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Have You Ever Thought of Owning Your Own Business?

Have you ever thought of owning your own business? Most get discouraged just thinking about it. Will you be able to do this? If you fall under the category of dreamers then you think it will be easy. The truth is somewhere in the middle. I for one wanted to own my own business because I thought I had a great idea and a product that could help people. What more if we can offer outstanding customer service and great rates for it, it would be something that could benefit everyone. Now, let’s uncover the myth’s of owning your own business…

I get to be my own boss and I don’t have to listen to anyone.

While you do get to be your own boss there are times when you do have to listen to people.. your customers. Your customers ultimately are a major deciding factor of what your business will be like, when and how.

I get to do whatever I want.

Usually business people adhere to a certain code of ethics. Often there is a code of ethics that exists in your line of business (i.e. lawyers, paralegals or in medicinal fields). So while you can decide how you run your business you can not exactly do what you want if it entails harming others or conducting bad business as it will hurt the your business as a whole. Moreover, you can end up with many lawsuits on your hands and your name all over scammer reports on the web.

People that own businesses hardly have to work.

Contrary to the old fable that owning your own business is no work at all, it is actually more work at first, than pay. The rewards are limitless though. Of course, you build a team and work in the right direction and as a tree grows so will your business.

I can get funded and begin a business

Unless you are already friends with some pretty good investors, funding might have to come out of your own pocket initially. Investors want to see that you can do it first and then they will also put money into your cause. For the most part, banks will want a up front collateral to lend you anything, unless you have been in business for two years, as a standard. Furthermore, if you borrow money at the beginning and have no customers, no money coming in to the business and no cash saved how will you pay your lenders. This is another reason the majority of business owners go out of business before the second year. Plan ahead start off small and build, that way you can still work and begin blossoming your business and not be in a debt crisis. Also, get a marketing plan and business plan first. Why? Because this will reveal to you the answers necessary for your success, such as: Is there a growing need for this product/service/business/idea? Will there be a need for this in the future? Who will I market this product/service/business to? Where? Smart business owners think of an idea and get a business plan before they go into business that way if the numbers don’t look good for them, they saved a lot of time, money and heartache as they move on to the next idea.

Social Media networking is not for business

Wrong. It’s gotten to the point that most businesses are in almost every social network, whether advertising or not they at least have an account that they post to regularly. In fact, customers expect to see the “follow me on Facebook” or Twitter logo at the bottom of the page. Since many people do NOT like advertising through social media this is where you can be creative and outgoing and talk to your customers on a more personal and down to earth level; this is where you are in the customers playing field, and they know it so it also makes it easier for them to talk to you.

Many people who go into business do not go into business with a realization of what it’s actually like to own a business. Talk to other business owners and take them on as your mentors.

There is no cookie cutter idea. If there is a business that has a model built chances are if you follow in their footsteps you will not be as successful as they were; it’s kind of like a remake of a really good song, it’s never as good as the original.

Come up with some of your own original ideas to give your business your own personal twist. A good thought might be to talk to friends and family that support (notice the word support) your ideas and have some ideas, modifications, or good opinions to give you.

The road to success when owning your own business also leads to financial freedom. Since you own the business you choose your own schedule. With the exception of a few clients in which you may have to work around their schedule.

This article is a means of being prepared for your endeavor and journey ahead. There are many ways to prepare yourself. One of them is through education. Fear subsides with knowledge and is expelled with experience so… move forward. Until next time.

How to Setup a Business in Ontario, Canada?

How to setup a business in Ontario?

Setting up a business can be an overwhelming task with a lot to comprehend. It all starts with a dream and a vision, but how do you turn that dream into reality? The dream of becoming your own boss and having the freedom to make your own decisions can be a complicated one at the beginning. Once you have determined on the actual business and its inner workings, you will have to move on to the next step of executing that business. This is where a lot of people get stuck and don’t really know where to go next.

In this article I will explore and shed light on several different business structures available in Ontario. I will also explain how to be in compliance with Canada Revenue Agency (CRA) tax obligations.

The three most common structures are Sole proprietorship, Partnership, and Incorporation.

1. Sole proprietorship

Sole proprietorship, also known as a proprietorship or a sole business, is a type of business that is owned and operated by a single individual. Other individuals do not participate or own the business. This is the most simplest form of operating a business.

A sole proprietorship is simple to setup, you can operate the business under your personal name. If you desire to use an operating name you are able to register a Master Business License and operate under an operating name. The requirements for setting up a sole proprietorship are outlined in the provincial legislation.

