Why business transition planning is more than just financial planning

Why business transition planning is more than just financial planning

When business owners start planning for the transition of their business, quite often their business and personal financial position is what is planned for. While these factors are important, owners often give little consideration to their emotional readiness to transition. Preparing to transition a business involves some of the biggest decisions of an owners’ life and careful thought and care should also be afforded to the emotional journey.

When it comes to exit and/or transition planning, there are a number of options that can be built into the process to ease owners in and out of roles and help smooth the overall transition. Owners, if they are selling, may include a timeline for staying on as a consultant before or after the transition. If transitioning the business to the next generation or management, there may be a strategy incorporated for choosing and providing hands-on training for the successor.

What does it mean to be personally ready for post-sale and retirement? More specifically, what does the process of giving up control of a business you may have built from the ground up or have helped to grow, look like? Ignoring the emotions tied up in being a business owner or CEO likely means ignoring a large part of your identity. In order to transition as smoothly (and happily) as possible into the next phase of your life, it is critical to think about and plan in advance for the emotions that will likely surface while stepping out of that self-defining role.

In the Harvard Business Review article “Dealing with the Emotional Fallout of Selling Your Business,” former business owner Jeff Giesea writes “When you spend years architecting your life around a business and suddenly it’s gone, you’re probably going to have an identity crisis…. These issues,” Giesea adds, “don’t mean you shouldn’t proceed with a sale, just that you may want to prepare for the emotional journey afterwards.” 

What does preparing for the emotional aspects of transition – before and after exit – look like and where do you start? The following topics and questions should be discussed with your trusted advisors to help develop non-financial goals, objectives and a vision for life after business.

  • Control – How will it feel to let someone else make the decisions? Are you emotionally prepared to transfer the reigns when the time comes? How can you plan for it?
  • Intellectual stimulation – As an owner, you are used to making many strategic decisions and have been challenged intellectually on a daily basis. What other areas or topics might you be interested in learning about? What other creative outlets might exist to exercise those skills? Are there courses or classes you have always been interested in but never had the time to explore?
  • Lifestyle – Are there any adjustments you need to make to your lifestyle? Consider and plan for any changes in income (up or down) in your personal financial plan.
  • Change of pace – Are you ready for the change of pace? With more time on your hands, what will you do to keep yourself busy? There may be new or existing hobbies you want to take up. Is there a charity or cause you are passionate about? A new career plan? A pet project?
  • Relationships – How will you stay connected or reconnect with your spouse, family or friends? As a business owner, you are part of a community and business family; how will you stay connected with those people?
  • Health – Think about how you will balance your physical and mental health. Are there clubs, recreational facilities or other interests that will keep you active? Do you have a confidant or a coach you can talk to about the feelings and emotions pre and post transition?
  • Retirement – What is your vision for your life in retirement? Are you ready to retire full-time or is there an opportunity to work part-time? Do you have any travel plans? Do you plan to spend more time with family and friends?

Not only is having a transition plan that was put together by an experienced transition planning advisor personally reassuring, it also adds value to your business and can be a “green flag,” so to speak, for buyers when looking at a deal. Knowing an owner has put thought into being ready to transition can put the buyer at ease during negotiations. Giving yourself time to plan for the emotional and lifestyle changes you will face during your transition and after your exit will only add value to you and your business’ wellbeing.

If you are interested in discussing your future exit, connect with one of our transition planners to discuss how we can help you with financial and personal transition readiness planning.

Operational and cash flow planning for your business during COVID-19

Operational and cash flow planning for your business during COVID-19

COVID-19 has put a lot of stress and pressure on business owners. During a crisis our brains move into fight, flight or freeze mode – our heart rate increases, our breathing speeds up, we feel anxious and alert – our body is getting ready to face the crisis.

But the effects of stress aren’t always physical. The logic center of our brain gets suppressed, which means we don’t always make choices rationally or assess our options logically. We may react based on fear instead. In the article “Don’t Let Uncertainty Paralyze You” by the Harvard Business Review, Nathan Furr shares habits to help navigate turbulent times, one being “Open your eyes to all options, present and future”.

