Old Concept, New Practice

Cloud hosting is quite an old concept, which due to modern technology is only really starting to take off. Let’s say you have a company with a website about hotels in Niagara Falls, which has a lot of short conversations about hotels on it between members. It starts with a few users talking to each other, they tell their friends about your site and their friends tell their friends and so forth. This leads to you being successful, but with success comes problems.

Your equipment just can’t keep up with the demand. Your service slows down and suddenly you’re in trouble. A few years ago, you would have put your website on a computer and server somewhere. And when your success kicked in you had to run around and buy or rent new servers, set them up or have someone set them up for you.

Several companies still do this now. It costs a lot of money and it takes lots of time. This is called hosting. It takes time to set them up and it costs quite a bit of money to keep them running all the time. You pay for these servers when you’re using them and you pay for them when you’re not using them. You really want to just build your service and improve your product. But instead of success, your customers are getting angry and your successful business shrinks away.

Now you have a better option: cloud computing.

Cloud Computing

With cloud computing you have access to computing power instantly when you need it. Put your website on a cloud server, just as you would put it on a regular server and if the amount of users on your site increases significantly and you find yourself suddenly needing more computing power dedicated to your website, you can scale up as much as you need almost instantly. You get your computing power, as you need it from the cloud on demand and your customers stay happy without noticing any difference.

Furthermore, if your traffic dips back down, you can release your servers back into the cloud almost instantly.

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A trust is simply a way to transfer assets from one person to another, through an indirect method. For instance, if I wanted to transfer a huge sum of money to you, I could just write you a cheque. Or, I could put it in a trust, and the trust would pay you. The trust would be managed by someone or by a group of people.

“A trust sounds somewhat convoluted. Why not just give me a cheque?”

A good question. And there are several answers. One of them is income splitting. Often parents earn the bulk of the income in a family, whereas children earn nothing at first, and much less than the parents even as they get older.

Using a family trust to split the income ensures that much of the income comes tax-free. Let’s say you have two young children with no income of their own, and the trust pays each of them $10,000 a year. Nobody pays income tax on their first $10,000. So that means there is an extra $20,000 on which you pay no tax. If you were paying tax at the high rate of 46 percent, you have just reduced your taxes by $9200 per year. Sweet.

If you earn sizeable capital gains, the income-splitting deal is even sweeter, as with dividends.

A family trust can be used also to pass money down to adult children or even to grandchildren. Typically this is a way to help support family members in a much lower tax bracket, without having to pay the higher tax. In other words, tax-free charity within the family. Yes, you could just send a check for $10,000, but you would be taxed on that money when you earn it if you don’t do it through a trust.

The other big reason to use a family trust is to side-step the whole will process at the end of your life. Funds put into a trust do not have to be disclosed to anybody other than those people involved with the trust. So you can keep your wealth and how you distribute it under wraps. The money in the trust is also protected from anyone challenging the will.

Often people leave trusts to minor children so as to support them over time rather than leaving a lump sum that might quickly be squandered. In cases where a person remarries, they are often left to children so that the funds are not part of the new matrimonial deal. In other words, a family trust can make sure that inheritance is passed on to children in a useful and effective manner.

Of course, you can put a trust right into a will, if you simply want to pass along your inheritance to your children in stages rather than paying one big cheque.

“Wow. Family trusts sound great. I’m heading out to the corner store to pick up a dozen of them.”

Not so fast. You can’t pick up a family trust for $19.99. There are significant costs in setting one up and there are ongoing legal and accounting fees involved, too. And the trustees – those who administer the funds – will want to be paid something, too. You might be one of the trustees if it is not an end-of-life situation, but you will probably want an independent person, such as a lawyer, to be one of the trustees.

There is also always the risk that you will lose control. It is important not just to think carefully about who the trustees will be, but also what the terms will be. Once you set the terms, the trust is in charge. You can’t change your mind, because the assets are no longer your own. They now belong to the trust under the rules it was established.

There is also the risk that your trust will be declared a fraud. Of course, if you have set it up properly and for legitimate reasons, this risk is pretty small. But if you are trying to stretch the envelope, there are penalties for fraud.

The disadvantages are small for those people who can really make use of a family trust. But if your assets are small and you have no need to protect them somehow or redistribute your wealth, chances are that you will end up paying as much to set them up and administer them as you will benefit from them.

