Archive for the ‘Knowledge Bureau’ Category

Claiming Automobile Expenses

One of the more common expenses claimed by taxpayers are automobile expenses (applies to any motor vehicle such as a van, bus, pickup truck, station wagon, SUV, or other truck). Many individuals use their automobile for work or business and incur personal expenses in doing so. It is important to note that only expenses of a business nature are eligible as a deduction against their related income. As such, the Canada Revenue Agency (CRA) has strict requirements in ensuring that only business-related expenses are claimed. As a result, the retention of automobile tax records becomes imperative for every taxpayer that uses an automobile for work or business. Use a log book.

Maintaining Automobile Expenses
The use of an automobile log provides one of the safest ways to substantiate and keep track of all your automobile expenses incurred that are deductible for income tax purposes and the kilometres driven on income-earning activities. The type of expenses to keep track of can be broken down into two categories. They are operating and fixed expenses.

Operating Expenses
The types of operating expenses related to an automobile include gasoline, maintenance and repairs (such as oil changes and car washes), insurance, license and registration fees. Such expenses may vary in relation to the amount of kilometres driven.

Fixed Expenses
Fixed expenses differ from operating expenses in that they relate to the automobile itself as opposed to the amount of kilometres driven. When an automobile is purchased, they would relate to the capital cost allowance and interest expense when financed. In the case of a leased automobile, such expenses would include the lease payments. It is important to note that there are special rules and restrictions which limit the portion of actual costs that can be included in your total expenses. You can consult with your Padgett Business Services representative to obtain more information on what these special rules and limitations are.

Deductible Expenses
Because your automobile will most likely be utilized for both business and personal reasons, it is essential that the total automobile expenses be allocated between these two uses on a reasonable basis in order to arrive at only the deductible portion for income tax purposes. The best method to achieve this will involve the distance traveled calculated by taking total kilometres driven for business purposes divided by total kilometres driven for both business and personal purposes. Certain expenses such as parking expenses incurred while on a business trip and car repairs made as a result of an accident while on a business trip do not have to be prorated. However, such expenses incurred resulting from a personal trip made are not deductible..

SHAREHOLDER LOAN

Unless you’re on regular payroll, whenever you take out money from your company, it’s as though the company has loaned you those funds until something is done with that balance – maybe a dividend is declared, a bonus paid or the full balance is repaid.

In an ideal world, you could keep ‘borrowing money’ forever from the company and never pay any personal tax on the funds that you’ve ‘borrowed’. Unfortunately, the CRA has put rules in place to make sure you do end up paying some personal taxes on this benefit – but, with some planning, you can minimize the personal taxes that you have to pay.

Shareholder Benefit Rules

Generally, when you borrow funds from your company and don’t repay it within one year, the CRA can assess the outstanding balance as ordinary income at an income tax rate similar to that of a salary. The catch is that your corporation isn’t allowed to claim this as an expense the way they would if it was a salary – you’re effectively double taxed.

For example, if you borrow or withdraw $50,000 throughout the year, without declaring a salary or dividend, the CRA could effectively call this income meaning that you’ll pay about $9,000 in income taxes and your corporation will pay about $7,500 in taxes, roughly $6,000 more than if you declared dividend or were paid a salary.

To avoid paying more tax than you have to, let’s look at two straightforward strategies to reduce the shareholder loan balance.

Repayment of Loan

The simplest solution to avoid being taxed on the loan is to repay it within one year. If you can repay the funds that you borrow from your company within a year of borrowing them, you won’t be taxed on the funds that you borrowed.

There’s a catch – if you take out a new loan from your company to repay the original loan the CRA will see this as a continuation of the original loan.

In the example above, if you borrow $50,000 from your company and are able to repay the loan within one year from when the first instalment was borrowed, there’s no amount that needs to be included in your income and no tax to pay on the $50,000 that you borrowed.

This works really well if the funds are needed to cover short term personal cash flow needs – maybe you’ve bought a new house but your old one hasn’t closed yet and you’re stuck juggling two mortgages. You can borrow funds from your company to help you cover your short term cash flow needs until your old house sells.

Declaring a dividend

As an alternative to a salary, you may draw funds from your company to cover your day to day living expenses or to cover a major unexpected expense and have no expectation of being able to repay those funds.

If this is the case, you can declare a dividend for that amount and you’ll pay tax at the lower dividend tax rates. You’ll need to prepare some tax filings that are due at the end of February following the year that the dividend is declared and you’ll pay any personal tax on the dividend at the end of the following April.

