Tax Reform In The U.S. and The Impact On Your Business If You Sell There


What are the biggest effects for Canadian business interests in the U.S.?

The Globe and Mail published a great piece about the implications associated with the recent tax reform bill that was passed in Congress. The bill represents President Trump’s first real legislative accomplishment, and the most significant tax reform the U.S. has seen since 1986. The gist of the bill includes a reduction in the corporate tax rate from 35 percent to 21 percent. The reduction in the corporate rate is one of the most significant changes that will affect businesses of all sizes.

For the first time ever there is a potential limitation on any interest expense, including that associated with third-party debt. The restrictions associated with the deductibility of interest expenses will require planning, however some small businesses may be excluded from these limits.

The big question is whether these tax reforms are going to make our corporate tax rate seem miniscule.

“We’re not gonna have any more pharmaceutical companies buying donut-makers in Canada and move their headquarters to get a lower tax rate,”  – Republican Senator Johnny Isakson 

Lower corporate rates generally lead to higher economic activity. Once the U.S. tax rate reductions become effective and the ability to immediately expense certain business assets is in place, Canadian businesses may be at a disadvantage they haven’t been used to. On the other hand, Canadian businesses that operate in the U.S. and generate significant revenues south of the border are getting a big break.

Questions? Comments? Share your thoughts! Looking for bookkeeping services for your small business? Contact us or request a consultation.

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Instant Pot Was and Continues To Be A Small-ish Business From Ottawa

Ex-Nortel Employees Made An Idea Into A Reality

The Instant Pot is seven years old this year. Robert Wang and his business partners Yi Qin and Dongjun Wang had all worked in Ottawa’s tech sector before deciding to put their engineering backgrounds to work on a problem in their own homes. Not having enough time to prepare meals, especially dinners, after a work day. The partners were acquainted with the practical convenience of a pressure cooker. Founder Robert Wang began work on the multi-functional electric pressure cooker after the tech giant began winding down its research and development work during the financial crisis of 2008. After raising about $350,000 – he started his journey of creating a product that could facilitate fast and delicious meals quickly, safely and perfectly, and ultimately – remotely via Bluetooth.

Sales weren’t great at the beginning. He relaunched in 2013 with a new name: iPot. That name didn’t last when trademark lawyers felt a potential showdown with Apple was probably inevitable. With no marketing budget, he sent 200 free samples to influential chefs, cooking instructors, and food bloggers. Those writers loved it, blogged about it, and even wrote cookbooks.

“This is one of the best products I have ever purchased. Everything tastes delicious in the Instant Pot”. – Amazon reviewer

This created incredibly valuable early word of mouth momentum that elevated the company beyond anything that it ever expected to achieve. This momentum was firmly rooted in what was ultimately an excellent product that capably attained that chain link level of evangelism from one suddenly fawning consumer desiring to share an excellent purchase with another. The Instant Pot began outselling stove-top pressure cookers on Amazon in January 2013, it has continued to do so since. It has since now sold more than two million units worldwide.

Not bad for a company that still maintains it’s headquarters in Kanata, Ontario.


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The Potential Impact of President Trump on Canadian Small Business

Donald Trump

November 8th, 2016 will go down in history as one of the greatest political upheavals that anyone can remember. Donald Trump won the U.S. Presidential election, beating favourite and year long poll front runner Hillary Clinton. With that win, he brought in a significant amount of global uncertainty related to his protectionist trade policies. One of his prime examples of one of the worst trade deals ever negotiated is the North American Free Trade Agreement (NAFTA).

