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

Jackie Joyner-Kersee

“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

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

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Now viewing: December 2018

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.