A fear response can cause us to forget the “bigger picture” but according to Furr, “if we can remember there is a context vaster than we might initially have thought, filled with more possibilities than we might have envisioned, we are much more likely to find an optimal outcome.”

There are business planning and measurement tools available to explore areas of your business where you may be able to improve cash flows, find new sources of revenue or improve efficiencies, especially amid a downturn. Taking control of what you can, basing your decisions on facts and putting actionable steps in place will help build resilience in your business for the long term.

Office Space and Remote work

Look at your current work environment – are your employees working remotely? If employees are working remotely, how has this impacted your business during COVID-19 or has it? Talk to your employees and find out how moving to a remote office has impacted their activities. Has it improved or hindered their performance? Revaluate your office space for physical distancing requirements and opportunities for individuals to work remotely for the long-term. Is there an option to decrease costs on office or workspace or renegotiate your lease agreements for lower payments?

Your Workforce

Take a closer look your workforce and what they do – do you have overlap on duties or job functions? Are there changes that need to be made to recover more quicker from the downturn? BDC (www.bdc.ca) provides a workplace planning chart to help track employee functions and changes to staff. This tool can help look at how employees work today and what that could look like in the future. It will identify areas critical to your business operations, skill and/or training needs key to moving out of the recession as well as areas where job sharing or shift work will help employees with family commitments resulting from COVID-19.

Ease of Payments and Delivery for Customers

Is it easy for your clients to get access to your products or services? Think about ways of making it easier. If you have a distributor, there may be other ways to reach your clients directly, more quickly or potential new distribution partners who already exist. Do you have the technology in place for clients to make electronic payments? Is there infrastructure to support customer service? Are there delivery options that put customers at ease and clear, accessible safety procedures in place?

Companies of all sizes can easily access regional, national and even global markets in a cost-effective way using e-commerce platforms for both buying and selling products. For example, many retailers have adapted e-commerce solutions with pick-up and delivery services during the quarantine to keep their business up and running.

Other Sources of Revenue

Look for opportunities and innovation. Is there a bigger demand for one of your products or services in the current environment? If so, is there a way to expand sales and look for new markets? Is there an opportunity to adapt a current service to meet the changing needs of your clients? Many businesses have moved to online meetings, opening up new markets regionally or globally for their services. Think about what you can do with the expertise and products you have today to help your clients with a specific need.

We understand that navigating business planning during a downturn can be difficult. For guidance and help with your business and financial planning needs, please connect with us.

3 Types of Business Structures

3 Types of Business Structures

There are many financial planning decisions business owners make, whether you are already an owner or thinking of becoming one.

Many of these decisions will not only impact your business but also your family’s financial wellness. Structuring your business is one of the first decisions you will make. Even though you can change your structure in the future as your business grows or new owners join the team, it can be more cost effective to anticipate your needs and select the structure to best meet those needs. The legal structure will guide decisions and should be chosen based on your business goals. Each structure has its advantages and disadvantages.

It is important to get proper legal and tax advice when determining how to structure your business. Your decision should take into account a range of factors including:

  • the nature of your business
  • where you are located
  • the number of owners and employees
  • tax considerations
  • potential exposure to liability
  • start-up costs or financial requirements
  • transition or exit options

The three most common types of business structures are: sole proprietor, partnership and incorporation. Depending on the number of owners in a business, options will vary. For example, if there are one or more owners, your options are either partnership or incorporation.