Referring back to the above example – if you took $50,000 from your company throughout the year to pay your living expenses or a major one-time expense, you could declare a dividend to cover off that amount. Depending on your personal situation and other income, you’d pay about $3,000 of personal taxes on this dividend.

Being able to draw funds from your company as you need them is a great way to deal with short term cashflow needs. The flexibility of drawing funds as you need them is also a good alternative to the rigidity of being on a regular salary and be able to cover unexpected expenses. With proper planning, you easily minimize your personal taxes related to those drawings by repaying the loans when possible or declaring a dividend.

http://www.liveca.ca/your-shareholder-loan-balance/

 

BUSINESS FAILURE: Personal Liability for Corporate

Tax Debt

There are special laws which hold a director personally liable for certain amounts that their corporation fails to deduct, withhold, remit, or pay. Most commonly, these amounts include federal sales tax (GST/HST) and payroll withholdings (income tax, EI and CPP). It does not generally include normal corporate income tax liabilities. In a June 22, 2017 Tax Court of Canada case, at issue was whether the director of a corporation could be held liable for $66,865 in unremitted source deductions, related penalties, and interest six years after the corporation went bankrupt. The taxpayer presented various defenses.

Two-Year Limitation

In general, CRA must issue an assessment against the director within two years from the time they last ceased to be a director. The taxpayer argued he should not be liable since he was forced off the property and denied access by the Trustee in bankruptcy more than two years before the assessment. However, the Court determined that only once one is removed as director under the governing corporations act will such liability be absolved. In this case (under the Ontario Business Corporations Act), bankruptcy does not remove directors from their position. As the taxpayer never officially ceased to be a director, the two-year period had not commenced, and therefore, had not expired at the date of assessment.

Due Diligence

Liability can be absolved if the director can show due diligence. In this case, the director argued that he was waiting for large investment tax refunds to fund the liability, and also, entered into a creditor proposal so as to enable the corporation to continue to pay off the liability. However, the Court noted that diligence was required to prevent nonremittance rather than simply diligence to pay after the fact. As there was insufficient proof to demonstrate diligence at the prevention stage, this argument was also unsuccessful.

With All Due Dispatch

Finally, the taxpayer argued that the issuance of the assessment 6 years after bankruptcy was inordinate and unreasonable, thereby contravening the requirement to assess with all due dispatch. The Court, however, found that this requirement related to the assessment of a filed tax return as opposed to the assessment of director liability. In particular, the law allowing CRA to hold the director liable states that “the Minister may at any time assess any amount payable”. This defense was also unsuccessful. The Minister’s assessment of liability to the director as upheld.

Action Point:

Ensure that the charging, collecting, and payment of GST/HST and source deductions is always done properly. Not doing so can result in personal liability for the director. Also, note that CRA has the ability to directly garnish a corporation or person’s bank account for such amounts, even if an objection has been filed.

http://yaleandpartners.ca/resources/tax-tips-traps-issue-121-2018/

From the office of Yale & Partners LLP, Chartered Professional Accountants, Chartered Accountants, Toronto

Digital currencies

Digital currency is electronic money. It’s not available as bills or coins.

Cryptocurrencies are a type of digital currency created using computer algorithms. The most popular cryptocurrency is Bitcoin.

No single organization, such as a central bank, creates digital currencies. Digital currencies are based on a decentralized, peer-to-peer (P2P) network. The “peers” in this network are the people that take part in digital currency transactions, and their computers make up the network.

Using digital currencies

You can use digital currencies to buy goods and services on the Internet and in stores that accept digital currencies. You may also buy and sell digital currency on open exchanges, called digital currency or cryptocurrency exchanges. An open exchange is similar to a stock market. 

To use digital currencies, you need to create a digital currency wallet to store and transfer digital currencies. You can store your wallet yourself or have a wallet provider manage your digital currency for you.

You need a “public key” and a “private key” to use your wallet. Keys are made up of a random sequence of numbers and letters.

Public keys are used to identify your wallet.

Private keys are used to unlock your wallet and access your money. Private keys should be kept secret.

All transactions are recorded to a public ledger or “blockchain” that everyone can see.

How tax rules apply to digital currency

Tax rules apply to digital currency transactions, including those made with cryptocurrencies. Using digital currency does not exempt consumers from Canadian tax obligations.

This means digital currencies are subject to the Income Tax Act.

