Changing Your Fiscal Year’s End Date – Why You Might and How You Could

by BusinessFinancial Planning

Looking to change your fiscal year’s end date to another time of the year? Choosing your year-end date can have strategic tax advantages, as well as operational advantages. And technically, you can change it to any date on the calendar, as long as it meets the Canada Revenue Agency’s (CRA) requirements. To learn more about why you might and how you could change your fiscal year’s end date, check out our short guide on the advantages and the process of doing so.

Benefits

Businesses with high inventory counts may prefer a year-end date to match with their offseason since a quieter time makes it easier to organize taxes and complete year-end tasks. A change may also help you to align your dates with your accounting firm’s slow period, getting you more attention, better rates, and a quicker turnaround when you need it most.

Sole-Proprietorship

When you open a sole-proprietorship, your fiscal year’s end date is automatically set for December 31 of the year you apply. However, you might want to have a date that makes filing taxes easier for you (as mentioned above). To request a change, you need to send a request to the CRA. To do this, you just need to fill out a form called the T1139 – Reconciliation of Business Income for Tax Purposes. The CRA will then review the application and determine if your reasoning is relevant enough for a change to occur. If your reasons are just, it is not likely you will be denied.

Corporation

For a corporation, the fiscal year’s end is established when you submit your first corporate tax return (T2). Technically, you don’t have to file it on December 31st. You could file it any other month, as long as the date you do so is within 53 weeks of your incorporation date. In the event that your corporation is already established, you’ll need to send a letter to the director of your local tax service office requesting a change.

Requirements for Approval

Not all applications will be approved by the CRA. They will only approve those that have sound business reasons and are not applying to attempt to minimize their taxes. An example is if your corporation is changing the fiscal year end date to match that of the date used by the parent corporation – such a reason makes sense for a multitude of reasons for both the umbrella company and for the company applying.

Special Circumstances

In some cases, you may be able to adjust your fiscal year-end date without the written approval of the CRA. For instance, let’s say your corporation is being acquired by another business and that company would like the fiscal year-end dates to match – you could just make a straight change. Other cases where this is acceptable include: when the corporation has wound-up, where a business has to end its tax year at a certain time because it’s moving abroad, or when a business has become exempt from tax.

Changing your fiscal year end is not right for every business – it also has the potential to introduce more tax reporting complexities. So, it’s always wise to talk to an advisor first before making a decision. We recommend getting in contact with us at The Beacon Group of Assante Financial Management Ltd. before you make any decisions regarding your fiscal planning.

Downsizing: Why It’s Not Always a Bad Option

Downsizing: Why It’s Not Always a Bad Option

by BusinessFinancial Planning

Are you considering downsizing your business but are afraid it may lead to poor results, slower growth, or other negative consequences? You shouldn’t worry – it may actually be a better idea than you had imagined. Here are just a few of the reasons why downsizing isn’t always a bad option.

Reduce Debts

Bad management and poor decisions are not the only causes of business debt. Sometimes it’s just plain old bad luck, and sometimes it’s the result of trying to grow too fast. When the debts are getting a little out of control and beginning to have a major impact on the business operations, downsizing can be the key to helping you get the finances back in order.

Remove Weak Links

Sometimes when companies grow too quickly, they must take on a large amount of staff without taking as much care and consideration in the hiring process, ensuring they can keep production in line with demand. If something happens in the marketplace, in your area, or within the company, and there is a dip in business as a result, you may find yourself over-staffed with underperforming, low-quality employees. Downsizing during this time can help you remove the weakest links within your teams and provide better opportunities for the ones who are dedicated and add real value.

Balance Resources

Another advantage of downsizing is that you can rebalance your resources. There will often come a time when certain departments may be receiving more resources than they need, putting a damper on your bottom line. It can be hard to notice when this is happening amongst the chaos of your everyday operations. Downsizing can assist you in this scenario by providing you with a good opportunity to re-evaluate and re-allocate resources to where they are most needed.