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Unfortunately, Computer hardware does not come cheap, they are also very costly to maintain too. Having a team of engineers to watch over the system is an inevitable expense since any unattended issue within your businesses’ IT system could result in a severe breakdown that could result in losses. There is however the option of cloud computing.

In cloud computing your business can utilize computer hardware located in a different place from your premise through a network connection. This way, you do not have to invest in IT systems such as servers and server software; instead your business relies on virtual servers that have been programmed to support you remotely. The server is virtual in that one physical server can be serving several businesses at once, the data is however well secured such that there is no exchange of information at any point between the firms sharing it, each party sees the server as a single one.

This is very convenient since your business does not require an IT department to run your server or deal with frequent breakdowns. You also get advantages such as the ability to work from anywhere, also, added data security since any problem within you premise such as break-ins or fire does not affect your data. In order to move your business server online to the cloud you need to perform the following;

First of all, determine the kind of cloud service that you require, there are five main types namely, Software as a service or (Saas),Plat for as a Service (Paas), Infrastructure as a Service (Iaas), Desktop as a Service (Daas) and Managed Service providers (MSP). All of these are designed to suit all the different ICT needs your business may require, once you have determined the best for you, can move to the second step.

Begin by running some of your applications from the cloud while leaving your current work intact. This helps your business slowly adapt to the use of the virtual server. At this point, you contact income support staff who will help you learn all you need to know and provide assistance where required.

Once you have gained all the knowledge and have done a conclusive run of the system having ensured that it works in the manner that you desire for your business, you can then begin performing a full move to the cloud. Move your data and ensure that everything is run from the cloud. Once you have performed your move, all work must be done from the cloud to ensure proper synchrony of all files and information.

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#1 – It’s easier to stay on top of your accounts
Buying a good account software package will cost you around C$100 and could just be one of the best business investments you ever make. It offers you a good half-way point between the cheapest option – struggling with doing your own accounts and coping with spreadsheets, boxes of paper receipts and invoices that don’t match – and the expensive option: hiring an accountant to do it for you.

#2 – It makes it easier to comply with your tax obligations
Not only does accounting software make it easier to balance the books, but it also offers you a host of other options. Tax software will let you compile reports detailing, for example, how much tax you’ve paid over a certain amount of time. This means that full compliance with GST/HST returns allows you to focus on other aspects of the business knowing that your taxes are taken care of. In fact, some systems now allow you to e-submit GST/HST returns, making it even easier to ensure you pay the right amount and on time too.

#3 – It lets you analyse your business
A system such as QuickBooks comes with a plethora of add-ons and analysis tools. It’s like having your own personal financial advisor and gives you a wealth of easy-to-understand information at your fingertips. You can produce everything from balance sheet summaries to reports that detail which customers are behind on payments so that you can adapt your business strategy to cope with the fluid nature of the business.

#4 – It centralises everything
If you look at your desktop icons now, how organised are they? Would you know exactly where to find a balance sheet for August last year? Or where that invoice for customer XYZ for June is located? The advantage of using an accounting software package is that everything is collated together, centralising all your financial data in one place. If you then take advantage of cloud computing you can access that data even when you’re away from the office. Account software brings everything – payroll, accounts, invoicing, tax returns and even customer and business management – together and gets it working in harmony; which can only be a benefit to your business.

#5 – It eliminates the possibility of mistakes
As long as you put the right figures in to start with, accounting software can eliminate the possibility of errors, as it carries out all the calculations for you. So your financial data is more accurate and, when it comes to submitting end-of-year tax returns to the Revenue Agency, you’re less likely to be financially penalised for inaccurate returns.

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So you got a new job and you get to use the company car! Or maybe you got that long-awaited promotion, and one of the many new perks is that you get to drive the company car — even for your own use! Seems like a pretty sweet deal, right? It some ways it is, but in some ways it isn’t.

When you drive an employer-owned vehicle for your own personal use — even if you only just drive it to and from work each day — that is considered a taxable benefit. Here’s what you need to know about the tax responsibilities of using an employer-owned vehicle for your personal use:

Income Tax

If you are able to use an employer-owned vehicle for personal use in any capacity, you are charged income tax based on the value of that benefit. The value of the benefit is used to determine the taxes that are to be deducted from your paycheck, including CPP and EI.

