Federal Budget 2023: Other Measures
Small Business Credit Card Fees
Budget 2023 announced that commitments had been obtained from Visa and Mastercard to lower fees for small businesses. More than 90% of credit card-accepting businesses are expected to see their fees reduced by up to 27%.
Automatic Tax Filing for Low-income Canadians
Budget 2023 announced that the number of Canadians eligible for CRA’s automatic File My Return service will be increased to 2 million by 2025, almost tripling the number of currently eligible Canadians. In 2022, 53,000 returns were filed using this service. In addition, a new pilot project will be implemented to assist vulnerable Canadians in applying for benefits even if they do not file tax returns.
Student Benefits
Budget 2023 proposes increasing Canada student grants by 40%, raising the interest-free Canada student loan limit from $210 to $300 per study week, and waiving the requirement for mature students (aged 22 or older) to undergo credit screening in order to qualify.
Dental Care for Canadians
The Canadian dental care plan would provide coverage for all uninsured Canadians with an annual family income of less than $90,000 (the Canada dental benefit only provided benefits for children under 12) by the end of 2023. The plan will be administered by Health Canada with support from a third-party benefits administrator. Benefits are reduced for families with income between $70,000 and $90,000.
Protecting Federally Regulated Gig Workers
Budget 2023 proposes to amend the Canada Labour Code to strengthen prohibitions against employee misclassification for federally regulated gig workers such that they will receive protections and benefits including EI and CPP.
Ensuring the Integrity of Emergency COVID-19 Benefits
Budget 2023 proposes to provide $53.8 million in 2022-23 to Employment and Social Development Canada to support integrity activities relating to overpayments of COVID-19 emergency income supports.
Disclaimer: Avisar Chartered Professional Accountant’s blog 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 post, no individual or organization involved in either the preparation or distribution of this post accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
Federal Budget 2022: Retirement Plan Measures
Borrowing by Defined Benefit Pension Plans
Budget 2022 proposes to provide more borrowing flexibility to administrators of defined benefit registered pension plans (other than individual pension plans) for amounts borrowed on or after April 7, 2022.
Reporting Requirements for RRSPs and RRIFs
Budget 2022 proposes to require financial institutions to annually report to CRA the total fair market value of property held in each RRSP and RRIF at the end of the calendar year. This information would assist CRA in its risk-assessment activities regarding qualified investments held by RRSPs and RRIFs. This measure would apply to the 2023 and subsequent taxation years.
The tax consequences of leaving Canada permanently
From assets and property to personal ties, several factors affect the tax consequences of leaving Canada. As a result, detailed planning needs to be done in advance of the move.
About three million Canadians currently live outside the country. And many others contemplate making a move at some point in their lives – whether it be to pursue a professional opportunity, return to their home country or relax in a warmer climate.
But if you are thinking of moving abroad, it’s important to remember that the process can be complicated. Among other things, you will need to plan for the tax consequences, especially if you expect the move to be permanent. There are many rules to consider – the key considerations below are just a few of them – which is why professional advice is important.
“Having a CPA oversee the process helps avoid unpleasant surprises,” says Virginie Vargel, a CPA who specializes in expatriate and non-resident taxation.
Here are four factors to think about:
Determining your residency status
To determine whether you will need to continue paying tax in Canada, the Government will first check whether you have retained significant ties here, says CPA Annie Poitras, lead senior manager, U.S. and international taxation at Raymond Chabot Grant Thornton. Such ties, she says, might include owning a house in Canada or having a spouse or common-law partner and/or dependents who are minors still residing in the country. The Government will also consider secondary ties, such as owning personal property, bank accounts, or a valid driver’s licence.
“These ties are acceptable as long as they can be justified,” says Poitras. “You can keep your driver’s licence if it is valid in the host country and you can continue to own a residence that you are renting out if conditions are met, such as having a written lease. The Canada Revenue Agency starts to ask more questions, however, if you leave the country but retain a vacant home or if you have dependents, spouse or common-law partner in Canada. Residency status is based on facts and on the taxpayer’s firm intention to leave the country.”