  1. Sole proprietorship is the most common and simplest structure. It allows the owner to have total control over company operations. You are considered self-employed and can hire employees; you manage the business yourself. The owner receives all the profits, claims all losses, and does not have separate legal status from the business. Some advantages of sole proprietorship are: it is less costly to set up, you have full control over your business and you earn all the profits. A disadvantage to being a sole proprietor is that you also assume all the risk of the business and this risk can extend to your personal assets. When it comes to selling our business, ownership cannot be transferred only the assets of the business can be sold.
  2. A partnership is formed when two or more people join, or partner, together to run a business. Each partner has equal share in the net profits and losses of the business. Each partner contributes money, labour, property, or skills to the partnership. In return, each partner is entitled to a share of the profits or losses of the business. The business profits (or losses) are usually divided among the partners based on the partnership agreement. Advantages of this structure are: it is easy to form, you have a shared responsibility for the debts and profits in the business as well as different skill sets that can enhance your business operations. The potential cons of a partnership are: you are still personally liable for the debts of the business, finding a partner you are compatible with can be hard and there can be conflicts that arise from difference of opinions. Ownership generally cannot be transferred in a partnership unless a limited partnership is formed where shares could potentially be transferred.
  3. A corporation is an option whether you are just starting out, are already a sole proprietor or in a partnership. This structure is more expensive and complicated to set up and manage but provides advantages over the other two structures.

A corporation is treated as a separate legal person under the law with a certain number of shares that you determine. Shares are allocated which establishes the ownership structure – it can be one shareholder or more. Shares can be issued or bought and sold and can provide a way of raising capital unlike sole proprietorship and partnership structures which rely on the capital supplied by their owners. Other advantages of a corporation include keeping your personal and corporate assets separate as well as tax advantages such as choosing when to take income and which type – salary or dividends, possible tax deferral or credits and the capital gains exemption when sold. Corporations can live on despite transferring ownership so it can be easier to sell or pass on a business. Possible disadvantages are: it is more costly to establish and manage, there are no personal tax credits as well as owners may have to personally guarantee financing.

Your professional advisors can help ensure you are well informed on the legal and taxation issues you may encounter so you understand the personal and business implications of each business structure. Planning ahead to protect your business and the ones you love, will help you achieve long term financial success. If you own a business and would like to talk to one of our advisors about your business structure or plan, please connect with us.

Estate Planning Topics to Think About

Estate Planning Topics to Think About

While many of us are at home surrounded by our families, it’s natural to be thinking about and discussing how the COVID-19 pandemic might impact our personal and familial affairs. If you now find yourself with an abundance of time, consider taking advantage of the situation by reviewing some of those important estate planning topics you and your family may have been putting off.

Reviewing or Writing Your Will

Many Canadians are thinking about their wills; wondering when the last time they took a good look at it was and perhaps asking themselves where they put it for safe keeping. If you are an adult with any dependants, you should have a will and a power of attorney in place. Having a will ensures your assets will be divided as you wish and that your dependants – children and pets – will have the proper legal guardians in place. If you have had any life changing events since it was last updated, take the extra time while you are in isolation to review the details.

Part of your will includes choosing an executor, the person with the legal authority to represent your estate and execute your will and final wishes. Ensure you’ve chosen an executor who you feel has the knowledge and experience to represent you and handle financial and legal matters. It is important you speak to that person to ensure they feel comfortable and capable of acting in such an important capacity.

If you do not have a will, start taking the steps necessary to begin building your team by contacting us. We can help direct you to valuable resources, like a lawyer and possibly a tax expert if your affairs are more complex.

Appointing a Power of Attorney and Healthcare Directive

You may be surprised to learn that if you were to become incapacitated, your spouse or children would not automatically have the legal right to make decisions on your behalf. A power of attorney and healthcare directive allows you to appoint someone to advocate for you when it comes to your health and financial affairs if you are not able to. A health care directive – sometimes also called a living will – is a document that expresses your wishes for your medical care. A power of attorney protects your finances and gives a person or multiple people the power to deal with your property and financial affairs.

Life Insurance and Beneficiaries

Now is also a good time to review your investment and life insurance beneficiaries. If you have had any major changes in your life – new babies, a separation or divorce, or a loss of a family member, for example – you may have forgotten about some of the administrative changes that need to be made. Take some time to call or video chat your financial advisor to review your policies and ensure they are up to date.

Also, take the time to review your current insurance plan to determine whether your loved ones and those who depend on you, are protected. If you have anyone who relies on you, it is important for you to have life insurance. Even remotely, your financial advisor can work with you one on one to review your needs.

