FINANCIAL PLANNING EXPERT, Brian Stephen, CFP Investment Advisor, Financial Planner
QUESTION: What are some advantages to using an Investment Holding Company?
ANSWER: Years ago the use of a Canadian Investment Holding Company was considered an attractive tax planning technique. Tax changes over the last several years have more than eliminated this advantage. Even though this is the case, investing through an investment holding company can provide other benefits:
• Income-splitting with adult children Rules discourage income-splitting with spouses and minor children but dividends can be paid to adult children and taxed in their hands.
• Estate Freeze This is where you “freeze” a company’s share value for original shareholders while ensuring future increases in value pass to the next generation.
• RRSP Room If an individual has little or no income, payments from a holding company such as a salary or management fee can create earned income and RRSP contribution room.
Note: Investment Holding Companies also have some disadvantages and I will elaborate on these in next month’s issue.
For more information on using Investment Holding Companies and to receive a complimentary copy of the “Investment Holding Companies” booklet, feel free to give me a call.
Brian Stephen CFP, Investment Advisor, Financial Planner
tel: 519-756-1908 274 Lynden Road, Suite A, Brantford, ON N3T 5L8
QUESTION: Is there Employment Insurance special benefits for self-employed people?
ANSWER:As a self-employed person, you are now able to enter into an agreement with the Canada Employment Insurance Commission on a voluntary basis. This new program began January 31, 2010.
There are four types of EI special benefits available:
• Maternity Benefits : maximum of 15 weeks
• Parental Benefits: maximum of 35 weeks
• Sickness Benefits: maximum of 15 weeks
• Compassionate Care Benefits: maximum of 6 weeks
EI regular benefits are benefits available to employees when they lose their jobs through no fault of their own and are available for and able to work, but cannot find a job.
Please note that self-employed people cannot access EI regular benefits based on their self-employment.
EI premiums are payable on the amount of your earnings from self-employment, up to an annual maximum amount for 2010 of $43,200.00. The 2010 EI premium rate for self-employed is $1.73 per $100.00 of earnings, which is the same rate that employees pay.
Once enrolled in the program, at “My Service Canada”, you will have to wait 12 months before you will be able to make a claim for EI special benefits.
Additional Program and Enrollment information can be found on the Employment Insurance web page.
QUESTION: What should manufacturers know about outsourcing storage of their inventory?
ANSWER: You may think warehousing is simply a matter of finding a big room with a loading dock, enough space to store your product, and the best price.
Think again.
Longevity. Solvency. Experience. Technology. Security. Insurance. Fire protection. These things make the difference. How annoying would it be to entrust your product to a warehouse with inadequate security, untrained staff, or even one whose doors are locked by a creditor? Know the questions to ask or risk learning the answers too late. Confirm that your warehouse of choice invests in the levels of protection your inventory deserves.
Like everything else, warehousing has entered the world of technology. If your warehouse has invested in a Warehouse Management System, a few key-strokes on a laptop from anywhere, any time, will serve up real-time inventory reporting, control, management, and the ability to virtually direct your shipping and receiving. A technologically savvy 3rd party warehouse can offer as much or as little hands-on involvement as desired, and become a seamless extension of your own company.
With 250,000 sq. ft. and 14 years in the industry, Brantcord Warehousing offers full services and both long-term and temporary storage to large and small businesses. Call to see how Brantcord can help you meet your business needs!
HUMAN RESOURCES EXPERT, Annette Grant, Branch Manager
QUESTION: Is your degree worth the cost?
ANSWER:There is no doubt that you might be wondering if your degree is worth the cost The monetary and time investment required to complete your degree is definitely worth the cost. You are more marketable and you possess proven discipline to accomplish your goals. Recent studies also confirm college degrees can result in higher earnings and lower unemployment. A college degree will help you stand out in the crowd and is often required just to get your foot in the door at certain companies or within certain fields. Once you get your foot in the door, there are several things you can do to get the most out of your degree and increase your value within the company.
Show your leadership skills. You have had numerous opportunities in college to develop your leadership skills. Try putting those skills to work by taking the lead on new projects. Or, if you see opportunities for process improvement, make a presentation to your boss on how your suggested improvements can impact the bottom line.
Be professional. Prove that you are a professional by preparing for meetings, doing your research, and dressing for the job you want, not the job you have. Brush up on your e-mail etiquette and writing skills. Begin networking with professional groups, and volunteer for the tasks at work that others don’t want to tackle.
Offer solutions. Show your value by being creative, thinking strategically and offerings solutions. Sometimes it is easy to get so involved in details that you miss the overall picture. Approach each project strategically by setting goals and objectives. Strategic thinking will lead to more solutions and will help lead to more opportunities for your career growth.
ANSWER:Customers are too hard to find; I can’t afford to lose any! Wrong! You can’t afford to keep them if they are not profitable. We seldom think of the real contribution customers make to our bottom line. The old axiom 80% of your business comes from 20% of your customers is proven true time and time again. So what is the point you might ask? Well, 80% of your customers are only giving you 20% of your business. Now is the time for some real soul searching. First you have to get rid of the emotion and honestly look at these customers; ask the following questions of each one:
• How much time is being invested in this customer?
• What is my cost for this time?
• What products do they purchase?
• What is the margin on those products?
• What is their payment history? • Can I increase my business with them without increasing my costs? • What will happen if we stop calling on them?
Chances are that you will find the answers to these questions will lead you to one answer; these clients cost far too much to service. If you can’t see a way to improve your profitability with them you should abandon them and direct your efforts to areas where you can make more money with less cost. You wouldn’t drop all 80% but perhaps 10% to 20% of them. Then look to your 20% big producers and find ways to increase your sales to them—they make you money and cost less to service. Do the analysis you will be amazed, I know I was! As a real benefit of this exercise is that you will identify customers that have potential that you were neglecting. Need some help with this concept—email info@enterprisebrant.com and ask for an appointment with one of our Professional Business Consultants.
Mike Kirby is a Business Consultant with Enterprise Brant and brings a long and successful career in the corporate world combined with his experience as an entrepreneur in assisting his clients.
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