If the Government determines that you are no longer a resident, you will be considered an emigrant and subject to certain restrictions. For example, you will no longer be able to make regular contributions to a tax-free savings account (TFSA). However, as the CRA website explains, “Any withdrawals made during the period that you were a non-resident will be added back to your TFSA contribution room in the following year, but will only be available if you re-establish your Canadian residency status for tax purposes”.
You will still be able to contribute to a registered retirement savings plan (RRSP) if you have unused contributions but it may not make sense to do so. “This is why it is so important to carefully consider the date on which you give up your Canadian residency,” says Poitras.
Avoiding double tax
Switching to non-resident status is crucial because every host country has its own tax rules and, in many cases, an agreement with Canada.
“The goal,” Poitras points out, “is to avoid being taxed twice.” For example, in Canada, the tax rate on an RRSP withdrawal is generally 25 per cent for non-residents. However, depending on tax agreements, this rate could be lowered to 15 per cent depending on how amounts are withdrawn.”
“Whether there is double tax or not depends on whether the foreign country will tax the RRSP,” says FCPA Bruce Ball, vice-president of taxation at CPA Canada. “If the rate is 25 per cent but no tax is paid in the new country of residence, there is no double tax. Also, one may be able to claim a foreign tax credit in the other country based on the Canadian tax depending on the tax rules of that country.
Paying a departure tax
The moment a resident leaves Canada, the CRA deems that they have disposed of certain kinds of property at fair market value and immediately reacquired it at the same price. This is known as a deemed disposition and you may have to report a taxable capital gain that is subject to tax (also known as departure tax). But, that doesn’t mean an individual leaving should rush to liquidate everything.
For example, says Poitras, “furniture and vehicles, are excluded from tax, as are registered plans (such as RRSPs or TFSAs) and CPP and QPP benefit entitlements, because they will be taxed at a later date.” Same for foreign assets, such as, property that generate taxable capital gains, as long as the person has been a resident for 60 months or less during the 10-year period prior to emigration and held the property when residency was established.
Also, there is no immediate need to sell your home, as the deemed disposition does not apply to real property. “There is no deemed capital gain on a principal residence,” Vargel explains. “The property only becomes taxable when you leave the country and it is sold.” At that time, recognition is given to the principal residence designations which apply.
That said, leaving a vacant home can be an issue for residency determination, so it’s common for people to sell or rent the home, says Ball. If the property is rented, there may be a deemed disposition due to a change in use and other issues may arise, such as withholding tax on rental income. Hence, getting professional advice is important.
If the house is sold once the owner has become a non-resident, the vendor must notify the CRA about the disposition or proposed disposition by completing Form T2062 and send the payment or acceptable security to cover the resulting tax payable.
Also, any balance owed under the Home Buyers’ Plan must be repaid before you leave, otherwise it will be included in taxable income, says Vargel.
Poitras adds that it’s also important to communicate your change in status to any financial institutions where you have accounts generating passive income, such as interest or dividends. Also, provide a foreign address.
Final tax return and tax deferral
Since it will include your departure date, the change will be confirmed when you file a final tax return by April 30 of the year following the one you left Canada.
“The tax authorities treat this final tax return much like they would treat the tax return of a deceased person,” says Poitras. “It’s the last chance for the CRA to tax the income and property of a Canadian resident, including foreign assets, such as a condo in Florida.”
When filing their return, the resident can choose to defer the departure tax to be paid on income relating to the deemed disposition of property, says Poitras. This can include some or all the assets with no pre-set time limit, even if the eventual return date to Canada has yet to be decided. “Some may defer, since they might come back,” adds Ball.
“If the person provides guarantees [such as a letter from a bank], they will not pay the tax immediately, but only when the assets that are the subject of the guarantee are actually deemed to be disposed of,” she says. “If the amount of federal tax owing on income from the deemed disposition of property is more than $16,500 ($13,777.50 for former residents of Quebec), you have to provide adequate security to the CRA to cover the amount [see Form T1244].”