These are not pleasant topics to think about in these uncertain times however, ensuring these legal documents and products are in place may provide you with a sense of security, control and comfort knowing they are there when you or your family needs them.

If you are in urgent need of legal support, the Canadian Bar Association has current developments and resources to guide us through the legal system during these unprecedent times. Each province in Canada has different legal requirements for a valid will and power of attorney. Even with the current environment and requirements for physical distancing, it is possible to have these documents prepared.

Connect with us to help guide you through updating or building your estate plan.

5 Ways Critical Insurance Can Protect Your Family

Couple hugging

When you or a loved one suffers from a critical illness your life turns upside down. Unfortunately, many Canadians who suffer a serious health event, experience a financial impact as a result. Having a plan and the protection of critical illness insurance can provide some comfort and financial relief when you need it most.

If you are diagnosed with a life-threatening condition that’s covered in your policy and you survive the waiting period, critical illness insurance will pay you a tax-free lump sum to use in any way you wish. Advances in medical science are consistently improving the chances of survival after the diagnosis of a serious illnesses which means there is a heightened need for insurance benefits designed to help protect your lifestyle after the onset of a critical illness insured condition.

This insurance benefit can help alleviate some of the financial concerns surrounding an illness, helping you focus on family and healing during a time when you need all your physical and mental strength to recover. There are other benefits a critical illness policy may include which provide access to medical specialists or second opinions that can be invaluable after a diagnosis.

How critical illness insurance coverage can help you and your family:

1. This insurance benefit is designed to maintain your lifestyle when you are unable to work. The realities of daily life do not necessarily pause after a diagnosis; your mortgage and/or bills still need to be paid and the influx of money from critical illness insurance can be used to address these types of financial stressors.

For many Canadians, living off savings for a long period of time isn’t feasible. A 2018 study conducted for the Financial Planning Standards Council found “one-in-three [Canadians] rarely or never set aside savings at the end of the month.”[1] A critical illness diagnosis may mean having to reduce expenses, go into debt, withdraw from your retirement savings or ask a family member for help.

Critical illness insurance can complement any disability insurance you may have to ensure your income is fully covered and can allow the proper amount of time off from work to go through treatment or rehabilitation after an illness.

2. If you or a loved one would like to take a leave of absence or extended time off from work to take care of a family member that is covered, the benefit can help support this decision. While some employees can take personal days off, paid time off is limited for most Canadians and many working Canadians (i.e. self-employed and contract workers) don’t have the benefit of any paid time off. Many parents protect their children in the event of a critical illness to ensure they have the ability to take as much time as they can without the financial worries.  

3. When the unthinkable happens, the benefit can provide you access to treatments that may have been out of reach financially. Some treatments and medication are not covered by insurance or medical coverage. You may also need to travel out of province or country to get access to specialists, alternative treatments or shorter wait times. Knowing you will have the funds to consider all options may provide peace of mind now and in the future.

4. Coverage can help pay for unplanned expenses that can arise like hiring a nurse, retrofitting your home, parking, travelling, meals, additional childcare, or a family vacation. Unlike reimbursed health care expenses, you decide where to spend the benefit.

5. Critical illness policies can go beyond the lump-sum benefit to provide additional benefit programs that offer access to medical specialists around the world, second opinions for diagnosis and treatment plans, support navigating the health care system as well as counselling services. Some plans even extend these services to immediate family members. These services save you from spending unnecessary time researching doctors and treatments and more time focusing on treatments and recovery.

Critical illness is a specialized product and your decision to buy coverage should be made with the help of financial advisor who knows the product and the options available. For more information on critical illness insurance and how it can complement your financial plan, please connect with us.

[1] http://fpsc.ca/docs/default-source/FPSC/news-publications/fpsc-cross-country-checkup.pdf

Why Good HR Adds to the Value of Your Business

Why Good HR Adds to the Value of Your Business

If an interested party came knocking on your door today and wanted to purchase your business, would you know how much to quote them? More importantly, would the integrity of your business – its foundation, practices, and culture – accurately reflect your perceived value and encourage a buyer to pay your asking price?