Standby Charge

The amount you pay is determined by a formula that takes into account how much you use the vehicle for personal use, the value of the vehicle itself, and any reimbursement that you pay to your employer for using the vehicle. The standby charge is calculated by multiplying 2 percent times the number of months that you use the vehicle during the year — for example, 24 percent if you use it all year. You then take that percentage of the value of the vehicle and include it in your taxable income.

If your employer leases the vehicle rather than owns it, you would take 2/3 of the monthly leasing costs and multiply that by the number of months that you use the vehicle. That amount would then be added to your taxable income.

You can qualify for reductions in the standby charge if you drive at least 50 percent of total miles in the vehicle for business or if you drive less than 20,004 km per year for personal use.

Operating Cost

If your employer pays for operating costs — such as gasoline, insurance, maintenance and other expenses — then you will also have to pay a tax on this benefit. The value of this benefit is determined on a per-kilometer basis. In 2013, the cost is 27 cents per kilometer.  You can qualify for a reduction of this benefit if you use your vehicle at least 50 percent for business purposes. The amount would then equal 50 percent of whatever your standby charge is.

There are exceptions for certain types of professions, such as automobile salesman, but in general, these are the rules regulating the taxation of employer-provided automobile benefits. If you have questions about how this rule applies to your particular circumstances, you can meet with someone in your company’s payroll department or talk with a qualified tax professional. It’s worth understanding how this nice little perk may be having a big impact on your overall tax obligations.

Kelly Opferman is a seasoned writer who at this time focuses on her site: http://www.autoloancalculator.org/. Her educational background includes finance, teaching, and economics.

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But options do exist. These 5 last-minute small business tax tips are powerful options a small business can utilize prior to filing and paying taxes at the end of the month.

Tip #1 Have All Your Forms Ready

Bad tax returns often occur when people let themselves fall behind with paperwork and then try to fix something with the wrong information. The Canada Revenue Agency posts all tax forms and guidebooks on the Internet for free (http://www.cra-arc.gc.ca). Download any time of the day or night and get to work. With the correct forms and guidebook available, tax filing can be done the right way without guessing.

Tip #2 Hire Professional Tax Help

If your business tax information is scrambled at this late date, don’t try to tackle a mountain of paperwork and tax rules, especially if you’ve never done taxes before. That’s why expert tax preparers exist. Pay the fee and focus on your business while they prep the paperwork for filing.

Tip #3 Check the Work

Mistakes happen, so be sure to double-check the tax preparer’s work. They too are human and get rushed, especially close to the filing deadline, which is their busiest season. Yes, mistakes happen, but unfortunately your business ends up being responsible for the filing in the eyes of the tax agencies. So avoid the headache ahead of time and double-check the figures on the final copy before signing.

Tip #4 Account for All Support Documentation, All of It

Don’t sign and file a tax return until you are sure every number reported on the return appears on the documentation you supply that supports valid deductions, earnings, or tax credits. If unsure, remove the tax credit or deduction and include the extra earnings. It’s a far better position to be in if an audit occurs.

Tip #5 Mine Tax Changes for Opportunities

Every year new tax laws are passed, some providing advantages for a small business. Be aware of them and claim the valid benefits if they help.

Whatever the circumstances, never try to fabricate information or omit data that should be reported. Eventually a paper trail will collapse on itself, and tax agency auditors know this. It’s far better to pay late taxes with interest and penalties than to find your business undergoing an investigation for tax evasion or fraud. The costs of the litigation can be immense, even if a business ultimately wins the case and proves itself innocent.

Note too that a business cannot add new expenses and earnings if the calendar year has ended. Fudging tax numbers in this fashion just puts a business owner in a pot of hot water.

In Summary

Every small business has a set of reports, tax credits, and tax deductions that can be used to its advantage. These 5 last-minute small business tax tips should be fully evaluated before filing a return. Not every option has to be taken, but consideration can identify a lot of missed savings that can be put to better use in a business’s versus the government’s bank account.

Kristen Gramigna is Chief Marketing Officer for BluePay, a leading provider of Canadian merchant account services. The brings more than 15 years of experience in the bankcard industry in direct sales, sales management, and marketing to the company and also serves on its Board of Directors.