“Leaving the country has significant and costly consequences from a taxation standpoint,” reminds Poitras. “However, a CPA can review everything in advance before the tax return is filed. It’s always much cheaper to hire an expert to help you plan than to pay them to fix mistakes.”
Stay updated on taxes
This article includes a general summary of detailed tax rules. Need specific tax advice? Hire a Chartered Professional Accountant (CPA) and get the best working for you. Visit the website of your provincial or regional CPA body to access a CPA directory.
Disclaimer:
Avisar Chartered Professional Accountant’s blog 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 post, no individual or organization involved in either the preparation or distribution of this post accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
The High Costs of Equipment And Vehicles
The high cost of equipment demands that owner-managers have an in-depth understanding of the cost of owning and maintaining specific types of equipment, to ensure that it contributes to a positive return on investment. Factoring the significant costs of equipment ownership into a pricing formula could increase your sales figures and at the same time, help you understand where you can reduce present and future costs – and improve your bottom line.
Businesses spend a great deal of time reviewing salary and wages, both to control cost and to determine billing rates when providing estimates or billing clients.
Next to wages, vehicle and equipment ownership and operations are among the higher-expense items within a profit-and-loss statement. Yet, very few businesses monitor the cost of owning and operating vehicles or equipment. Instead, they may simply fold it into the price of doing business without analyzing it further.
Whether your business needs a front-end loader costing just south of $500,000, or a working truck in the $90k to $100k range, analyzing the cost and contributions that these assets make to the business may contribute to a more satisfying bottom line.
To better understand the benefits of job costing each piece of equipment, consider this advice:
This information in turn provides a basis for quoting jobs, as well as documentation you can use if you’re considering future equipment purchases.
- Consider recording the cost of powering the equipment. Whether the source of power is fossil fuel or electricity, knowing the operation costs is a major consideration in an energy-expensive world.
- Downtime of all equipment should also be recorded. Knowing how many hours equipment is out-of-commission due to mechanical failure is essential to:
- Understand the cost of repairing the equipment.
- Determine the lost opportunity cost because equipment cannot be used.
- Establish whether that brand of equipment meets job requirements.
- Compare the downtime to that of similar equipment, so you can analyze based on hard numbers which is the most reliable or usable piece of equipment.
- Purchasing equipment usually requires financing. Interest is a cost of ownership and, as such, should
- be recorded for each specific piece of equipment. Factoring interest costs into the operational cost of the equipment forces management to consider whether charge-out rates need to increase, or whether leasing or renting is a better alternative to the cost of ownership.
- Consider extended warranty cost as part of the cost of operating equipment. If extended warranty is included, you as an owner-manager may wish to consider extending the useful life of the equipment to align with the extended warranty period, which will help you cost jobs or hire out equipment.
- Finally, be sure to record revenue earned using the equipment based upon the predetermined hourly charge-out rate. Knowing whether the equipment is paying for itself helps determine whether your business should purchase additional equipment, sell the existing equipment or rent similar equipment in the future.
JOB COSTING
Establishing an asset-specific costing process is not as difficult as you might think. Most quality bookkeeping systems will have a job-costing module that already allows posting of expenses and/or revenues for reference purposes. If your software does not have this kind of module, you could also build a spreadsheet to record the cost and revenue attributed to specific assets.
The hard part is to ensure that all employees are trained to record the additional required information. For instance, when an in-house mechanic repairs a specific piece of equipment, the time spent on the repair should be documented to allow posting to the job cost for that equipment.
Bookkeepers must also be able to identify the invoice associated with the cost of parts for that specific equipment repair, for their job-cost posting. Each business will need to adapt its procedures to accommodate its software.
Naturally, all the recordkeeping in the world will not benefit the bottom line if management does not review, on a regular basis, the results of their decision to rent or lease an asset.
Reviewing this data allows management to:
- Determine whether usage of equipment dictates that the business will need a replacement earlier than suggested.
- Consider whether the asset is bringing an advantage to the business.
- Compare similar equipment to determine which brand is less costly to maintain in future.
- Determine whether your employees have a possible bias towards a specific piece of equipment that may sway future purchase decisions.