Buying goods or services using digital currency

Goods purchased using digital currency must be included in the seller’s income for tax purposes. GST/HST also applies on the fair market value of any goods or services you buy using digital currency.

Buying and selling digital currency like a commodity

When you file your taxes you must report any gains or losses from selling or buying digital currencies.

Digital currencies are considered a commodity and are subject to the barter rules of the Income Tax Act. Not reporting income from such transactions is illegal.

Tips for using digital currency

Here are a few tips to help you protect yourself when using digital currency.

Protect your wallet

Take steps to protect your wallet:

  • keep your wallet, and any backups, in a safe place
  • encrypt your wallet using encryption software
  • encrypt any copies you make or online backups
  • set a password to help prevent thieves from withdrawing your funds
  • use a strong password that contains letters, numbers and symbols

Know the merchant’s refund, return and dispute policies

Before you make a purchase, find out:

  • what the exchange rate will be
  • if refunds are available
  • if refunds will be processed in digital currency, Canadian dollars or store credit
  • how to contact someone if there’s a problem

Wait for multiple confirmations before completing a transaction

It can take 10 minutes or more for a digital currency transaction to be confirmed. Confirmation happens when users on the network verify the transaction. During that time, a transaction could be reversed and you could lose your funds to a dishonest user.

Understand what the actual costs will be

Find out if there are any mark-ups or other fees. Find out what will happen if the rate changes before the exchange is completed.

Think about the future

Consider what will happen if you fall ill or die and can no longer access your wallet.

If no one knows the locations and passwords of your wallets when you are gone, the funds can’t be recovered.

Consider having a backup plan for your peers and family.

What is the Canada caregiver credit?

If you’re supporting a family member with a disability, the extra financial responsibility of being a caregiver can have a big impact on your budget. To help offset some of the cost, the Canada Revenue Agency has introduced the Canada Caregiver Amount. If you qualify, you could be in line for a tax break. Here’s what you need to know about the Canada Caregiver Amount.

Out with the Old

The Canada Caregiver Amount replaces three credits:

The Caregiver Amount,

The Amount for Infirm Dependants (18 & older), and

The Family Caregiver Amount.

The rules for claiming each of these credits were very different from each other. For example, the Caregiver Amount required that the person you were supporting must live with you while the Amount for an Infirm Dependant did not. The Family Caregiver Amount was the only one of the three available for children until 18.

Now, with the Canada Caregiver Credit, figuring out if you qualify for a tax credit is much simpler. There’s only one set of requirements; either you qualify or you don’t.

What’s Changed?

The Canada Caregiver Amount brings three main changes:

  1. The dependant you’re supporting must be “infirm”.

This means that your family member must be dependant upon you due to a physical or mental condition or “infirmity”. In the past, if you lived with a parent or grandparent over the age of 65, you were eligible for the former Caregiver Amount, even if the senior wasn’t “infirm”. That’s’ no longer the case.

  1. The dependant doesn’t have to live with you.

This is good news to all the caregivers whose help allows family members to stay in their own homes. If your disabled sister lives nearby but you assist with day-to-day chores like grocery shopping or paying bills, your help could earn you a tax break.

  1. Partial credit is available if your dependant’s income is too high.

Previously, if your dependant’s income was over $14,000, you may have been excluded from claiming any tax credits. The Canada Caregiver Amount features a more generous income limit ($16,163) for the full credit and partial credit for incomes up to $23,046.

Do I Qualify for the Canada Caregiver Amount?

If you’re caring for a low-income family member with an infirmity, there’s a good chance you qualify. There are two base amounts for the Canada Caregiver Amount – $2,150 and $6,388. How much credit you can claim depends on the dependant’s relationship to you, what other credits you’re claiming for them, and their income level.

If your spouse is infirm, the amount of your Canada Caregiver Amount depends on their income. First, the $2,150 figure is added to the usual spouse amount. If your spouse’s income is zero, you’ll claim the total of the spousal amount and the $2,150. If your spouse’s income is too high to claim the spousal amount, you still may qualify for the Canada Caregiver Amount. A “top-up” calculation is used for higher incomes so if your spouse earns less than $23,046, you will receive partial credit. Similar rules apply if you’re claiming the Eligible Dependant Credit for a child under 18.

If your infirm dependant is a family member other than your spouse or minor child, the full amount of $6,388 may be claimed if your relative’s net income is below $16,163. If your relative’s income is between $16,163 and $23,046, a partial credit can be claimed.