The shortfall with a proprietorship is that the sole proprietor is personally liable for the business. There is no legal separation between the business and its owner. This creates unlimited liability from creditors and other business debts.

What are the setup cost?

The setup costs are relatively low. To Register a Master Business License online the government fee is $60. There are additional fees for name search and enhanced business name search.

How is a sole proprietorship taxed?

A proprietorship is not a separate legal entity and is taxed based on the proprietors personal income. A separate tax return is not required. The income or losses of the proprietorship will be taxed at the applicable marginal rate of the individual. If the business is profitable this may put you in a higher tax bracket.

There is no need to obtain a CRA business number for a sole proprietorship. However, in certain circumstances you will be required to register a HST number. If you have employees you will be required to register a payroll number. All of which can be done over the phone by calling the CRA business line.

The income and expenses from the sole proprietorship can be reported on your T1 Personal Income Tax return on the T2125 Statement of Business Activities form. You will be required to keep all your receipts for income tax purposes.

2. Partnership

Much like a sole proprietorship, a partnership is not a separate legal entity. A partnership arises from the legal relationship between two or more people that join forces to start a business. The partners do not have limited liability from creditors and personal assets could be seized. This has given arise to several different partnership structures, including General Partnerships, Limited Partnerships, and Limited Liability Partnerships; each of which has a different level of personal liability.

What is a General Partnership?

In a general partnership each partner is jointly and separately liable for the liabilities and obligations of the partnership. In this type of partnership, the partners do not have limited liability from creditors and personal assets could be at risk.

What is a Limited Partnership?

A limited partnership consists of a general and a limited partner. The limited partner has limited liability and only the initial investment is at risk to creditors. The general partner has unlimited liability.

What is a Limited Liability Partnership (LLP)?

A LLP is created under The Partnerships Act which allows certain professionals to practice under a LLP. The legislation states that the partner is not personally liable for any liabilities of the partnership that arise as a result of negligence by other partners of the LLP. The partners’ investment and the assets of the LLP can be at risk.

Do I need a partnership agreement?

Although a partnership agreement is not required by law, it’s a very good idea to have one in place. The partnership agreement would help avoid disputes among the partners in the future. The partnership agreement should include the following:

General governing rules regarding the partnership

How to add or remove partners

What happens in case of death of a partner

How to divide and distribute profits and losses

How is a partnership taxed?

A partnership is not a separate legal entity and does not file a separate tax return. The profits and losses flow directly to the partners, who report the income/losses on their personal tax return. A partnership could be required to file a T5013 Statement of Partnership Income depending on revenues and other criteria. A partnership calculates income and expenses in accordance with section 96(1) of the Income Tax Act which states that income and expenses have to be calculated at the partnership level.

A CRA business number for a partnership is not required. However, in certain circumstances you will be required to register a HST number. If you have employees you will be required to register a payroll number. All of which can be done over the phone by calling the CRA business line.

3. Corporation

A corporation is a separate legal entity which can be incorporated at the federal or provincial levels. A corporation is separate from its shareholders and must file a tax return annually regardless of the revenues it makes. A shareholder of the corporation is not liable for debts of the corporation. Although a corporation can be named in a lawsuit, the shareholders have limited liability to the capital contributed to the corporation.

What is a Federal (Canadian) incorporation?

Federal incorporation will allow you to operate and open branches all across Canada with the same name. The corporate name is recognized all over Canada. A Federal corporation is required to file a annual return every year as long as the corporation remains active. You will also have to register in the province you decide to operate in.

What is an Ontario (Provincial) incorporation?

Ontario or provincial incorporation will only allow you to have a branch in Ontario. If you decide to open a branch in another provide you will be required to incorporate there as well (the same name might not be available). With an Ontario corporation you are still able to sell your products across Canada.

How is a corporation taxed?

The income earned in the corporation is taxed at the corporate rate. The funds left over after paying taxes are considered retained earnings of the corporation. The retained earnings are distributed to the shareholders through dividends and are then taxed in the shareholders’ hands at their respective marginal tax rate.

The setup costs can range from $500 to $5,000 depending on the tax structure and legal advice needed.

When to file corporate taxes?

All corporations have to file a corporation tax (T2) return every tax year even if there is no tax payable. If you are a CCPC the payment is due 90 days after the corporate year end and filing is due 180 days from the year end.