Using a fact-filled approach will help you arrive at decisions about acquiring future equipment to be purchased and related cash-flow requirements. It will also help your business take action to ensure that financial data, corporate records, and lines of credit are up-to-date, so you’ll be able to secure financing for any future replacement assets.
Learn more about how to read and understand financial statements in How to Read Financial Statements: A Guide for Business Owners.
Disclaimer: Avisar Chartered Professional Accountant’s blog 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 post, no individual or organization involved in either the preparation or distribution of this post accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
The High Cost Of Stress
Stress response was meant to be a temporary reaction to a life-threatening situation, but unfortunately, more and more employees are finding that the stress of everyday living combined with on-the-job stress is having an impact on their lives.
“Stress generally refers to two things: the psychological perception of pressure, on the one hand, and the body’s response to it, on the other, which involves multiple systems, from metabolism to muscles to memory. Through hormonal signalling, the perception of danger sets off an automatic response system, known as the fight-or-flight response, that prepares all animals to meet a challenge or flee from it.”
Psychology Today
Stress Within The Workplace
Owner-managers may not be able to control an employee’s personal life stress. However, they must be sensitive to stress points that trigger employees’ unhappiness, both within and outside the workplace environment and work towards assuaging the stress points.
Stress within the workplace is an expensive hidden cost to the employer:
- Absenteeism increases create higher payroll cost.
- Productivity is reduced when employees are absent.
- Illness, both physical and mental in nature, drive up the cost of health premiums.
- Employee turnover results in higher training cost and lost productivity.
- Costly litigation may result if employees challenge the dismissal.
- Individuals under stress may have reduced ability to make critical decisions, as their thought process
- is clouded with personal issues that lead to errors.
- Interpersonal skills may deteriorate, as individuals under stress may not filter comments, thereby offending co-workers or clients.
- Other workers are negatively impacted thereby reducing effectiveness and creating job dissatisfaction.
REDUCING EMPLOYEE ON-THE-JOB STRESS
Identifying and counteracting on-the-job stress is not an easy task for the owner-manager. Perhaps the best approach is for the owner-manager to put themselves in the worker’s position to try to understand the stress points of the job.
It is not suggested that management needs to become an “Undercover Boss” as depicted on the television series, but adopting the concept certainly would help management identify stress points within a job classification and better enable them to address the areas that require attention.
Consider these practices to help your employees reduce their stress on the job:
- Have an open-door policy with the assurance of confidentiality that allows employees to discuss workplace-related issues as well as personal issues that are causing anxiety. (Only 23% of Canadian workers had enough confidence to approach management and seek help with stress issues.)
- Address job-related problems and or employee concerns (bereavement, divorce, illness, moving home and financial) in a timely fashion. An individual’s stress is an overlay of personal and work-related problems and not understanding and working with the employee to address issues amplifies their stress level.
- Ensure that managers know how to reprimand and provide constructive criticism without humiliating or degrading employees.
- Never tolerate aggressive physical, emotional or vocal bullying tactics.
- Institute empathy and interpersonal skills training for all employees.
- Prepare employees for changes in the work environment or upcoming projects through dialogue. Management receives feedback and thus a means of judging the demands that will be placed upon employees, available employee skills, project hours and timeline required. This, in turn, will assist in normalizing the project into a manageable process and thereby reduce stress.
- Owner-managers want employees that work as hard for the company as they do. Ensure that employees do not take on more than they can handle. Encourage employees to take coffee breaks, lunch breaks, full vacation and statutory holidays to allow time to let go of workplace responsibilities.
- Provide training in time management that educates employees not only to manage their time but also to recognize that taking on multiple projects that cannot be completed within given time frames leads to poor job performance, anxiety and stress.
- Monitor employees and management to make more effective use of time. Spending time on non-essentials tasks when a major project is underway creates anxiety and stress. Focusing on what is important directs employees to what is the priority.
- Ensure that upper management and team leaders can vent their concerns by having regular meetings to discuss concerns about projects, employees or management issues. Second-in-command individuals are unable to discuss issues with employees and thus need a means to express frustration and anxiety that they may be feeling about the job.