If your minor child is infirm and you are not claiming the Eligible Dependant Credit for them, you’ll claim $2,150 for each qualifying child.

If your parent or grandparent is over 65 but is not infirm, you do not qualify for the Canada Caregiver Amount.

Canada Caregiver Amount FAQs

If I pay support for my infirm dependant, can I claim the Canada Caregiver Amount?

If you are required to pay support for the dependant, you cannot claim the Canada Caregiver Amount.

Can I split the Canada Caregiver Amount with another person?

If more than one person cares for the infirm dependant, the credit can be shared. The maximum amount of $6,883 still applies.

What proof of infirmity is required?

A signed statement from your dependant’s doctor or practitioner may be required by the Canada Revenue Agency. The statement should contain details on the infirmity as well as when the infirmity began and how long it is expected to last. If your dependant already has an approved Form T2201 – Disability Tax Certificate – on file with CRA, no additional paperwork is needed.

By Jennifer Gorman

https://turbotax.intuit.ca/tips/everything-need-know-canada-caregiver-credit-8006

Claiming Automobile Expenses

One of the more common expenses claimed by taxpayers are automobile expenses (applies to any motor vehicle such as van, bus, pickup truck, station wagon, SUV or other truck). Many individuals use their automobile for work or business and incur personal expenses in doing so. It is important to note that only expenses of a business nature are eligible as a deduction against their related income.

As such, the Canada Revenue Agency (CRA) has strict requirements in ensuring that only business-related expenses are claimed. As a result, the retention of automobile tax records becomes imperative for every taxpayer that uses an automobile for work or business, so make sure to use a kilometer log book.

 

Home Buyers Amount

Home Buyers Amount

As a first-time home buyer, you may be able to claim $5,000 in tax credits for the purchase of a qualifying home in 2017.

To qualify for the home buyers amount, you cannot have lived in another home owned by you or your spouse or common-law partner that year or in any of the preceding four years.

The qualifying home must be located in Canada and registered in your name and/or your spouse’s or common-law partner’s name per the applicable land registration system. It includes existing homes, such as single-family houses, semi-detached houses, townhomes, mobile homes, condominium units, apartments in duplexes, triplexes, fourplexes, or apartment buildings. It also includes homes under construction.

You do not have to be a first-time home buyer if:

→ You are eligible for the disability tax credit; or

→ You purchased the home for the benefit of a related person who is eligible for the disability tax credit.

 

 

 

Dying without a Will

A will is a document that says how you wish property to be divided after your death.

In Alberta, if you die without a will or if you leave property that is not disposed of by will, the Wills and Succession Act determines what will happen to your property.

 If you die leaving children but no spouse, then everything is divided equally among your children. If any of your children died before you, but left children (your grandchildren) who survive you, are entitled to share the portion of your estate which your child would have received if he or she was alive.

If you are married or in an adult interdependent partnership and you have children who are also the children of your surviving spouse or adult interdependent partner, your spouse or adult interdependent partner is entitled to receive your entire estate.

 If you are married or in an adult interdependent partnership and you have children who are not also the children or your surviving spouse or adult interdependent partner, your surviving spouse or adult interdependent partner will be entitled to receive either 50% of your estate or an amount set out in the Act at the same time of your death, whichever amount is greater. Your children are entitled to share the balance of your estate equally. If any of your children died before you, but left children (your grandchildren) who survive you, those grandchildren are entitled to share the portion of your estate which your child would have received if he or she was alive.

If you leave no spouse or children or descendants, your estate goes to your nearest kin, in the following order: to your parents in equal shares, or to your surviving parent; if both of your parents are dead, then to your brothers and sisters in equal shares. The children of deceased brother and sisters inherit their parent’s share. If you have no surviving nieces or nephews, then your estate would be left to your next of kin according to different degrees of blood relationships. For example, your estate would pass first to your grandparents. If your grandparents have died before you, your estate will be divided equally among your surviving aunts and uncles. If you do not have surviving aunts and uncles, your estate will be divided among your cousins. If you do not leave any traceable next of kin, your estate goes to the provincial government and is used for universities to provide funding for scholarships or fields of research.

The Wills and Succession Act does not consider the needs of each particular family and some unfair situations may result.

A surviving parent may go through needless inconvenience when the other parent dies without a will. For example, where part of the deceased’s estate is to go to the children and the children are under 18 years of age; their share may be held in trust for them by the Public Trustee of Alberta.

