Do You Have One Major Client? Be Careful

If 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

Previously, 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,

Networking Works

I was at my hairdresser’s the other day and as 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?

The 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!

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

How do you settle on an idea to pursue?

Dare I mention it again? Chris Guillebeau, author of “The $100 Startup” has an excellent tip on how to evaluate your business ideas to determine which ones you should focus on.

He lists all his ideas and then rates them on a scale of 1 to 5 based on the following criteria: Impact, Effort, Profitability, Fit with Vision.

Then he totals up all the scores, and the ones with the greatest impact, profitability, etc. float to the top and the other ones that don’t meet his criteria end up on the bottom. I plan to do this for myself with the trillion ideas I have floating around in my head. Don’t worry, I won’t write them all down at once.

I hope you find this information useful.  And sorry, I can’t help myself. I don’t like to spend full price on books and seldom do. That’s why I picked up The History of Furniture for $5 (and was later disappointed that they dropped the price to $2, and no I haven’t read it yet.) So,  I just have to say The $100 Startup is worth every penny of the full price I paid for it. Hopefully, it will be worth more once I actually start to follow through with it.

Until next time. Write those ideas down. And if you have any input or suggestions, you are welcome to comment.

Down to Business – A Great Place to Start

If you haven’t already done so, check out the Business Link website. It provides all the information you’ll likely ever need to start a business in Alberta. They offer sessions throughout the year on everything from business plans to marketing and much more. They are sponsored by the Government of Alberta and a great place to start. They also have networking sessions as well.

Some of the upcoming Business Learning sessions that the Business Link in Edmonton is offering are:

• Improve Your Profitability! Leverage Your Customer Advocates on Thursday, November 29, 2:30pm-4:00pm
• Small Business Bookkeeping and Payroll on Tuesday, December 4, 9:00am-11:30am
• Start Your Business! on Wednesday, December 5, 1:00pm-4:00pm
• Income Tax Basics for Sole Proprietors & Partnerships  on Tuesday, December 11, 9:30am-11:30am

These are just a few of the titles. Prices to attend vary according to the workshop.

They also have an office in Calgary for those of you located closer to Calgary.

In addition, they have a large library of business resources that you can check out.

Unbelievable Coincidence

So, I’m sitting in my living room, talking to my brother-in-law, and he starts to tell me that I must read this fabulous book that he has been reading, “The $100 Startup“. What are the chances of that happening? Before he spits out the name of the book, my sister is already starting to laugh. She finds any discussions on starting up a business extremely boring as evidenced by the eye-rolling and desire to go lie-down while her hubby and I enthusiastically talked about our ideas.

Just saying .  . . I’m not the only one who thinks this is a great book.

Generating Business Ideas and “The $100 Startup”

Further to an earlier post, I actually went out and bought the book “The $100 Startup” by Chris Guillebeau. I haven’t exactly made my first $100 (although undoubtedly he has, as I spent $26.95 on the book). However, I don’t regret it. He has a lot of good advice and research. In all my research, (which I excel at), I have discovered the greatest advice comes from Nike, “Just do it!”

$100 Start Up coming to a community near you.

In my regular scouring of the internet for fantastic business tips and admittedly some sort of painless entry into the business world where I wake up the next day and I’m a great success without even having started . . . I came across 100startup.com. Of course, it immediately appealed to me — a business startup for $100? I already like it. And the good news is the author, Chris Guillebeau, is going to be appearing in Calgary on June 20th at 7 p.m. and it’s free. The bad news is I can’t go because I’m working that day. If you check his website you will be able to see additional information. You will have to sign up to attend.

Under the resources section on the website there are also several documents that could be very useful such as “Seven Steps to Market Testing”, and “The One Page Business Plan”.

Talk to you later,

Jamie