Generate Revenue

When you downsize, you will likely end up with equipment, supplies, and assets that you will no longer need. You can sell these within your industry and generate money that you can reinvest into the business to help grow your company into the direction you desire.

Improve Work-Life Balance

It’s a misconception that businesses need to be large to be successful. Sometimes bigger is more difficult to manage; it’s chaotic and more exhaustive on resources and employees than smaller businesses are. This is particularly true if you and all your managers are working non-stop to manage your large-scale operations. What’s the point if you can’t enjoy your life? Downsizing can help create a better work-life balance and keep your business structure in check as well.

Downsizing is not always a bad option.  In many ways, it can end up being the best option for your business to get back on track and succeed the way you planned. To find out if your business could benefit from downsizing, talk to one of our advisors today. We offer advice and guide you through the process when you’re ready to make a change.

Getting Back on Track with Your Savings

Getting Back on Track with Your Savings

by FinancialFinancial Planning

We all have things we’d like to save for – whether it’s an addition to the home, a retirement plan, or post-secondary education for the kids. Reaching these goals can be a complicated and challenging process. Often, we get a little off track with our savings and need some help to get them back under control. If this rings true to you and you feel like it’s time to re-visit your savings plan, check out these 5 ways you can start getting back on track with your savings today.

Create a Savings Strategy

Once you know what your financial goal is, it’s important that you create a savings strategy. First, figure out how much you want to save each month to reach your goal, and then decide on what the deadline is to achieve your goal. By dividing the total amount you need to save by the number of months that it will take to complete your goal, you will get the total of how much you need to save each month. If the amount looks too high, you should look at your expenses to see if you can find ways to save more money. A financial planner can help you find better tools and ways to reach your goal without burdening your lifestyle.

Review Your Options

There are plenty more options to save money than just through a savings account. Saving tools like Registered Retirement Savings Plans (RRSP), Tax-Free Savings Plans (TFSA), and Guaranteed Investment Certificates (GIC), are just three of the most popular methods available in Canada to help you save. By talking to a professional advisor, you can get the guidance you need to help make a decision that is right for your financial goals.

Track Your Expenses

Once you have a detailed strategy and savings plan in place, you need to start tracking your expenses. By tracking how you spend your money like your monthly bills, entertainment, and lifestyle expenses, you will be able to see more clearly where you spend the most money. This will, in turn, help you find ways to trim down your expenses and free up money for your savings, like cutting back on eating out or switching to a more affordable gym membership.

Pay More Than Just Credit

With credit being easy to obtain, many people have gotten away from the habit of saving and instead, focus only on paying back their credit. Without any money in savings, you are just living off of debt. To get back on track with your savings, you need to put a proper payment strategy in place for both your credit accounts and your savings accounts. One method is to set up an automatic payment to your savings account, so you are paying a little bit each month, instead of just paying your credit back. You will be surprised at how fast it adds up.

Look For Better Deals

If you’re spending too much on your insurance, mortgage, and bank fees, you could be losing out on saving opportunities. To find better deals, hire a professional advisor who can look through all your expenses and help determine what better options are available to you. A new bank account, re-financed mortgage, or new insurance policy can help you to free up some of your money for your savings accounts.

When your savings need to be resurrected from the dead, talk to us at The Beacon Group of Assante Financial Management Ltd. Our professional advisors can help you better organize your expenses and get your savings back on the right track.

5 Ways to be Sure You are Making the Right Investment Choice

5 Ways to be Sure You are Making the Right Investment Choice

by FinancialFinancial PlanningInvestment PlanningRisk Management

When you want to make your money grow you first need to learn how to invest properly. The fact is that thousands of Canadians lose money on investments each year by not taking the time to understand their investment strategy. Having a solid investment plan in play, you need to take the right steps and inquire with the right people who can advise you. To get on the right track with your investments, check out these 5 ways to be sure you are making the right investment choice right from the get-go.

Know Your Goal

You will never be able to know if you’re on the right track of making the best investment choice if you don’t know what your goals are. For instance, are you investing for extra retirement security, income, or growth? Do you want to invest for the short-term, mid-term, or long-term? Your answers to these questions can help form your financial plan and strategy that will be in sync with your goals. Thus, any decisions you make should be in sync with your strategy in order to keep you on the right path.