As a result, a parent or guardian with small children may only be allowed to use that money if he or she applies to the Public Trustee each time she needs money to buy something for the children. The Public Trustee invests the money held in trust, and charges an administrative fee for acting as trustee for the children.

When the surviving spouse is elderly and the children of the deceased are adults who are able to earn a living, it may be the case that the surviving spouse needs the inheritance more than the adult children do. However, without a will, the estate will not necessarily pass entirely to the surviving spouse. This problem could be avoided by making a will which would leave the entire estate to the surviving spouse.

If you do not have any traceable relatives, you probably still wish to decide what happens to your estate when you die. You may prefer to leave your estate to a charitable organization or a friend rather than to the provincial government. You can state your preference in a will. If you leave any portion of your estate to a charitable organization, your estate will receive a tax benefit as a result of the donation.

Alberta has additional legislation that affects what happens to your estate if you die without a will. For example, The Dower Act, which prevents a married person from selling, mortgaging, or willing away the homestead without the spouse’s consent, entitles the surviving spouse to the use of the homestead for the remainder of his or her life, subject to the interests of any mortgagee or other registered creditor. Under the Dower Act, a homestead is the land upon which there is a dwelling house occupied by the owner (that is the deceased spouse, prior to his or her death), as longs as there are no joint owners on title to the land. The surviving spouse is allowed to occupy the dwelling house during his or her lifetime, or can rent the land and receive the income. This is the case regardless of the terms of the will or the provisions of the Wills and Succession Act.

If you die without a will and the share going to your dependent family members under the Wills and Succession Act is not enough for their proper maintenance and support, your dependent family members may apply to the court for more money. The judge, in such cases may make changes as he or she sees fit. According to the Family Maintenance and Support provisions of the Wills and Succession Act, dependent family members include your spouse or adult interdependent partner, children under the age of 18, and children over the age of 18 who are unable to earn a living due to a mental or physical disability. These provisions also apply where a will is made but does not make adequate provision for dependent family members. If you leave a will, you can specifically address the individual needs of your spouse and minor or disabled children. You can also state your reasons for not leaving a larger portion of your estate to certain of your family members. For example, if you and your spouse have signed a pre-nuptial agreement in which you agree to keep your finances separate, you may wish to make reference to that agreement in your will.

In summary, if you die with a will in Alberta, there are laws that determine what happens to your estate. You should make a will if you want to decide what will happen to your estate when you die, rather than have the provincial legislation do it for you.

http://clg.ab.ca/programs-services/dial-a-law/dying-without-a-will/

 

ESSENTIAL TAX NUMBERS: UPDATED FOR 2018

http://www.advisor.ca/

WORKING CLIENTS

Maximum RRSP contribution: The maximum contribution for 2017 is $26,010; for 2018, $26,230.

TFSA limit: The annual limit for 2017 is $5,500, for a total of $52,000 in room available in 2017 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009. In 2018, the annual limit is $5,500, for a total of $57,500 for someone who has been eligible since 2009. The annual TFSA limit will be indexed to inflation in future years.

Maximum pensionable earnings: For 2017, the maximum pensionable earnings is $55,300 ($55,900 in 2018), and the basic exemption amount is $3,500 for 2017 and 2018.

Maximum EI insurable earnings: The maximum annual insurance earnings (federal) for 2017 is $51,300; for 2018, $51,700.

Lifetime capital gains exemption: The lifetime capital gains exemption is $835,716 for 2017 and $848,252 in 2018.

Low-interest loans: The current family loan rate is 1%.

Home buyers’ amount: Did your buy a home? You may be able to claim up to $5,000 of the purchase cost, and get a non-refundable tax credit of up to $750.

Medical expenses threshold: For the 2017 tax year, the maximum is 3% of net income or $2,268, whichever is less. For 2018, the max is 3% or $2,302, whichever is less.

Donation tax credits: After March 20, 2013, the first-time donor super credit is 25% for up to $1,000 in donations, for one tax year between 2013 and 2017.

Basic personal amount: For 2017, it’s $11,635, line 300. For 2018, it’s $11,809.

OLDER CLIENTS

Age amount: You can claim this amount if they were 65 years of age or older on December 31 of the taxation year and have income less than $84,597 in 2017 (the 2018 threshold is not yet available). The maximum amount they can claim in 2017 is $7,225, and in 2018 is $7,333.

