Do You Have One Major Client? Be Careful

Employee or Self-EmployedIf you have only one or two big clients you may have to prove to Revenue Canada that you are self-employed rather than an employee of your client.

You may consider yourself to be self-employed but you may find yourself having to convince Revenue Canada that this is the case according to the criteria they use to determine this. If you have a few minutes, it might be a good idea to review the“Employee or Self-Employed” article from the Canadian Revenue Agency which explains the criteria in detail.

According to the Revenue Canada website, some of the questions they will ask to determine this relationship are:

  • the level of control the payer has over the worker’s activities;
  • whether the worker provides the tools and equipment;
  • whether the worker can subcontract the work or hire assistants;
  • the degree of financial risk the worker takes;
  • the degree of responsibility for investment and management the worker holds;
  • the worker’s opportunity for profit; and
  • any other relevant factors, such as written contracts.

If they rule that you are an employee instead of self-employed, you will not be able to deduct business expenses. And your client may end up owing the government money for Canada Pension Plan (CPP) contributions, EI premiums, and income tax from remuneration or other amounts they pay to their employees.

However, if you are several clients, you have a better chance of being able to prove to the government that you are in fact, self-employed and not an employee.


Cut Out to Run Her Own Business

January-022Previously, in my blog post entitled, “Networking Works“, I talked about taking advantage of opportunities that present themselves to promote your business, using myself as the example. In a conversation with my hairdresser Serena, I talked about my blog and wanting to do interviews with local small businesses. Serena kindly offered to meet with me and discuss her business.

Yesterday, I met with Serena and we talked about her business. Serena runs a hair salon called “Hair by Serena” out of her home in Edmonton.

The main things Serena has going for her business  (in my estimation) are:

  • She is a pleasure to be a round as she is always bubby and upbeat
  • She listens to her clients and gives suggestions
  • Her rates are reasonable
  • She is good at what she does

These are all key factors that can help determine the success or failure of a business. Value and Quality for money. Someone who actually listens to their clients and their needs, and knows what she is doing.

When meeting with Serena I was able to ask her the following questions:

Why did you start your own business?

I started my own business because the salon where I was working suddenly closed down and I realized this was my chance to do it. I always wanted to start my own business because I wanted the freedom.

How long have you been in business?

Over the past 10 years, I have always worked on the side trying to make extra money but I have been full time on my own for a year now.

What is one tip you would be willing to share with other small business owners?

Don’t be afraid to fail. I think that was why it took me ten years to do it.

What are some of your challenges you face as a small business owner?

One of the challenges I face is having to do everything myself. I cannot afford to hire anyone to help nor do I have the funds to expand my business.

Sometimes circumstances force us into taking that giant leap into the business world and overcoming our fears of failure. Although it is challenging, Serena loves the freedom of being able to set her own hours.

One of the reasons I started this blog was to be able to help people like Serena succeed. She mentioned she had read my blog on “Should You Be a Sole Proprietor or Incorporate Your Business?” and that she had found some interesting information in the article that she hadn’t considered before. Mission accomplished.

We had such a great time yesterday talking about her business and brainstorming ideas on how to increase her customer base. Some of these ideas I will share in an upcoming blog.

Until the next time,

Free Business Resources through BDC (Business Development Bank of Canada)

English: The BDC (Business Development Bank of...

English: The BDC (Business Development Bank of Canada) building Edmonton, Alberta, Canada. (Photo credit: Wikipedia)

The Business Development Bank of Canada at has some excellent free resources on their website.

Find out up to date information on the current economies in Canada and the U.S. by subscribing to their free monthly economic letter (or you can go to their site and read them online without subscribing if you prefer).

As well,  if you are a small business owner, take some time to read through their “In Business” newsletters. You are bound to find something useful that can help you be successful in your business. And it’s free.

Their December 2012 Economic Letter provides an overview of both the Canadian and U. S. economies and where they are believed to be heading based on statistics.

For example, did you know:

  • The share of Canadian GDP claimed by exports fell from 44%
    in 2000 to 34% in 2011.

If you are wondering what is GDP which stands for Gross Domestic Product, Investopedia has an excellent definition and explains why it is a primary indicator of a country’s economy.

Some of the recent articles in their “In Business” newsletter are:

Presenting Your Business in 60 Seconds

10 tips for Attracting Customers with Great Online Content

8 tips for Avoiding Customer Service Disasters (In my estimation, this is a key one today, where good customer service is often lacking in many businesses.) Maybe it’s just my own opinion, but it seems that many young people entering the workforce don’t seem to know how to provide good customer service. How many times have you had to deal with a young person behind the counter who seems to be completely disinterested in you as a customer, unhelpful and disengaged? If you ask them a question, they seem to feel that you are being a nuisance, completely forgetting that the reason for their job is to be of assistance to you. A couple of the tips in this article that stood out were:

    1. Be sure your employees are well-versed in the basics including how to speak politely to customers and maintain their composure when dealing with complaints. Don’t assume good manners are common sense. Take the time to review etiquette with your team, starting with the need to say please and thank you during customer interactions.
    2. Create a list of offending phrases that employees should avoid at all costs. For example, “There’s nothing I can do,” and “It’s not my fault.” Give them more positive alternatives such as “I will do my best to get to the bottom of this,” or “I understand your frustration. I’m not able to help you, but I will speak to somebody who can.”