- Reward employees by letting them know their work is valued and appreciated. Regular reviews, and not just for raises, are required to let employees know when they are doing well and when there is need to modify their approach, or to gain more experience, additional training or education.
- Involve employees’ spouses and children so they have an appreciation of job functions, environment, and co-workers and thereby have a better understanding of what goes on during the workday. Consider family days, bring your child to work days or company events to create a family environment.
Canadian statistics indicate that 500,000 Canadians miss work each week from stress-related issues. Forty-seven percent of individuals indicate that work is the most stressful part of their life.
Consider that work-related stress costs the Canadian workplace approximately $20 billion per year – isn’t it time that your business made every effort to reduce stress within the workplace and positively enhance the bottom line?
Disclaimer:
Avisar Chartered Professional Accountant’s blog 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 post, no individual or organization involved in either the preparation or distribution of this post accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
Self-Directed Investments
Fundamentally, there are four avenues that the average Canadian may consider over their lifetime:
- Registered Retirement Savings Plan (RRSP)
- Registered Retirement Income Fund (RRIF)
- Tax-Free Savings Account (TFSA)
- Non-Registered Investment Account (NRIA)
The first three account types are registered with taxation authorities and as such are accompanied by rules and regulations that must be followed to obtain specific tax advantages or to avoid penalties for non-compliance.
The NRIA is not encumbered by the requirements of the registered accounts and about the only requirement is to ensure that the CRA receives full disclosure of income earned, capital gains or losses and administration fees that may be incurred throughout the calendar year.
Many taxpayers that have one or more of these investment vehicles relinquish management of such to institutional investors, not realizing that all these investments can be placed into a self-directed investment vehicle within their financial institution or investment firm.
ADVANTAGES OF SELF-DIRECTED INVESTMENTS
- Lower cost per trade. Most institutions will allow trades, buying and selling, for approximately $10.00
- per trade transaction.
- Investors can make trades online quickly and efficiently without the need to contact your broker.
- Most self-directed trade sites provide information about the investment. Reports show important information that includes, to mention a few areas:
- balance sheets, income statements, cash flow statements quarterly or year to date
- history of dividend payments
- high and low market value of the investment for not only the current but past years
- other investors’ analyses of the company and, in some situations. a rating of whether to buy,
- sell or hold the investment
- current news updates on the company
- The investor has control of the investment rather than leaving the decisions in the hands of an investment firm or another individual.
- The investor is not locked into specific investment vehicles such as Mutual Funds, Exchange Traded Funds, specific individual stocks, bonds or GICs that may be an institutional investor’s approach.
Some financial institutions offer a “play” account wherein you can practice trading using their software to become accustomed to how the system works and also gain insight into how well the investments would have done if you had invested.
Many financial institutions aid investors wanting to self-direct their investments.
DISADVANTAGES OF SELF-DIRECTED INVESTMENTS
- An unsophisticated investor may not have sufficient knowledge to determine the appropriate investment decisions considering factors such as their age, portfolio diversification, and risk tolerance.
- Familiarity with the investments that are allowed and not allowed in registered investment vehicles is required.
- Investments in foreign jurisdictions may become problematic if foreign tax authorities require registration or reporting in their country.
- Investors may not be familiar with tax requirements.
- Record keeping is essential for non-registered investments as taxation authorities need to know the buy price, sale price, commissions, dividends, income, capital gains, capital losses, and administrative cost. Some online brokerages may provide this reporting for their investors.
- A starting portfolio with low investment may not offer a return on investment comparable to an investment firm that can comingle smaller amounts to create a large investment portfolio.
- A minimum deposit amount may be required to open a self-directed account.
- Financial investors may charge an annual fee. These fees may be hidden in the RRSP or TFSA investment vehicles. These fees are not tax-deductible but simply reduce the overall amount that is available for investment. Similarly, within an NRIA, the more that it costs to administer or complete trades, the less that is available for investment growth. Investment fees within an NRIA are tax-deductible.