The Globe and Mail published a very interesting piece the day after the action. Protectionist economic policies are something that don’t play to Canadian economic interests. Small businesses – traditionally excluded from discussions about trade – are seeing the benefits of exporting. According to a recent UPS Canada survey, three-quarters of Canadian small and medium-sized businesses (SMBs) recognize that free-trade agreements create opportunities in foreign markets by reducing trade barriers, and 61 per cent say exports are the key factor for continued growth and success. Many in the business community are concerned with one of Trump’s hallmark economic declarations. A renegotiation of NAFTA could affect Canada’s economy negatively. The flow of goods and people across the border could be choked by tariff and non-tariff regulations and/or stiffer immigration controls in the guise of security concerns. A “free and open” border has defined the relationship between Canada and the United States for decades. Prime Minister Trudeau has openly indicated that Canada is ready to deal with this head on.

Back in September, CTV News published a piece about the positive effects that a Trump presidency could have on the Canadian economy. In it, a RBC Capital Markets report was cited that focused on the upsides. It indicated that Trump’s proposals on lower tax rates, infrastructure spending and oil would promote U.S. economic growth, which would in turn have a “fairly meaningful” impact on the Canadian economy. When the American economy is humming, their export demand increases.

Also, Trump and a Republican-controlled Congress may breathe new life into the Keystone XL pipeline. The controversial project, meant to carry Alberta crude oil to refineries on the U.S. Gulf coast, had been sidelined by the Obama administration because of environmental concerns, despite the Harper Conservatives doing everything they could to champion the project.

The reality is that no one knows for certain what effects Trump will have on small, medium, or even big business in Canada. Analysts and professionals can speculate as much as they like, but ultimately everyone must wait and see. It’s one thing to make claims when you’re in election mode, but quite a different one all together when you’re in the position of being required to govern. What President Trump enacts in terms of policy will remain a waiting game.

Questions? Comments? Share your thoughts! Looking for bookkeeping services for your small business? Contact us or request a consultation.

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Visa vs. Wal Mart – Round 1.

Ottawa Wal Mart

Visa and Wal-Mart are getting divorced.

One of the world’s biggest corporations is through with the fees that Visa imposes. Walmart Canada announced on June 11th that it would stop accepting Visa cards at stores beginning in July, claiming the fees Visa wants for the service in this country are way too high. Walmart says it plans to reject the cards at its more than 400 Canadian locations. The company that Sam built says it pays more than $100 million in fees annually to credit card companies like Visa and MasterCard for processing sales transactions. Across Canada, credit card companies charge a collective $5 billion in “interchange” fees every year to retailers, and most cards average about 1.5 per cent of the value of any transaction. That’s Wal-Mart’s story.

Here’s Visa’s side of the story. The company says it already gives Walmart one of the lowest rates of any merchant in Canada, but they apparently want more, demanding to pay a lower fee than local groceries, pharmacies, convenience stores, charities and schools. Visa is pretty serious about setting the record straight here on this one. They maintain that Wal-Mart is purposely creating a public issue of the matter and is attempting to use their size and scale to achieve a seriously unfair advantage over everyone else. The credit card company says it has been negotiating with Walmart for months to reach an agreement and will be running an open letter in Canadian news media on Wednesday to counter the narrative that Wal-Mart is crafting.

Gary Sands, chair of Canada’s Small Business Matters coalition, said Visa is in the right. “If Visa is saying to us, and they have, that it is important they maintain a commitment to continue to reduce credit card fees for small business and not strike one off deals with entities like Wal-Mart, which would be at our expense, then I support that approach,” said Sands. Credit card fees to merchants and small retailers is something that Gary Sands fairly passionate about.

This is a once in a blue moon public battle between two behemoth business entities. Look out for Visa’s open letter in tomorrow’s major newspapers as we continue to see how this plays out.

Questions? Comments? Share your thoughts! Looking for bookkeeping services for your small business? Contact us or request a consultation

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Shopify Puts Ottawa Back On The High-Tech Map

Thursday May 21st, 2015 was a big day for Ottawa’s business community. Shopify, Inc. rung the bell at the New York Stock Exchange, ushering them into the realm of being a publicly traded company – on both the NYSE and the TSX. This is a big deal on a few fronts. Considering a large part of Ottawa’s once-flourishing tech industry crashed, Ottawa has seen a resurgence of startups driven in large part by an expanding group of young entrepreneurs who are working at changing the web and how we interact with it. As per a recent piece on the CBC, Ottawa now boasts 1,700 technology firms, more than twice as many as Waterloo, Ont., according to Invest Ottawa.