Be Realistic

Being realistic about how much money you have to invest will help you make better investment choices. For instance, if you have a hefty sum of money to invest you will naturally have more investment options available to you, and can easily diversify. If you only have a small amount of money, you should start slow and begin transferring monthly amounts to your investments that you can actually afford. If you’re not realistic you can get yourself into money issues quickly, so talk to an advisor on how to build your portfolio with what you can afford.

Do the Research

Hearing from a friend about a “good stock to buy” often leads to costly regrets. Before you invest, learn as much as you can about stocks, bonds, mutual funds, and all the investment instruments out there. Take the time to understand the jargon and terms, the types of investments available to you, what investments are better for short and long-term, and educate yourself about the financial markets. The more you know, the better prepared you are, and the more likely you will make the right investment choice to see your money grow.

Know the Risks Involved

It’s no surprise that all investments come with some degree of risk. But some investments are much riskier than others. You are more likely to make a sound investment decision if you are aware of the risks that a particular investment can entail, and have the capacity to absorb any potential risk you may experience.

Get Advice from a Professional

Investments are complex to understand and trade. If you don’t know what you’re doing, you could lose money. Talking to a professional for advice on what investment tools are best for your financial condition, is the best way to ensure you’re making the right investment choices for you. Even the savviest traders have financial mentors and work with other professionals to help them get the most out of their investments.

When you need some expert advice, talk to us at The Beacon Group of Assante Financial Management Ltd. Our team of business professionals can guide you in your investment decision and help you understand what financial strategies are best suited to you.

Financial Planning: Balancing Post-Secondary Education and Retirement Savings

Financial Planning: Balancing Post-Secondary Education and Retirement Savings

by EducationFinancial PlanningLifestyle

It can be difficult to get a proper investment plan in place to help you save for some of your financial goals like your child’s post-secondary education or your retirement funds. But with some careful planning and a well-designed strategy, you can get your savings right on track. Let us show you how you can start balancing post-secondary education and retirement savings without breaking the bank!

Outline Your Goals

First things first – you should have an idea of how much you’ll need to save. If you want to save for your child’s education, you should research what the typical post-secondary education costs are today. The same goes for your retirement – what is the average amount of savings you will need to live comfortably after you retire? There are online calculators that can help you, but talking to a professional who has expertise and insight is always a wise decision in gaining a more accurate scope.

Look At Your Choices

Once you have a better understanding of the goals you’ll need to achieve; you can then begin putting a savings strategy into place. If you feel overwhelmed by the figures involved, reach out to your advisor. They can help you focus on what’s in front of you, so you can stay on track and determine what the best strategy is. Their job is to help you understand all the choices that are available to you to meet your education and retirement savings goals without putting a damper on your lifestyle.

Start Early

The earlier you start saving, the more funds you will have available when your child needs to enroll in post-secondary school and when you’re ready to retire. For example, if you begin saving $100 per month for your child’s education, you can save approximately $20,000 by the time they go off to college. If you wait too long, then the number starts to decline. The same goes with your retirement savings – start saving now for better returns.

Set And Stick To Priorities

Learning to identify your priorities is another important factor in achieving your financial goals. You will face many moments in your life where you’ll need to make hard decisions between your wants and your needs – is that in-ground pool really worth it or is it better to tuck that amount away into your savings instead? It’s all about setting your priorities and trade-offs straight before you land in some bad habits of putting your wants before your needs. By placing your retirement and education savings toward the top of your priority list, you’ll have a much better shot of reaching your goals.

Be As Frugal As Possible

There are lots of ways to save more money without limiting your lifestyle. You can save by shopping at a discount grocery store, buying items in bulk, by sticking with only one vehicle, taking staycations, and limiting your shopping habits. By sacrificing a little, you’d be surprised at just how much you can end up with.