The truth is, most business owners don’t know the precise value of their business nor do they have a comprehensive understanding of how to maximize this value.

Having a clear human resource strategy in place gives you the ability to provide documentation and therefore peace of mind to an incoming buyer. With employee policies, procedures and an evaluation process in place, documented job descriptions and employee and supplier contracts on file, you not only enhance the appeal of your business but provide the foundation for employee and leadership development, knowledge transfer and proper transition planning.

Here are some ways to start increasing the value of your business today with good human resource management strategies:

  • Think about and document what the culture is inside your company today and where you want it to be.
  • Develop an HR strategy to determine how to leverage talent, retain good employees and develop leaders.
  • Develop an HR action plan and guideline to help determine who are the right recruits and how to attract top talent.
  • Design and develop HR policies, guidelines and job descriptions to support your HR strategy.
  • Think about which workforce segments in your business are the most critical to a high performing culture – the sales team, product development or maybe client services? Develop strategies to support and train in these areas.
  • Analyze the tools and infrastructure you have in place to help your HR staff or managers succeed.
  • Identify the right key performance indicators and create a scorecard to track the investment in your HR strategies.
  • Identify key areas and positions where there may be a gap in capabilities of knowledge and skills of the incoming successor or leaders for future transitions.
  • Develop a succession and knowledge transfer plans with key measurables and timelines.  

If you do not have an HR specialist, you may want to consider hiring or delegating the responsibilities and management to a specialist in this area. There are business advisors who can help you implement an HR plan, as well as technology and tools to support and track your HR initiatives.

Building good HR strategies that are successfully applied and executed will have a significant impact on the long-term well-being of a business as they inspire and motivate people to efficiently execute the company’s vision, build culture and add value.   

Whether you want to lead this initiative yourself or would prefer the expertise of a business advisor who can help build an action plan or access to the tools to support your initiatives, connect with an Intent Planning advisor to explore your HR needs.

Are you ready to transition out of your business?

Are you ready to transition out of your business?

Are you thinking of transitioning out of your business? Do you feel lost on where and how to begin?

The exit planning process requires you to think about when you want to transition out, who you feel comfortable transferring or selling your business to and how the transition will take place.

A common concern for owners when it comes to selling or transitioning their business is not knowing where to start or who to talk to. Preparing for the eventual transition of your business is a process not an event, which means even if you are not ready to scale back for another five years, it is never too late or too early, to start planning.

Daunting as it may be, it is important to begin thinking about your business’s critical issues as they can take longer than you think to resolve. Begin trying to envision what life after your business might look like. Do you want to work after the sale and gradually give over the reins or will you want to walk away and never look back? There are no wrong answers, the important part is thinking about it and working with a team of collaborative professionals to help you through the process.

Have you given thought to the following areas of your transition plan?


How much planning and work is needed to get your company ready to transition or sell? Have you met with an exit planner or succession planner to review all the critical areas in your company and discuss where you can build value in the business? Areas such as sales, technology and systems, marketing, human resources and management teams among others can be assessed to determine where there may be issues or opportunities to build value. Taking the time to make changes will ultimately drive the value of your company and increase the chance of a sale and a successful transition.


Have you thought about how easy or hard it will be to give up control of your company? Is there a plan for who will lead the company and how you will transfer your insight and knowledge from years of experience? Part of the transition plan is diving deep and coming to terms with what you really have control of, and what you don’t.

Start thinking about how it will feel to not have control over every decision and how this might start to give you some relief and reduce stress. If you have a leader, partner or a family member in mind to take over, you can start assessing the knowledge and skills they require and start a conversation about the possibility of succession. Once you get excited about the possibilities, you can begin to develop an action plan for the transition of knowledge and responsibilities and ultimately position your company for long term success.

The thing you have the most control over is you and acknowledging this will help you remain accountable for your many critical decisions. Having a solid understanding of your areas of influence will enable you to make the best decisions possible for the company when the time comes to transition.

