadians regret their spending habits. Radio Canada International points out that, “An overwhelming majority (93 per cent) of respondents said they felt remorse and admitted they had regrettable spending habits…The investment firm suggested that people should have a financial strategy and, if they enjoy spending money spontaneously, they should plan for it...”

A Financial Strategy Is Your Best Tool for Debt Taming

A financial strategy/budget is your best solution to money troubles. A realistic budget that is designed specifically for you and your habits and personal circumstances can be your most useful tool to get control of your finances. Planning out a good budget not only helps you see your financial picture and gain control of it, but it will most likely reduce the money stress in your life.

Shaw & Associates Chartered Accountants can help you get on top and stay on top of your income, your expenses, and taxes owing. We can also figure out where you are weak, where you are strong, fix what needs fixing, and keep an eye on everything so you always have an accurate picture of what is happening with your money.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.

Personal Income Taxes for Business Owners and How to Lower Them

Posted December 13, 2018

To Pay or Not To Pay; There Isn’t Really Any Question

Most Canadians have one choice with income taxes—pay what you owe to the Canada Revenue Agency (CRA). Small business owners do have other options, though. A small business owner can work with an accounting company like Shaw & Associates to figure out what works best for your personal income tax picture.

Incorporate? Salary? Dividends? Help!

The first discussion to have is whether or not to incorporate. Incorporated companies can have significantly reduced taxation rates, but there are some trade-offs in complexity. Again, this is a great discussion to have with your accounting company—will your company benefit from incorporating? What will work best if you do incorporate—pay yourself a salary, or pay yourself dividends?

Re-Invest in My Company?

If you have incorporated, you would probably be advised to keep as much money in the company as possible, rather than taking money out in dividends. This reduces the overall income tax rate of the owner, since corporate tax rates are better than personal ones. An additional benefit of putting more money back into your company is that the money can be used for growth and creating an even rosier financial picture for you and your family in the future.

Corporate Donations—Win/Win!

Another option to think about is donations. Maximizing your charitable donations is another discussion to have with your accountant—which makes more financial sense, donating through the company or donating personally? How much donation minimizes your income taxes owed? Which charities qualify as a Canadian charity, and which ones don’t? 

Here’s an article on business versus personal donations in Canada to help you get a better handle on this subject. 

Deferred Income—Earn Now, Pay Later!

Another method of minimizing your tax burden is with a Registered Retirement Savings Plan (RRSP). An RRSP can be used to defer income, ideally from when you are a high-earning individual to when you will be a lower-earning individual. This is another strategy that is best worked out with Shaw & Associates, since how much income you take (in salary or dividends) will affect your RRSP picture, as well as other expenses you might want to claim.

For some more ideas on taxation strategies for small business, have a look at this article from thebalancesmb.com.

And, In Closing, Talk to Your Accountant

You’ve probably noticed a theme here—talk to an accounting professional if you want to keep more money in your own pockets! We are tax experts, and can guide you through the complexities of finding income tax savings for your business, and for you personally.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.

Accounting For Aging and Retired Canadians

Posted November 26, 2018

When people get older and retire, their accounting needs change, but their need for an accounting company doesn’t disappear. Accounting for elderly people is due to become a large part of what any accounting company can do for its clients.

As of 2018, 15% of Canadians are seniors (age 65+), and 29% are Baby Boomers, who are just hitting retirement age.

Per Monster.com, “With the oldest Baby Boomers hitting their 60s, a multibillion-dollar niche in accounting is developing to help seniors and their adult children plan for the future care of those who can no longer live independently.”

Older people have different financial goals and concerns than younger people. Retired people might be concerned about outliving their money, and are more focused on financial planning now and in the near future, rather than the distant future.

People of retirement age may also be looking at selling real estate and divesting themselves of assets to provide funds to live on. They are also more concerned about their estates, and having their money and assets being divided up exactly the way they want them to be after their death.

Retirement-age people tend to use healthcare more often, and for more expensive or involved procedures. This could be a facet of their financial picture; they might be looking at improving their health insurance situation, or even looking at doing financial planning for medical tourism (travelling to other countries to have procedures done).