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What’s the best option for you? Here’s a breakdown of some of the features of the most popular cloud-based and traditional accounting software suites so you can compare and make the selection that’s best for you:

Cloud-Based Accounting Software

Xero (https://www.xero.com)

Xero is an online software package that allows you to manage all your bank balances, sales, and upcoming bills. The software allows you to track wages and issue payments (or to connect with another payroll system). You can manage your spending and pay bills, handle personal expenses, and review reports for all your finances. Plans start at $19 per month for basic needs and go up to $39 per month for more expanded access.

Wave Accounting (https://www.waveapps.com)

Use this software to create and send invoices, manage all your accounting, and view financial reports. You get unlimited invoicing, and you can customize them according to your needs. Manage expenses, payroll, time, and much more. You can also use it to accept credit card payments and to manage your personal expenses. This comprehensive software suite is totally free to use and is supported by affiliate sales.

Freshbooks (http://www.freshbooks.com)

More than 5 million people use Freshbooks, which offers cloud-based accounting that allows you to work from any device (including an iPhone or iPad if you install the app). Track your time (and your workers’ time), create invoices and accept payments, import and track expenses, and much more with this comprehensive software. You can try the service free for 30 days, and then plans start at $19.95 per month. You can maintain a free account if you manage only 3 clients or less.

Traditional Accounting Software

Quickbooks (http://quickbooks.intuit.com)

Manage all your money right from your desktop with this software. You can use it to track sales and expenses, print cheques, pay bills, and manage invoices. Accept credit cards with the software and even scan and deposit checks. You can even use it to manage payroll and payroll taxes (a direct deposit option is sold separately). Time tracking is also included. The basic Pro Software starts at $249.95, and there are options for larger businesses.

Sage 50 (http://na.sage.com/sage-50-accounting-ca)

Formerly known as Simply Accounting, Sage 50 has a number of accounting software packages to meet your specific needs. The basic package allows up to 4 licenses and allows you to manage inventory, track expenses across companies, prepare and control budgets, and more. Like Quickbooks, Sage 50 offers a number of add-ons if you need more advanced services, including credit card services, direct payments, and the ability to create checks and forms. The basic software costs $99.99, but more advanced packages will cost more.

There are many more options for accounting software depending on the needs of your small business and whether you prefer a cloud-based option or a desktop option. These are some of the top choices for many small businesses, but you should explore them to decide which is the best for you.

What is your favorite accounting software to use for your small business? Tell us about it in the comments!

Carmen Guzlas is a writer and manager for Movoto.com, where she has recently been researching boston real estate. In her spare time, Carmen enjoys gardening and making homemade soap.

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1. No Inheritance Tax – Canada doesn’t charge an inheritance tax from those that gain from the passing of a loved one or friend. However, sitting on the money instead of going on a shopping spree may be the best idea as other taxes can be accumulated during the process of dividing up the remaining estate of the deceased. Although technically a death tax doesn’t exist in Canada, the estate of the decedent can still be taxed based on benefits and other incomes he or she may have had. Capital property acts as though it were sold immediately before death and the monies incurred are treated as a taxable income.

2. Income – Obviously, any income the decedent was accumulating prior to death has to be taxed. The executor of the estate has to file taxes for the decedent including any incomes including Registered Retirement Savings Plans and Registered Retirement Income Funds unless the spouse or a child was named the beneficiary prior to death. At which point, the monies don’t need to be deregistered and don’t have to be taxed.

You can transfer a RRSP or RRIF to a surviving spouse without suffering tax penalties. However, this tax-free move could only delay the inevitable if the spouse were to die as well. Without a direct beneficiary of these monies, it will become deregistered and included in the capital income of the decedent.

3. Real Estate – Owning property other than your primary residence can be included as Capital Gains upon death of the owner. Any increase of value of the property at the time of death can create a hefty bill for the estate’s executor. These real estate taxes, like many other assets that can be taxed in Canada after death, can be avoided by granting the property to a successor. This is usually a spouse, child, or even grandchild in some cases. For instance, a cabin in the woods for the family to enjoy during vacation times can be taxed unless it is bequeathed to a surviving spouse.