Financially ready

Part of your transition plan is evaluating if you are financially ready to sell or transition out. For most owners, their business is their biggest asset and quite often, they do not have an accurate idea of what their business is worth. While the business may be generating a large income for the owner, its sale value may not provide the income they need to maintain the lifestyle they have become accustomed to. You will need to work with a team of advisors to determine what your business is worth today, how to maximize value if needed, evaluate when the right time to sell or transition is and how the sale will support you in retirement or your next venture.

Meeting with advisors to understand your personal and corporate financial and tax situation will help you recognize your options. It is important to review and analyze what you need financially from the business to meet your long-term objectives and have conversations around the lifestyle you want to maintain in retirement.

Life After Business

Thinking about leaving your business may be difficult but preparing and planning will ease the pain. Aligning your personal goals and vision is vital in a successful transition plan. Have you really thought about how you might spend your time once you transition out of your business? Do you have family you want to spend time with, hobbies to enjoy, places you want to see or charitable organizations you want to dedicate time to?

Part of your planning process should be spent assessing where your personal and mental wellness is today and where you need to be before and after the sale. Begin connecting and communicating with family and friends about your plans. Start to think about what life after business looks like and document it. This is a key component of a successful transition and can help reduce the chances of regretting your decision.

Give yourself time to evaluate what is best for you. It can be difficult for many owners to transition out of running a business but proper planning can help ensure you’re ready for, and even excited about, whatever the next chapter holds.

For more information or for answers to your questions about starting a transition plan and assessing your personal needs, please connect with Intent Planning.

Protect the Growth of Your Business

Protect the Growth of Your Business

Businesses in the growth stage are typically generating a consistent source of income and cash flows have begun to improve. Sales are taking off and customers are creating a demand for their product or services.

As a business owner, you want to make good decisions to ensure the business can continue and you are able to manage the growth in the long term. This means keeping the key people in the business and creating a plan that allows you to prioritize risks.

Working with a team of business planning professionals such as financial planners, lawyers and accountants is vital in ensuring a proactive approach is taken to protect your growing business. Building a network of trusted advisors will help you to prioritize your goals and put strategies in place to keep and attract key employees, protect the business in case of an injury, illness or death of a key employee or owner, protect cash flow and debt, and to pay less tax.

To attract and keep top talent in your industry, you will need to begin putting programs and benefits in place to support and protect your employees. Group benefits like healthcare, disability insurance, life and accidental death insurance, critical illness insurance as well as professional services for employees like counseling for themselves and family members, should be looked at. Plans that are flexible and affordable will support attracting and keeping high level employees and people.

If you haven’t put a shareholder’s agreement in place, now is the time to work with your lawyer to establish a buy-sell agreement, and with your financial planner to ensure the proper insurance and/or other funding strategies are in order. This legal agreement between partners or co-owners puts a written plan in place to protect the business in the event of an injury, sickness or death. An agreement made now will help prevent disagreements later.

A financial planner or tax professional can also help with strategies for minimizing tax within the business and educate you on options for drawing income, investing, acquisitions and protecting cash flow.

Succession or good business planning is not just for the final years of an owner’s involvement in their business. It is planning for now and planning for the future growth of the business.

If you have any questions about your growing business or how to find a financial advisor to work with you to develop your financial plan, connect with us.

Three Important Considerations for Start-Up Businesses

Three Important Considerations for Start-Up Businesses

Whether you are in the early stages a new business or in the start-up phase of building a business there are many financial planning decisions to make. Planning for potential future problems is important to ensure the continuation of the business is not impacted.

Business owners in the start-up phase tend to focus on getting their business running, finding customers and launching into the market place. Many business owners are often too busy with the day-to-day operations and often put off planning. A financial planner will help identify problems that may arise and protect owners and the business from the impact.

“Everybody has a plan until you get punched in the face.”   – Mike Tyson

Three Important Planning Considerations in the Start-Up Phase:

Structure – What type of business structure do I need to set up? Setting up a business structure (sole proprietor, partnership, corporation) will have an impact on initial start up costs, control and flexibility in management, taxation of the business and individual owners, plus the business risks for the individual owners. The choice of the type of structure requires consultation from a business professional to ensure the structure is right for your business.