To boot, Invest Ottawa has also said initial public offerings over the past five years by other local companies — Halogen Software and Kinaxis — means Ottawa software companies have raised more cash than all other Canadian cities combined. In fact, on Thursday, Shopify successfully raised about $131,000,000 in new capital alone. For a company that only 10 years ago was a tiny 3 man team selling snowboard equipment, this is an amazing story.

The beauty about Shopify’s product is that it’s helping other entrepreneurs and small businesses in a very direct way. Their e-commerce platform makes building and managing online stores simple and straightforward. Congratulations Shopify, along with all of Ottawa’s other rapidly growing startups for putting the nation’s capital back on the map!

Questions? Comments? What do you think of Ottawa’s startup community? Share your thoughts! Looking for bookkeeping services for your small business? Contact us or request a consultation

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What Small Business Can Learn From Target’s Canadian Failure

Screen Shot 2015-01-20 at 11.58.16 AMThe perhaps not so surprising closure of all 133 of Target’s store locations felt like a swift uppercut into the face of Canadian retail. The American giant was beset with a series of difficulties almost as soon as it opened. The consensus on one of the main issues that besieged the brand was the lack of inventory for their Canadian locations and higher prices than the competition domestically. They also didn’t  run an e-commerce site  to promote revenue and operated stores in former Zellers locations that often looked much like the ones of the faltering Canadian chain it replaced.

Business analysts also cited a lack of understanding the Canadian retail market and a failure to recreate the shopping experience that many Canadians went into the United States for. Target has a tremendous appreciation of their brand in the U.S., and that just wasn’t translated to the Canadian side of the business. A tricky situation when you’re a retail institution. In short – an arrogance of sorts – assumed that because the brand is so iconic and successful in the United States, it would have just translated into a successful operation in Canada. It certainly looked that way in the beginning, but people weren’t returning after shopping trips. 17,000 layoffs later, an over 7 billion dollar investment into the great white north ends up going south figuratively and literally.

What can small business learn from such a fall from grace? A few things….

1. First and foremost, don’t assume. Just because you might be successful in one market, it doesn’t mean you can recreate that in another – no matter how iconic your brand or business is and no matter how good your idea is. Assumption can be the main ingredient in any business failure. Approach each step to growing your business with a reminder that you can fail. Growing too fast and too aggressively can also increase the likelihood of things not working out. For small business – being conservative in your expectations is an essential. Analyze scenarios and determine a minimum viability. Determine a failure scenario. Obsessively look at and study every potential reality, competitor, and market condition. Create a plan of action for each. Growing gradually and thriving is better than growing rapidly and trying to survive. 

2. Be committed to your product, service, and the overall experience. Ensure that what you’re selling is readily available and make sure the price and the service are competitive, outstanding, and distinctive. Whether you’re selling widgets or cutting hair, if customers perceive a high degree of value in coming to you, and they come and go happy – you’re doing it right. This can include, but is not limited to, being committed to how you market your products or services as well. Be committed to a good web experience for your business. Be committed to a good social media marketing presence. Ensure what you’re marketing and what you’re selling is matching up. 

3. Be adaptive and prepared to react. If things aren’t working out in line with your expectations, don’t wait. Change something as quickly as you can. If customers are providing feedback to you about what they’d like to see different – treat it preciously, respond to that feedback, and adjust what you need to to create number 2.