When you need an advisor to help you balance post-secondary education and retirement savings, talk to us at The Beacon Group at Assante Wealth Management Ltd. Our team can help you organize your finances and help you achieve your financial goals.

 

Financial Planning for the New Year

Financial Planning for the New Year

by Financial Planning

Most people don’t really commit to their financial resolutions each New Year. Sometimes the goals are just too ambitious, and other times it’s simply because they weren’t held accountable to stick with them. Nevertheless, you’ll get another crack at it this year, and with these following tips you can get back on track with your financial planning for the New Year and keep it going over the long-term.

Determine What You Really Want

If you don’t know exactly what goals you are working towards, then you won’t achieve them. Take the time to write out all the financial goals you would like to complete this year. Then create a few milestones that you will need to accomplish and give these items a deadline. By knowing what you really want to attain and having a clear plan for succeeding, you will be starting off on the right foot.

Review Your Portfolio

There’s no better time to review your financial portfolios than now. Make it one of your resolutions to check which areas overperformed and underperformed, and rebalance your portfolio as necessary.

Revisit Your Retirement Savings

Every New Year, you should evaluate how much you have saved so far for your retirement. Then you need to create a financial plan for your current savings and see if you have the opportunity to contribute even further.

Update Your Debt Reduction Goal

As an important part of your financial planning for the New Year, don’t forget to review your current outstanding debts. If it is available to you to pay down some extra principal towards your mortgage or credit card payments, create a plan to do so. Determine how much you can realistically afford to pay off during the new year. For optimal results, avoid adding anything further to your credit card and talk to an advisor about getting a consolidated line of credit.

Plan to Save More

Make this new year the one where you form a new habit of putting more into your savings account. To resist spending what you should be putting away, set up an automatic payment plan. That way any money you need to be placed aside goes instantly into your savings account, making it much easier to save since you don’t even have to think about it.

Review Your Insurance

Take some time to think through how much protection you need and if you are on the right track to having the necessary amount of coverage. Talking to a professional can help you get a better handle on the options available to you.

Getting a head start on financial planning for the new year is always a smart step for creating a good plan that you can stick to. Take this opportunity to set realistic financial resolutions and keep track of how you are doing throughout the year. For help and guidance on how to set organize your financial future, talk to a financial advisor at The Beacon Group at Assante Wealth Management Ltd. today to review your goals and help you set achievable objectives.

 

Understanding the Tax Implications of Family Gifts and Loans

Understanding the Tax Implications of Family Gifts and Loans

by Financial PlanningTax Planning

It’s not uncommon for parents to financially support their children well into their twenties and sometimes even in their thirties and forties. With the Canadian housing market being increasingly difficult to enter for first time buyers, parents are becoming more involved with helping their children afford a down payment and more. Some even assist their kids with investment money to start businesses and to help with investment instruments. And while all this may seem harmless, difficulties can arise if parents don’t understand the tax implications of family gifts and loans. Let’s take a look at what we mean.

 

Create Clear Intentions

If you loan your child money or present it as a gift, make sure you get the correct documentation. With a loan, you will need a promissory note, loan document, or registered mortgage on the title of their home. With a gift, you should always collect a deed of gift, or make it in writing. By not having clear documentation about your intentions, your wishes won’t be clear, and you could end up with tax implications, regardless of your intentions.

 

Giving Cash Gifts

There is no tax in Canada for cash gifts that you give your child. However, if the cash is intended to help them pay for a home or for any other capital like stocks or shares, there will be tax implications for you. This is to prevent people from trying to pass on assets to their children to take advantage of the child’s tax rate as opposed to paying at the higher tax bracket.

 

Buying Your Child A Home

If you decide to give your child money for a down payment, pay their monthly mortgage bills, or buy a home outright for them, you will have certain tax implications. For one, if you buy a home for your child the law sees it as if you sold it to them at fair market value. You will be expected to pay the capital gains, not your child.

 

Loaning Money

When you loan money to your child and charge them an interest rate, you will still need to declare any interest you earn on your tax return. If your child is using that money to purchase a home, and they are taking out a Canada Mortgage and Housing Corporation Insurance, they will need to pay a surcharge since the down payment money was borrowed. So be selective on how much interest you plan to charge them.