Retired people also become Snowbirds—Canadians who spend a large part of the cold months in a sunnier climate like Arizona or Florida. Snowbirds have particular financial needs as well; they may need their bills taken care of for them in Canada while they’re away, and their tax situations might be more complicated with partial residency or real estate holdings in a foreign country.

Here’s a video with regards to whether or not you can afford to retire. This should give you some sense of where you stand and what you may need to discuss with your accountant.

Accounting firms can provide a number of services to retired clients, so they don’t need to get these services from multiple providers. This is a great benefit to older people, who may not have any interest in spending more time than they have to on their accounting/financial needs, and don’t want to have to deal with multiple companies. Shaw and Associates might be the only accounting company you need as you age.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.

Why Develop a Relationship with Shaw & Associates

Posted October 29, 2018

The relationship you develop with your accounting company can be one of the most important relationships you have when you are running a business. A healthy accounting relationship is based on trust and confidence.

You need to trust that your accountants are handling your business in a professional, competent way, and you need to be confident that we are not only doing your day-to-day accounting correctly, but we are also going above and beyond in looking out for more opportunities for your business.

Trust and Confidence

Trust and confidence come from knowing your accounting team, and feeling assured that we know you, and we know your business. Customers who work with Shelly Shaw and her associates appreciate the responsiveness and professionalism that we bring to our customer interactions, as well as our knowledge of accounting principles and practices.

Not “Just Another Client”

When you develop relationships with everyone at Shaw, you’re not just another client to Shaw & Associates. The people working on your accounting will know you and your business, and be able to give you good, personalized advice based on your individual situation and your unique preferences.

You won’t get a, “I’m sorry, we can’t do that” attitude from Shelly and her team. Because we know you and your business, we will work with you to find ways to achieve your goals.

Shaw & Associates Are Available and Responsive

Also important is how approachable, available, and responsive everyone is at Shaw & Associates. When you need answers to accounting questions, you usually need them in a hurry.

No one wants to have a question that goes unanswered and leaves your business in limbo while your expert takes a lengthy time getting back to you. Shelly and her team make client inquiries a priority.

A Customer Endorsement

customer endorsement: “Shelly and her team are awesome! As a controller for a small business, former employee of one of the largest accounting firms in the world and now as a financial adviser with Investors Group, I have worked with many accountants and when I run into clients who work with Shelly it always makes my job easier! Highly recommend Shaw and associates.”

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.

Changes to Deductions for Your 2017 Income Tax

Posted October 22, 2018

There have been a number of changes to income tax deductions for the 2017 tax year, which will continue to apply for 2018. Let’s take a look at a few of the lesser-known changes here.

Caregiver Expense Deduction

Three previous credits, the caregiver credit, the family caregiver credit, and the credit for infirm dependants over 18, have been replaced by the Canada caregiver credit. The maximum claim amount for the new amalgamated credit has been increased to $6,883 for 2017 (and potentially higher for 2018).

As noted on the Government of Canada website, the credit is similar to the previous three credits that it is replacing except for one notable exception—if you are supporting a parent or grandparent over 65 who is living with you, you cannot claim the caregiver credit unless that parent or grandparent is infirm.

Deployed Military Salaries Exempt from Income Tax

Also on Canada.ca, as part of Canada’s new Defence Policy to improve how Canadian military personnel are treated, Canadian Armed Forces personnel who are on active deployment will now have their incomes exempt from income taxes while they are on deployment. Police officers who have been deployed on designated international missions will also be included in this income tax exemption.

Disability Tax Credit

Canadian citizens with a severe and/or prolonged mental or physical disability have been able to claim a disability tax credit in the past. This tax credit has had a change as well, in that nurse practitioners have been added to the list of medical personnel who are able to certify the disability application form, Form T2201 (the Disability Tax Credit Certificate).

Public Transit Expense Deduction

As of July 1, 2017, Canadians will no longer be able to claim a deduction for transit passes. The federal government has indicated that it will be considering other ways to encourage Canadians to use transit other than the underutilized public transit expense deduction.

Contact Shaw & Associates Chartered Accountants to help you with unusual tax credit questions. One complimentary meeting with us will put you and your business on a more profitable and positive path.

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