Pension income amount: You may be able to claim up to $2,000 if they reported eligible pension, superannuation or annuity payments.

OAS recovery threshold: If your net world income exceeds $74,788 for 2017 and $75,910 for 2018, you may have to repay part of or the entire OAS pension.

CLIENTS WITH CHILDREN

Family caregiver amount: If you have a dependant who’s physically or mentally impaired, you may be able to claim up to an additional $2,121 in calculating certain non-refundable tax credits.

Disability amount: The amount for 2017 is $8,113 (non-refundable credit; $8,235 in 2018), with a supplement up to $4,733 for those under 18 (the amount is reduced if child care expenses are claimed; $4,804 in 2018). Canadians claiming the disability tax credit (DTC) can file their T1 return online regardless of whether or not their Form T2201, Disability Tax Credit Certificate has been submitted to CRA for that tax year.

Child disability benefit: The child disability benefit is a tax-free benefit of up to $2,730 (for the period of July 2016 to June 2018) for families who care for a child under age 18 with a severe and prolonged impairment in physical or mental functions.

Canada Child Benefit: This non-taxable benefit is effective as of July 1, 2016. The maximum CCB benefit is $6,400 per child under age six and up to $5,400 per child aged six through 17. In the 2017 Fall Economic Update, the government pledged to index the benefit beginning in 2018.

Universal child care benefit (UCCB): This benefit was replaced with the Canada Child Benefit as of July 1, 2016. However, Canadian residents can still apply for previous years if they meet certain conditions, including living with the child and being primarily responsible for the child’s care and upbringing.

Child care expense deduction limits: As of 2017, the maximum amounts that can be claimed are $8,000 for children under age seven, $5,000 for children aged seven through 16, and $11,000 for children who are eligible for the disability tax credit.

Children’s fitness tax credit: This credit has been phased out, and is gone as of 2017.

Children’s arts tax credit: This credit has been phased out, and is gone as of 2017.

Originally published on Advisor.ca

1/26/2018 Essential tax numbers: updated for 2018 | Advisor.ca

 

Perspective on cash flow

A 26-year financial services veteran’s perspective on cash flow

Posted on: October 19, 2017 | Author: Myron Feser, vice president of sales, ATB Financial

Cash is king. For no one is this more true than for the entrepreneur who’s working to get their new business off the ground. Learning how to manage cash flow is a crucial milestone on the road to success.

Cash flow is the health of your company. Access to working capital will allow you to provide stability during tough times, while having cash available helps your business grow and thrive during prosperous ones. The ability to handle the ups and downs of any economic cycle also shows the bank that your company is well managed!

Of course, like many things involved in entrepreneurship, it isn’t as easy as it sounds. In fact, effectively managing cash flow can be downright overwhelming, especially if you’re just starting out. It’s always a good idea to engage financial experts, like a business accountant, to help you. As your business grows, you may even want to think about bringing in someone to orchestrate your cashflow full-time.

Whether you’re managing your finances on your own or if you’ve brought in an expert, the next step is to understand your business cycle. That means knowing how quickly the goods or services you provide can be turned into cash. For example, if you have a manufacturing business your cycle might look like: Take raw materials -> manufacture product -> sell the product -> turn the receivable into cash.

The shorter the cycle, the better it is for your business as you’ll have more cash on hand. Even shortening your business cycle by one day can have a significant impact on your company’s working capital position.

Again, having working capital is crucial to building a successful business. Most businesses don’t fail because they aren’t profitable. They fail because they run out of cash. Keep an eye on your cash and your business cycle, and your business should thrive!

Myron’s top cash flow tips:

Entrepreneurs often underestimate how much working capital is required to grow their business. Talk to your banker and figure out how much you need.

Finance any capital purchases like capital assets so that you don’t tie up too much of your working capital.

Make sure you understand your finances and cash flow—even if you do bring in outside help. Monitoring your cash flow on a daily or weekly basis is critical.

Develop strategies to make your business cycle as short as possible.

Definitions

Working capital: the money you use for day-to-day operations. Current assets minus current liabilities.

Capital purchases: significant purchases that a company makes as an investment to acquire or improve long-term capital assets.

Capital assets: assets owned by the company, like buildings or equipment.

Business cycle: how fast you turn your inventory, product or service into cash.

Contact Us

Padgett Business Services

1511 10 Street SW Calgary, AB T2R 1E8
Phone: (403) 220-1570

Email: Padgett Calgary

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