Family loans and gifts can be very complex to navigate, so talk to us at The Beacon Group at Assante Financial Management Ltd. We can help you get over your financial hurdles and understand all the tax implications in relation to gifts and loans.

5 Ways you Can Better Organize Your Business’s Finances

5 Ways you Can Better Organize Your Business’s Finances

by BusinessFinancial Planning

Running a business can present many challenges – especially when it comes to organizing your business’s finances. If your numbers aren’t accurate or up-to-date, it can impact your bottom line, your growth, and in turn, your success. Fortunately, there are strategies that you can easily implement to coordinate and monitor the finances and day-to-day operations of your business. Check out these 5 ways you can get your company’s finances under control and get ahead.

 

Outline Financial Goals

To get your business’s finances in order, you first need to figure out what the financial goals are that you wish to achieve. Do you want to double your profits over three years? Would you like for your company to go public? Do you want to expand your company to another country? Spending time identifying your financial goals should be your first step. Then write down all the financial milestones for this coming year, along with the next three, five, and ten-year marks. Once you have an idea of how you want the future of your business to unfold, you can then start to figure out how your business will achieve each of the objectives.

 

Create a Budget

Once the financial goals have been set and you have an idea of how to achieve them, now is the time to set achievable targets. By creating a budget, you can better plan how your business will allocate money. This will help you get a grip on where your money should be going.

 

Set Company Standards

An important part of organizing your business’s finances is to set the standards and regulations for partners and/or employees to follow in order to stay within your budget. For example, if you have employees who will expense incidentals during business travel, make sure you outline what the business will cover, how much, and what they are expected to pay out of pocket. Having well defined best practices and company rules will help to ensure your employees don’t go over budget.

 

Organize Paper

Even though many processes have now gone digital, you will still need to work with paper and receipts for many of your dealings. And just throwing your hard copies into a box won’t cut it. You need to set up a properly organized system where you can find what you need quick and simply. Having a filing cabinet and a proper filing system that organizes each part of your business into separate sections – accounting, contracts, HR, operations, sales, etc. – and then by sub-sections, (alphabetically and then by date), will make everyone’s lives much easier.

 

Track Corporate Spending

When you run a business, you need to have finance software and technology to track all of your corporate spendings properly. All the outputs, such as printing, office supplies, leasing costs, utility bills, expense receipts, and extras like coffee and vending machine snacks, should be accurately inputted and accounted for. Neatly organizing all your expenses and income earned will help you to organize your business finances better.

Let us help you achieve the level of organization that your business needs. At The Beacon Group of Assante Financial Management Ltd., we help leaders and business owners fix their problems to gain more effective processes geared for success. Call us today!

Beyond the Will: What’s Involved in Estate Planning?

Beyond the Will: What’s Involved in Estate Planning?

by AgingEstate PlanningFinancial Planning

Every Canadian should have a will. We understand how uncomfortable this discussion and process can be, but it’s crucial to take care of to gain peace of mind and to know that your family and your assets are well taken care of. A Will allows you to determine how you want your possessions and estate handled, who the executor will be, and who the guardians of your children will be if something should ever happen to you.

If you’re wondering what’s involved in estate planning, here’s what you need to know when it comes to gaining that important peace of mind during the creation of your Will.

 

Create your Will

An essential part of estate planning is creating your Will. This key legal document outlines how your assets will be distributed and to which beneficiaries. It also stipulates who will be responsible for ensuring your wishes are carried out exactly as you planned.

 

Name the Executor

Naming your executor is the next important step of your Will planning process.  This person or corporation will have the responsibility for carrying out your wishes after you pass away.  This named individual will also have the responsibility to issue payment from your bank account to cover any taxes or debts that you owe.

 

Choose the Power of Attorney

Important to your estate planning is also determining a Power of Attorney. This refers to someone you designate to have the power and legal precedence to make any financial or health-related decisions on your behalf.