I have signed up for the BDC monthly newsletter “In Business” and received a free e-book on “Social Media: A Guide for Entrepreneurs”.

So take some time and read through some of their articles and check out their website.

Networking Works

I was at my hairdresser’s the other day and Imageas you know, at the hairdressers, part of the ritual is to talk about life and what’s going on, so I told her about my blog and my goals for the future. I also mentioned that I would like to start interviewing local small business owners and getting their insights and advice. She was very enthusiastic and we have plans to meet for an interview. One thing lead to another. I mentioned that If she was interviewed in the blog, it could promote her business. In fact, we could link to her website. But, alas, she doesn’t have a website. Hmmm, so, I offered to help her with her website and in exchange she offered to provide a service for me. And she has friends . . . who need help with their websites, and . . . .so on. So my lessons learned this week are:

  • Put it out there – you don’t want to be a drone or only talk about your business but if an opportunity presents itself remember the saying, “Opportunity only has one hair, and you have to grab it as it’s going by.” Don’t ask me where I learned that from. I read it years ago and for some crazy reason it always stuck with me. The point is, if you see opportunities, grab them. Don’t be  afraid of rejection. I’m a writer mostly, not a talker. And I find it difficult to promote myself verbally. So, I had to self-talk myself into mentioning the interview again and offering to help her with a website. Otherwise, nothing would have happened. I would have paid her and left. Now, I’m one small step closer to my goals. 
  • Be willing to do something for someone else – good things will come from it. Time and time again in the business start up books I read, a common theme these days seems to be about the need to be willing to do something for others, whether it’s providing free information on how to do something or some other value-added service.

Should You be a Sole Proprietor or Incorporate Your Business?

agendaThe book, “Keep Your Sanity and Your Shirt“(Alberta Edition) written by Rita Fipke and Janet MacLeod is full of excellent advice if you are starting a  business in Alberta.

In this book, several examples were given of the benefits of being an incorporated business vs. being a sole proprietor. And you don’t have to have a big corporate image in order to be incorporated. In the author’s case, her company was made up of her and her spouse. And how to incorporate is explained in a way that is easy to understand, even for someone who doesn’t have a degree in business.

Personal tax rates are about 25% in Alberta. As for business rates, check out this chart that outlines the benefits of doing business in Alberta and makes a comparison between corporate tax rates in various provinces as well as some of the States.

One of the examples in the book, “Keep Your Sanity and Your Shirt” was of a consulting company that makes $200,000 year. Taxed as a sole proprietor, the personal income tax  could have been upwards of 55%. Whereas in this case, the owner earned nothing in actual wages from the company but instead received $40,000 in dividends. The remainder of the money stayed in the company and was applied towards business expenses, etc. This way, the owner only had to pay $1,000 in personal tax on the dividends they were paid.  The reason is that “anything claimed as dividends has already had the majority of the tax paid on it,” through the company.

Now, please bear in mind this is just an example and I am not an expert. I am just learning and sharing what I learn with you. So, of course, this raised the question for myself, should I incorporate? My initial intent was to be a sole proprietor and start a home-based business. But now I wonder whether it would be more beneficial to incorporate?

So, maybe it’s time to hire an accountant who can work out the details for me? And it’s a tax deductible business expense too!

How do you Manage your On Line Presence?

Although many business owners realize the importance of maintaining their online presence and start out with good intentions, they may not be seeing the results they had hoped for.

This could be due to a few factors:

  • Lack of knowledge about how people will find them on the internet
    • Do they know what is search engine optimization (SEO)?
    • Do they realize that they need to link to their site from other sites and directories?
  • Lack of persistence in maintaining their on-line presence
    • Do they know that they may be losing customers through lack of maintenance? I know that if I go to a site that has outdated information or is obviously just slapped up there without any thought it makes me question the credibility of the company or product.
  • Lack of perceived value
    • Do they realize that if their website is handled correctly they could significantly increase their traffic and potential customer base?

Seattle-123Some entrepreneurs may think that all they need to do is put up a website and no further thought to their website is needed other than the occasional maintenance, if that. They may have paid hundreds of dollars for web design and hosting, but when they don’t see any results they may decide to resort to other traditional methods of face-to-face customer contact.

How often have you come across websites that are well-designed but with out-dated information about last year’s Christmas party still up? Or their last newsletter was from the spring of this year? And yet, how much more effective would their website be if they would only ensure that it continued to provide valuable and timely information to their customers.

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Success in Striving

There are millions of people out there who want to start a business or who have read and heard stories of others who have become overnight successes, whether it is by finding the next big thing, starting up an internet business, writing an e-book,  affiliate programming,  etc. There are many people out there who dream about becoming rich like all the other people they see around them with the big houses and fancy cars. If they can do it, why can’t I?


Mark Twain wrote a short story called, “The $30,000 Bequest“. It’s somewhat lengthy but has a lot of value even today. It’s a story about a family that gets word that they will be inheriting money from a distant relative, $30,000. The story is about how they dream about this money and what they will do with it to such an extent that it starts to affect how

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