Questions? Comments? What do you think of Target closing down their Canadian operation? Contact us or request a consultation


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EGADS! 4 in 10 Canadian small business owners get ‘F’ for financial literacy

This is alarming. 4 in 10 Canadian small business owners failed a financial literacy survey that was put together by Intuit. Bryan Jackson put this piece together in and believe it or not – this was actually an improvement from a similar survey that was conducted in 2012. The survey results are based on a sample of 500 small business owners (with up up to 99 employees) based in across Canada. If you’re curious about taking the survey yourself – you can do it here.

Business owners in Atlantic Canada scored the best. Business owners in Quebec scored the worst. The most recent survey was completed in November of last year, which just so happened to be the month that the Financial Consumer Agency of Canada declared “Financial Literacy Month“. While FLM was aimed more at the consumer as opposed to the business owner, the point that we ALL need a refresher in our respective spheres of knowledge isn’t being lost here.

Business owners! Get some refreshers here, here, and here. Questions? Comments? Contact us or request a consultation

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Paul Singh Is Throwing The Glove Down For Canadian Entrepreneurs

Paul SIngh

Paul Singh, the former U.S. based investor in 500 startups, oversaw capital injections in more than 500 companies across 35 countries, including about 20 in Canada. Last year, he left 500 Startups to start Washington-based Disruption Corporation, a research company. He claims there are plenty of impressive companies and startup founders in Canada, but he has concerns about the country’s tech startup scene. He conducted an interesting interview recently with the Financial Post about his thoughts on what Canadian startup entrepreneurs are doing too much of, and his innovative plan to include more of these startups on U.S. investment radar.

“Canada has a bit of a messaging problem,” said Singh. “A lot of people outside Canada don’t really know how much good stuff there is up there. Inside Canada, many of the entrepreneurs have a confidence problem. In my opinion they’re just as good as their U.S. counterparts, and they’re just as capable of building big businesses. But for whatever reason they don’t seem to be swinging for the fences.”

Singh argues that two main problems are impeding Canadian entrepreneurs: confidence, and our investors might not be giving them incentives to “swing for the fences.” He also said there’s way too many accelerators out there and government-funded tech initiatives should be lessened.

Read the interview here. Do you have a startup? Questions? Comments? Contact us or request a consultation


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The Small Business Community Is Optimistic

Ottawa Bookkeeping serviceThe Financial Post published a very interesting article about the positive out look that the small business community has about the economy and market prospects, and it’s interesting. In fact, the community’s optimism is at the highest point in more than two years — and just shy of levels consistent with steady economic growth, according to the most recent survey.

The Canadian Federation of Independent Business says its Business Barometer index rose for a second month, to a reading of 67.1 in May, a gain of 1.4 points from April’s reading. This month’s positive response is the strongest since March 2012 when the index was at 67.7. Anything above 50 implies that small business owners who expect stronger economic performance in the coming year outnumber those anticipating weaker growth.

Check out the piece in the Financial Post here. Questions? Comments? Contact us or request a consultation


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Canadian Wage Subsidies Are Available to Business Owners

Screen Shot 2014-06-01 at 6.55.52 PMCheck out this piece in Small Business trends. The Fed has a series of wage subsidies available to businesses who have a majority ownership by resident Canadians, and it’s not a series of tax credits. It’s actually money that can cover up to 80% of an employee’s salary.

A page detailing wage subsidies for various industries on the Canadian Business Network website maintained by the Canadian government sheds some light on the initiative. Some of the subsidies apply to only certain provinces, but there’s something in there for almost everyone. As an example, the Employ PEI program is an employment benefit program which is designed to encourage employers to hire eligible individuals and provide them with an on-the-job work experience to enhance their skills and employability. The Early Childhood Enhancement Grant in Nova Scotia can be applied to increasing the wages of daycare workers (both full time and part time). The Employer Signing Bonus in Ontario is designed to encourage employers in the trades to register new apprentices in sectors where there is a high demand for skilled workers. 

Contrary to popular opinion, there are a series of federal programs out there for business owners. Check out the Canadian Business Network hereQuestions? Comments? Contact us or request a consultation

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