 

Set up your Insurance

Many people underestimate the amount of money that’s necessary to cover the funeral expenses, taxes, debts, and probate fees. Setting up a life insurance policy can help reduce these burdens on your family and can also help your heirs receive inheritance money to help them out in the future.

 

Ensure Business Continuity

Without a plan for business continuity, you may end up leaving your business partners or family members in a bind. Instead, plan out how your business will operate after you pass on.

 

Outline Personal Care and Funeral Arrangements

Without a detailed plan on personal care and funeral arrangements, your family will be left with the burden of making these painful and challenging decisions for you. An estate plan can help you pre-plan your before and aftercare, how it will be paid for, and your desired wishes for the service.

 

Designate Charitable Gifts

If part of your estate plan includes charitable gifting, ensuring this is included in your Will is vital to guaranteeing that your charitable plans will be carried out correctly.

 

Minimize your Income Tax and Probate Fees

Although you’re not charged an estate tax in Canada, there are other fees that do exist in relation to your Will. There are ways that your estate plan can help minimize your fees that will be charged by your province to process and probate your will.

 

Appoint a Guardian

A guardian will be the person you name to take legal custody of your minors in case of your death.

Talk to an advisor at The Beacon Group of Assante Financial Management Ltd. today to help guide you through the process of creating your Will and your estate plan, so you can take care of any unforeseen situations in the future. It will ensure your loved ones are looked after once you are gone, and it will help settle your affairs preventing any further stress or burdens from being placed on your family.

3 Investment Rules for Estate Trustees

3 Investment Rules for Estate Trustees

by Estate PlanningFinancial Planning

An estate trustee is responsible for performing various duties to encourage the wellbeing of the estate in question, as well as its beneficiaries. Among those duties includes careful and thoughtful investment in order to bolster the strength of the estate. There are three main rules pertaining to this duty, and by following them diligently and accurately, an invested estate can prosper for many years to come.

 

Obey the Trust Deed at All Times

A trust deed normally includes an agreement or term that protects the estate by limiting the trustee’s investment authority. Sometimes this is incorporated intentionally, but even if it isn’t, trustees are required to follow the instructions written out in a testator’s investment clause. Even if they are poorly explained or overly broad, the trustee and investment advisor are responsible for remaining faithful to the testator’s wishes. If not, they are essentially breaching their contracted duties and can be held liable in a court of law.

 

Invest Sensibly and Consider Outcomes

To guarantee sound and prudent trust investments, a trustee must consider the economic climate, including potential effects of inflation or deflation. Additionally, they must ruminate on any tax implications or impacts on the trust’s portfolio from any investments, as well as the expected total return, required payments or liquidity, and asset values to beneficiaries (such as family business shares). Case law also enforces the need for a trustee to diversify the trust’s portfolio to an appropriate extent — even in provinces where legislation doesn’t require diversification. You need to follow a designated investment plan that assesses risks and return potentialities associated with the investment portfolio, as well. You are permitted in any Canadian province to consult with a prudent investment advisor, stemming from applicable qualifications and experience investing within the trust setting. More commonly, an advisor is pre-selected in a clause of a trust deed to ensure continuity. In any case, a written agreement between you and the advisor is required in addition to the investment plan.

 

Be Fair to Beneficiaries (Even-Hand Rule)

On many occasions, trusts include a clause directing the estate trustee to favour or bypass an income beneficiary or a capital beneficiary. This request must be adhered to if included, but if not, you as the trustee need to consider the best interests of all beneficiaries prior to and during the investment process. Not doing so or investing in a beneficiary’s own business could be used against you in a court of law as a violation of the even-hand rule.

A trustee is quite literally trusted with the wellbeing of an estate and its applicable beneficiaries from a financial standpoint. To legally and diligently adhere to the testator’s wishes and follow specific guidelines, invest prudently, and follow the even-hand rule will enable for a smooth and efficient process. To learn more about selecting a trustee for your estate or ensuring your legacy is carried out according to your wishes, schedule a consultation with The Beacon Group of Assante Financial Management Ltd.