OTHER CONSIDERATIONS
- The transfer of all four investment categories from a managed portfolio into a self-directed portfolio in kind is permissible. Many investments held in a managed portfolio can simply be transferred over to a self-directed account without the need to liquidate and repurchase. Some investments can only be held in a managed portfolio and accordingly would have to be liquidated. Generally, there are no tax implications of liquidating assets held in an RRSP or TFSA (as long as the funds are not withdrawn from the account). Naturally, you must stay within the confines of a financial institution. You may be charged an administration fee. Most online brokerages cover the fees for transferring your investments.
- Investors must determine if they want interest, dividend or capital gain growth in their investment. Unlike dividends and interest growth, the capital appreciation of a stock compared to its original cost does not necessarily result in an increase in cash, unless the stock is sold. Accordingly, if an investor chooses to hold stock and its value subsequently decrease, that money is no longer available to invest.
- A capital loss within a registered vehicle is not tax-deductible. It merely reduces the amount of the investment when the stock is sold.
- A capital loss on an NRIA under normal circumstances can only be used to offset capital gains, though these losses may be carried back or forward to other taxation years.
- There are limitations on investments that can be made in registered accounts. The CRA considers these investments to be qualified investments. Investors should be familiar with investments by visiting the CRA website and referring to the publication Income Tax Folio S3-F10-C1, Qualified Investments-RRSPs, RESPs, RRIFs, RDSPs, and TFSAs. Failure to follow the rules and investing in non-qualified investments could result in a tax of 50% of the fair value of the investment at the time it was purchased or became non-qualified.
- An investor could choose a company for its dividend potential. However, if the market value drops below the original cost, the dividend income may not be sufficient to make up the capital loss.
- Investors must determine whether they are going to purchase and hold or actively trade. The CRA has been cracking down on TFSA abuses where investors have been allegedly running a trading business in these accounts.
- You can invest in debt obligations, mortgages, precious metals, warrants and options, securities on designated stock exchanges, money and deposits with Canadian banks, trust companies and credit unions (GICs). However, before making an investment outside designated stock exchanges or GICs, ensure you understand the requirements and restrictions.
- You cannot invest in digital currency.
Converting a managed investment vehicle to a self-directed vehicle is not for everyone. Those who are anxious about their ability to take on the responsibility for their retirement nest egg may not mind paying a management fee and thus are best to stay with a managed account. Others who feel confident in their investment prowess may determine that the risk of self-investing is more than offset by the potential increase in their portfolio value that they may realize by investing the administration fees they did not have to pay.
Disclaimer:
Avisar Chartered Professional Accountant’s blog 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 post, no individual or organization involved in either the preparation or distribution of this post accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
The Little Black Book Of Scams
Common-Sense Strategies Can Protect Your Business From External Fraud
Scams and frauds are probably as old as humanity, but recently they have taken a new turn with the arrival of the Internet and the development of sophisticated telecommunications technology. The Government of Canada has reacted by setting up the Canadian Anti-Fraud Centre, and the Competition Bureau has published a valuable handbook called The Little Black Book of Scams (full text available at www.competitionbureau.gc.ca), which describes 12 important classes of scam and how to protect yourself against them.
Included below are five scams of special concern to small-business owners.
1. BUSINESS SCAMS
In the directory scam, your company receives a proposal for a listing or advertisement in a magazine or business directory. Someone then calls to confirm the address and billing information. Accounts payable soon receives an official-looking invoice and unwittingly pays.
The office supply scammer bills your company for paper, toner, etc. you did not order.
In the health-and-safety products scam, someone pretending to be a government inspector will tell you that you need to replace outdated first-aid kits or safety equipment.
How to Protect Yourself
Create a list of regular suppliers; any new names should be questioned by the accounts payable staff. Because scammers can create company names and logos that look genuine, staff should look closely at all incoming invoices to verify dates, account numbers and other identifying information. The number of persons authorized to pay bills should be limited since scams are sometimes committed by an employee conspiring with an external fraudster.
Senior executives can be the target of special scams.