CRA Business Number

The CRA will open a business number for your corporation. The CRA will request that one of the owners or directors provide a social insurance number and major business activity.

GST/HST Number

You will be required to open a HST number if your revenues are going to be above $30,000 or you plan on collecting HST on the goods or services you provide. You also have the option to voluntary register for a HST number from the beginning. It is critical that you review the CRA’s GST/HST Guide to stay in compliance of the regulations.

This CRA tool can determine if you Should register for a GST/HST account?

Payroll Number

You have to register for a payroll account before the first remittance due date. Your first remittance due date is the 15th day of the month following the month in which you began withholding deductions from your employee’s pay.

Conclusion

The type and size of business will often dictate the structure of the business. A lot of businesses start as a sole proprietorship (for the above reasons) and as they grow they will change into a corporation. There are tax provisions which can be used to roll over the business to a corporation tax free. Once this is done the CRA will have to be notified and everything can be changed over.

Self-Publishing Business 101: The Art and Science of Book Promotion – Capitalization

A start-up small business vs. wishful thinking

An author writes. That is what he or she wants to do. In most cases, an author dreams. He or she dreams about bestsellers, about making a living from writing, about his or her book being made into a movie. These are all good-in fact, they are all great. Dreaming, hoping, fantasizing about ultimate success in one’s own writing is a virtue. Writing, however, is hard and writing really well is harder; it takes motivation, persistence, and continuous improvement.

For independent authors, the entire self-publishing journey is a three-stage adventure as described in Not a Gold Rush: The Taleist SelfPublishing Survey: “Writing a book is the first leg… getting it self-published is the second. The third leg is marketing your book.”

The writing process is what every author understands and completely relates to. The publishing process is, to a lesser extent, also a familiar setting for authors, especially the experienced ones. However, after a book is finished and published, the next phase of getting the book known and making it sell is usually like stepping into an entirely different world. It’s a hard adjustment to make for most, but the fact is promoting one’s book is akin to operating a small business; it has very little to do with writing or the publishing process. An author who realizes, accepts, and adjusts to this reality has already taken the first step.

Proper book promotion is something that a lot of authors don’t do. These are the authors who try to find someone willing to put energy into translating their dream into this functioning small business of promoting it. Agents do this. Traditional publishers do this. They become that second personality, that small “business mind.” In doing so, they allow the author to primarily stay in his or her writing, still dreaming and hoping, because the agent or publisher can take on the lion’s share of the small business that can actually belong to the author if only he or she knows how to handle it and handle it well.

Even in this case, when the agent or publisher is generally more involved, the author is still asked to step in and participate in the business quite often. The primary responsibility for the alter ego rests with somebody else, yes, but so does the profit. Less than 5%-by some measures, less than 1%-of authors find an agent or traditional publisher willing to take them on. For the other 95-99%, however, you-the author-are going to have to be two different people: a writer and a small business owner.

The characteristics of running a start-up small business

If you’ve never owned a small business, you would have no way of knowing what it’s about. I’ve owned and run small businesses for 27 years. There were times I have succeeded, as well as times I have failed. I’ve had Inc. 500 businesses, consulting businesses, marketing businesses, publishing businesses, and more. Based on my knowledge and experience as a businessman, I can tell you with 100% certainty that promoting one’s book and oneself-with the operations you have to go through-is just like operating any other small business. It has the same cycles, it has the same start -up needs, it has the same waiting, it has the same team building, it has the same “making-decisions-with-inadequate-data” characteristics, it has the same “throw-many-things-up-on-the-walluntil-you-know-what-you’re-doing,” it has the same fear, and it has the same thrills.

The most important thing you need to know is that running a business has its own skill set needed, just like anything else. The most common problem among people who try to start a business is they may think that, if they are just good at what they already know, they’ll succeed. Someone good at working on cars starts to charge people, word gets around, he works on more and more cars. Eventually, the fateful day comes when he starts to hire people to help him. He is confident about his knowledge and experience as a car mechanic and believes that it’s good enough to take things to the next level based on that skill alone. He, however, is about to embark on a venture of which he knows nothing-making a business work, not just making a car run. He is about to find out technical and managing kills have little to do with each other.