Cash Flow – What is the best and right type of financing for my business? What type of debt protection do I need? Many start up businesses have most of their capital invested and continue to reinvest in the business. This may result in business loans or limited cash flow in the early years. Ensuring the business can continue to repay loans in an unforeseen event is crucial for long-term success.

Key people – How do I protect my business if a key person is not able to work?  As a business owner you and any business partners involved in the operations are key to the success of the business. An unexpected loss, sickness or injury could threaten business operations and success. Building a plan that protects current and future risks is vital to continuation of the business. Protecting income needs for the individual owners and their families should also be planned for.

Working with a team of business planning professionals such as financial planners, lawyers and accountants is vital. This team can help ensure problems are avoided or at least mitigated with proper planning. Building a network of trusted advisors will help you prioritize your goals and protect you from unforeseen risks.

The 2016 Small Business Owner Study conducted by Environics Research Group revealed entrepreneurs would handle some of their decisions and plans differently if they could start over. One of the top 10 things these business owners would have done differently was to seek out assistance from professionals such as financial advisors and lawyers.

If you have any questions about your business’s financial plan or how to find a financial advisor to work with you to develop yours, connect with us.

5 Ways to be Better Prepared for Tax Season Next Year

5 Ways to be Better Prepared for Tax Season Next Year

The more organized you are, the less stress you will feel. Start thinking about how you can make next year’s tax season easier with these tips to keep your finances in order.

1.     Review Tax Filings from Previous Years

For most people, the changes from one tax year to the next are relatively slight. Previous tax returns are great reminders of areas that can easily be overlooked, such as interest or dividends, capital loss carry-forward balances, and infrequently used deductions. If there were any problem areas last year that were extra complicated, try to brainstorm how you can simplify the process and better prepare yourself for this next tax season. This could mean being better organized this year, filing earlier in the year, or even deciding to get professional tax help instead of doing taxes yourself.

2. Keep All Your Tax Information Together

Have you ever gone through a drawer and found a receipt from several years ago but cannot remember if you deducted it or not? Keeping your returns and documents together year to year will help you remember what items you have deducted, what you need to track and what you don’t. Start a new folder or filing system now for 2019 and keep everything in one place. The most important thing is to create a system that works for you. Tracking documents can be the most stressful part of tax season. Some items most commonly tracked are:  charitable donations, medical expenses and business expenses.

3. Save and Track Business Expenses

In general, if you are running a side business, small business or start-up, and are trying to claim certain items as business expenses during the year, you are going to have to justify these expenses. Save or track, any items you think you might want to claim as a business expense. You may not end up claiming them, but it is easier to discard receipts and documentation than wish you had them.

Tax software can be your friend. If you have software like QuickBooks or Zero you can put a system in place to track expenses, all those small missed deductions can add up. If your business can justify hiring a bookkeeper or accountant, consider outsourcing the burden of taxes and the stress of month-to-month tracking so you can focus on running your business. 

4.  Go Electronic

Many of your monthly bills or receipts are now e-statements or electronic PDFs. Start an electronic folder to track bills or monthly statements for credit cards, bank accounts, charitable donations and expenses. Many companies provide an option to have the receipt sent to you electronically after a purchase. If that option is not available, take a photo of the receipt with your phone and save it your electronic folder. Be sure to back up your files in the case of a crash or accidental deletion and to add extra protection password protect your folder or individual files.

5.     Prepare Yourself for Any Taxes You May Owe or Plan for Your Refund

Not everyone will get a tax refund. Many will actually owe money in taxes after filing. If you will likely owe on your taxes, take steps and budget to ensure you can pay the amount owed. You don’t want to be caught off guard when filing and be unprepared to pay the taxes owed. Depending on your finances, what you do with your refund could change each year. Is there a debt you need to pay off? Is there a vacation you want to use your refund for? Do you want to save your refund money for an emergency? Do you want to deposit to your RRSP or TFSA? Take a look at your finances or consult with your financial advisor when determining what your refund should go towards.

Feel free to connect with us to discuss your tax planning needs.