2. CEO SCAMS
Persons who have signing authority for large sums of money or report directly to the CEO are particularly common targets for this scam. The scam occurs when the CEO or other senior executive is known to be away from the office on a business trip. After hacking your email server, the scammer sends an email or other communication allegedly from the absent executive saying extra funds are needed immediately to close a deal, secure a contract, or take advantage of an unexpected opportunity. The email will ask that the money be sent to a third-party account.
How to Protect Yourself
Secure your computer systems with strong passwords and up-to-date antivirus software from a reputable supplier. Validate the request. Check the email for spelling and grammar mistakes and use of the language uncharacteristic of a native speaker or your executive. Have a standard, multi-level process for signing off on wire transfers.
Remember, a wire transfer is cash; recovery is virtually impossible. Limit the amount of information available to the public about your key employees.
3. SALE OF MERCHANDISE SCAMS
If you market online, you need to be aware of scammers posing as buyers of your product. A scammer will agree to buy your product and pay through PayPal or an email money notification claiming the payment is pending and will be released after you provide a tracking number.
Since a tracking number is usually only created when the purchase is being shipped, the product is on the way to the buyer before you find out the payment-pending notification was fake.
The scammer might also tell you the payment cannot go through because of some problem with your PayPal or bank account and you will have to pay a fee to get another account to complete the transaction. The generous scammer offers to pay the fee now if you will transfer or wire the fee amount to a false bank account. Now you will not only lose the product and the payment, but you will also lose the fee. The scammer may also simply use a stolen credit card number, issue a fraudulent cheque or make a fake money transfer.
How to Protect Yourself
Beware of buyers who are geographically distant with unverifiable email addresses. Never send money to get money.
4. DOOR-TO-DOOR SCAMS
These scams are committed by fraudsters seeking charitable donations or claiming to be selling maintenance or other services. These scammers are often very aggressive, very articulate, and know every trick of persuasion in the book.
How to Protect Yourself
Do not make a quick decision no matter how great the pressure. Do some research on the charity or maintenance company. Get their address. Get the name of the person making the sales call and call the charity or company to make sure the person you talked to actually represents them.
Do not let strangers see any company documents such as receipt forms that could give them information about your company. Do not sign anything. Make sure your employees know you have a procedure in place to review any proposals that come through the door.
5. IDENTITY THEFT
Identity theft is the theft of a person’s unique identifiers such as a Social Insurance Number (SIN), passport or driver’s licence, as well as personal information such as bank account or credit card numbers, birth date, signature, address, mother’s maiden name, user names and passwords. Possession of this information enables the scammer to assume the victim’s identity and transact as if they were that person.
How to Protect Yourself
Shred and destroy documents with sensitive information. Destroy redundant IT equipment, especially hard drives and other storage media. Never use SIN numbers as a filing system. Never send personal identifiers or sensitive personal information by email, text message or give it to unknown callers over the phone. And (it cannot be said too often) always use strong passwords for all online accounts.
You Cannot Be Too Careful
Fraud, whether committed by an employee or by an outside scammer, can destroy a business. As technology changes and scammers become more sophisticated, owner-managers must protect their businesses even more. Constant vigilance is a low price to pay for keeping your business safe.
Disclaimer: Avisar Chartered Professional Accountant’s blog 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 post, no individual or organization involved in either the preparation or distribution of this post accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
Penny-Pinching Pays
Playing Scrooge is not just for Christmas Anymore.
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.
1. 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 premises for revenue-producing uses.
2. 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!
3. 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.
4. 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 preprinted forms. The templates can be adjusted for format changes or staff and address changes.
5. 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 budget.
6. Maintenance
How often are the premises cleaned? Perhaps reducing the frequency of cleaning or having staff empty their own wastebaskets at the end of the day are options that will reduce costs without impacting the tidiness of the office.
7. Go Paperless
Going paperless can be difficult for older employees who are used to paper. Paperless offices must establish a filing system suitable for 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.
8. 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 rental costs.
9. 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.
From: Business Matters, December 2016
Volume 30, Issue 6
Disclaimer: Avisar Chartered Professional Accountant’s blog 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 post, no individual or organization involved in either the preparation or distribution of this post accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