The same thing goes with marketing your titles. Although a fair amount of book promotion is writing-blogs, articles, social media postings, press releases, etc.-this is just about 20% of it. You’ll want to concentrate on that and that’s a good thing. What is essential is that you accept and make it your mission to learn as much about the other 80% as you can, and spend enough time on that 80% as well. If you do that, you’ve got a shot. Unless you get an agent or a traditional publisher, if you say to yourself “Someone else can do all that. I don’t want to think about it” and then you do exactly that, you’ve lost before you have even started. This is not to say you have to be an expert in all parts of book promotion; it is, however, to say that you need to understand all parts of your new business well enough to oversee it. As what best-selling self-published author, Hugh Howey, mentioned in his article, “Hugh Howey: Self-publishing is the future-and great for writers”:

“The success of your work will depend on you knowing this business and embracing all the challenges that a self-published author faces… Promotion will be up to you.”

We all start from somewhere-or with something-and it is always preferable and more effective to understand the basics first instead of trying to take in the whole all at once. Before you start with-or overhaul-your book promotion business, there are five things or the first five tools you have to get to know and familiarize yourself:

• Capitalization

• Delegation

• Expectations of returns

• Systems orientation

• Fear

Important Note

We’d like to mention here and now, something that runs throughout the series of articles. As mentioned earlier, starting and running your book promotion business is exactly like starting and running any other small business in one big way. There is one simple rule of thumb, far more important than any other that will spell success of failure, and it is this:

If you avoid the biggest land mines, you have a chance at success. If you emulate those that have succeeded before you and truly make your best effort at doing that, you have an even greater chance of succeeding. In this series of articles we are going to show you the biggest land mines, and tell you what has worked best.

Please notice throughout this series of articles that, periodically, we will describe a behavior or an attribute a pattern of decision that either defines a bigger reason why authors fail or defines something that those self-publishing authors who reported making an independent living from royalties are doing. Our suggestion is that, when you see those you keep track and make a list of behaviors in common with authors that fail or with the Top Earners. We suggest that you refer to this list regularly and make sure you’re always avoiding the fail behaviors and emulating the ways that led to success. Most authors-in fact, most people-will tell themselves “This doesn’t apply to me” in this or that circumstance. They will go off on their own adventure, ignoring both lists, and end up looking around for whom to blame when they fail. It is your job and your responsibility to *not* be one of those people.

First up-Capitalization

It is important to strongly consider capitalization before you start your book promotion business or any business for that matter. There are ways to prepare properly for those and ways to reduce capitalization needed.

Most self-publishing authors make one or two mistakes right out of the gate. First, they do their book production themselves. According to the Taleist survey for self-publishing authors, majority of the 1000+ respondents stated that they earn more than 3.5 times of the royalty/revenue if they have the production work done by outside professionals, compared to if they did that work on their own. Second, when authors hire an outside firm to do this work, they tend to show poor judgment in their selection of firms. There are those who would spend $3000, only to get subpar production work done when they can get high-level prepress for 1/3 of that cost. With the former mistake, they enter into book production already having sabotaged themselves out of 2/3 of the returns they might get for promotion. With the latter mistake, they enter promotion $2000 poorer with what may or may not be an attractive product, which further decreases the chance of the book to sell.

Capitalization planning depends on a realistic idea of the amount of time it will take for promotion to succeed to a breakeven point. Most authors-in fact, most first time small business owners-vastly underestimate this amount of time. With most small businesses, it takes 3 to 5 years to get to breakeven. While the amount of time it may take to get to breakeven with book production is less than that, most authors-and most small business owners-give up after 3 to 6 months of effort. If you want to make it into that segment of the Top Earners-self-publishing authors who reported making a living off their royalty income (10% of self-publishing author respondents)-you should capitalize such that you can maintain your plan for at least 18 months, a probable timeframe to reach breakeven point. There are authors who accomplished this within 12 months, but very few in a shorter period of time.

The amount of capital needed obviously depends on the promotional systems picked, and this varies widely. It depends on what you can do yourself with competence. It depends on your willingness to invest time daily. It depends on the systems you decide to use whether or not they are “best-bang-for-your-buck” systems for your book or not. It depends on your ability and willingness to learn and adjust on the fly. The subject of amount of capital will be addressed later in this series and in more specific terms.

Capitalization is one part of the picture we are trying to put together, and like the rest of the foundations we are going to discuss, it also branches out and affects other aspects and, eventually, the whole venture. But, in order to understand the basics and the whole small business-start-up subject, we will start with the overviews before narrowing down into more details, during which we will introduce more important aspects of book promotions from the business perspective.

On the next article, we will tackle techniques on proper and effective delegation of tasks, knowing when and where to ask help, as well as what your focus should be in the start-up process.