As Benjamin Franklin pointed out, the only two certainties in life are death and taxes. As long as a good plan exists for the estate prior to death, many financial hardships can be avoided. Saving the nest-egg for your family after you’re gone could become a financial burden that you never realized as it could fall under your capital gains for the year. Talk with a tax professional today and discover how you can help support your family after you’ve passed on from this life.
Paul Taylor started www.babysittingjobs.com which offers an aggregated look at those sites to help families find sitters and to help sitters find families easier than ever. He loves writing, with the help of her wife he has contributed quality articles for different blogs & websites.

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The Cost of Transportation
Commuting around town with public bus or metro transportation has become more expensive. While the cost of a single ticket remains at $3, the cost of a monthly pass has risen from $75.50 to $77.

The Cost of Passports
For those residents who require a passport for international travel, the cost of a five-year passport for both children and adults will increase in just a few months. Effective July 1, 2013, an adult passport will increase in price from $87 to $120, and a child’s passport will increase from $37 to $57. A 10-year passport will now be available for $160.

The Cost of Income Taxes
Perhaps the most costly change that will affect middle-class Quebec residents in 2013 relates to income tax. For residents who earn $100,000 or more, the tax rate will increase to 25.75 percent from 24 percent. For those who earn $130,000 or more, a higher tax rate will be combined with a higher tax on health services. The health services tax will increase to $1,000 from $200 per year. The good news is for lower income families. Those who earn between $18,000 and $42,000 per year will see their tax on health services drop to just $100 per year. Older workers, who are over age 65, will also experience financial pain this year as the annual earnings exemption that was supposed to rise annually has instead been capped at $3,000 this year.

The Pension Plan
If those changes are not enough, one additional change to Quebec’s pension plan will affect most employees. This change is small, increasing the rate by only 0.15 percent. However, with so many other changes already affecting Quebec residents, even this small change will likely be felt by many residents.

The combined effect of all of these new tax changes for Quebec residents will have significant effects, so steps should be taken to refine personal budgets to accommodate these changes.

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Do Higher Taxes Keep Job Creators from Creating Jobs

One of the main arguments that conservatives use to call for lower taxes is that lower taxes allow the “job creators” to have more money and create jobs. They argue that higher taxes will cause millionaires to leave the country with their money and American jobs. From this point of view, high taxes are the reason for the current economic malaise. Since World War II, the amount of taxes paid to the federal government has generally comprised between 17 and 20 percent of American Gross Domestic Product. During the current recession, the ratio of taxes as a percentage of GDP has dropped to 15 percent. During the Great Depression, the federal government only took around five to seven percent of the GDP. If this argument that low taxes automatically create jobs were correct, the Great Depression and the Great Recession should have been the beginning of a large boom cycle rather than the economic calamities that they were.

Taxes Stifle the Innovators

Those who clamor against higher taxes on the wealthy usually claim that these taxes discourage innovations that can drive the economy for years into the future. This is not necessarily the case. A recent article pointed out some of the great innovations that took place during the 1970s. During this period that many anti-tax advocates point out in their attempt to get lower taxes, several important companies got their start. Microsoft started in 1975 in the midst of double digit inflation and a top marginal tax rate of 70 percent. Apple Computer burst onto the national scene the next year under very similar economic conditions. These companies built upon the innovation caused by the invention of the microprocessor by Intel in 1971 while President Nixon had price controls in place. Earlier, both IBM and Hewlett-Packard started during periods of financial panic in 1873 and 1939. Innovators will innovate regardless of the tax structure because they are driven individuals. That additional 4.6 percent of tax is not likely to deter them from making as much money as possible.

Higher Taxes Lead to an Exodus of the Wealthy Innovators

This is another common argument that comes from those who want to lower tax rates. However, in spite of the argument, few people actually leave a country to avoid paying taxes. Some will move to a nearby state with lower taxes, but very few will actually move to Europe or the Caribbean full-time. The innovators will stay put in their homeland. However, this does not stop them from moving many of their operations to foreign nations. The “job creators” do this not to avoid taxes, but to save money on low wages in developing nations.

Anti-tax advocates frequently claim that lower taxes will lead to more jobs and innovation. History does not back up this assertion. Those who are driven to innovate will usually be able to do so regardless of the tax structure in a country.

Byline
Errol Sanderson is a freelance writer who focuses on taxation, finance, politics and other important matters. Taxation is a very difficult, complicated subject; those who need assistance in this general area should contact RGBrenner.com.

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