Huron Expositor, 2000-01-26, Page 11We'd
m
This and That According To Grant
"What does an accountant use
fine hirth•control? His person-
ality'.. - anonymous .
Well. "anonymous" was
prohahly some.' just totally
enthralling character such as
a hanker. or a 'lawyer. And
there arc dozens more where
this came from. But the sad
part of it - most of these gags
arc completely true!
You -probably expect an arti-
cle from an accountant to.
•say. he entitled live things to
think about this time of year"
( yawn) or "changes to your
tax•return"(yawn again) or
even better "an OWFRP
update." (1 can't take. the
excitement!)i have a theory
about accounting and tax
based literature. No one
reads that stuff except
accountants 'and tax profes-
signal and it bores the skull
out of us: But we have to"
read it.- it is our sacrifice, our
booklet is published by us
and provided free of charge
(like anyone would pay for it)
to our clients and anyone
else.
Then, there arc people who
really du mcaii well. They
plan on reading it. And it sits
on the bedside table. or in the
magazine rack in the; hath -
room (where truly crappy,,lit
craturc "belongs anyway )--
and yes. many people do have
magazine racks in the' hath-
room- my parents arc.not the
only ones. -
Anyway. these well meaning
pcoplc start to read. for exam-
ple, our riveting chapter on
"employment income and
deductions" and atter twenty
or thirty words get a 'deer in
the headlights" look, or start
thinking about anything else.
This is a defense mechanism
actually, because overexpo-
sure .to this type of reading
duty. Someone has to read may result in immediate deep
and interpret thc pages of a,:depression and possible even
'dribble pumped out by the "Suicidal thoughts (Ihavebeen
politicians. . __ thinking of putting a warning
By the way. I have an excel- label on the. front cover of our
.
lent glossy booklet entitled booklet). •
"Personal Tax Planning What .is my message then''
1999/2000" and- embossed What wisdom in the arca of
with our EPR firm logo. This personal taxation or finances
ADVICE FOR GETTING ADVICE
You want to have a sound working for a reputable firm. •
Retirement Savings Plan.
You need' to get some good
advice concerning invest-
inents: so where do you go?
There arc many Financial
Planners, mutual fund sales paid?This is definitely a
people and stock brokers question that needs to be
-after your money. so who do answered: Unfortunately,
you choose for some sound most. people don't ask this
advice and how will you question and this can lead
know that the advice that them into the'grcedy"arms of
you're getting is worthwhile? some unscrupulous sales pco-
First, check on the qualifi- pie. Most mutual, fund sales
cations of the individual that people, financial planners.
is offering advice or trying to brokers, etc. are paid through.
se•11-you their product. You • a commission by the mutual
should ask yourself if they fund company that they are
area licensed mutual fund representing. Most mutual
sales person,, and what cours- funds charge a sales fee when
• es have • they taken. you are acquiring the fund or
Next. you•want to obtain when you arc selling the fund
;idvice from•somconc who is which is called a LOAD. If
You will want the peace of
mind of knowing that the '
firm will he in business for
thc foreseeable future..
How is this -person being
am 1 going to impart tor you
today?
First, you are probably'
already aware of the secret.
That's right, the secret. I am
sure I am breaking all types
of professional code right
now. but let them come and
get me! Have you ever
noticed how someone writes
an _aiticic on this unfortunate
subject and they only feed
you enough information to
prompt .yiu - not to solve the
problemsyourself-but to
convince you that you need
them. This reminds of anoth-
er quip regarding my chosen
profession. "What's thc defi-
nition of an accountant?
Someone who solves.a prob-
lem you didn't know you had
in a way you don't under-
stand."
So. i am going to be upfront,
and honest: and I am not
going to make you read long.
drawn-out boring text that.
will only prompt you to see
me any way I am just going
to suggest that you come to
•see me. People .do need
accountants. If mx..,car needs
work I go to .a professional
mechanic. You Will not see
me at Future Shop lined up to
buy. "Car Prep 2000" comput-
er software program and you,
will definitely not see me
reading,an article orbooklet
on automotive repair then
heading out to deal with the
beast in the driveway.
What is my preferred area of
practice? Personal tax and
corporate tax preparation,
tax -minimization planning
and management consulting -
for a wide range of business-
es, including agriculture.
I have had an office in Huron.
County - Seaforth to he exact.
- for fifteen months now and I
find the people of the area to
be very warm and the weath-
er to be .damn cold!
However, it has been a plea-
sure getting to know more
people from the area and to
he a part of the local business
community.
Writing this aniclet' The faun
part of my day now hack to
work. --
And that is how I see it.
Grant Palmer; CGA -.
(Grant:is the local partner of
the Seaforth and London
branches of EPR Evancic
Perrault Robertson. Certified
General Accountants).
FOR RRSP INVES.TMENTS
the load is charged when you So -where can you go to -get
sound RRSP and investment
advice from, a knowledgeable
professional that will put .
your needs ahead of their
own? You don't have to look •
that far. Just drop into your
local CIBC branch: and ask
to speak with one of their
Relationship Managers.
CIBC offer "Trusted
Financial 'Advice and
Service" to clients in the
form of free financial plan-
ning. no load_muttial funds;
GICS, and access to our vari-
ous
ari ous business partners such as
T.A.L. Investment counsel.
Wood Gundy Private Client •
Service. Investor's Edge
Discount Brokerage. and .
CIBC Financial Planning Inc.
first buy the fund. this is
called a front load fund. If the
load is charged when you sell
the fund this is called a rear
load charge. '
Well so I have to pay a
load, so what? If the mutual
fund that you have purchased
for your RRSP is constantly
losing value or is not per-
forming up to your expecta-
tions,, you may want tosell it
and invest the proceeds else-
where. To do so means that
you actually have to pay a fee
to get out of this mutual fund,
whish is just adding insult to
injury. Ask your advisor how
much the load or sales charge
is to purchase your invest-
ment. LOOK FOR NO
LOAD MUTUAL FUNDS.
Should I Incorporate My Business
Th thoughts
e ugh s of many small assets of the shareholder from.
business' owners tum to this any unforeseen business loss-
'question
oss 'question shortly after they es or lawsuits.. however. the
start their operations. There corporate "structure does. not
are many benefits and pitfalls , provide a• shield form all
that should be examined prior debts, and certainly all assets
to making . this decision. that have accumulated in the
These should be examined in corporation are at risk. The
• light of each individual's per-
sonal situation. .
There are several benefits
of operating a business in the
corporate structure. Firstly.
the rate of taxation on corpo-
rate income is lower and can
result in significant savings
over time. The combined fed-
"eral and Ontario corporate
income tax rate is approxi
mately 22% of business
inct►rne. This rate of tax is
. ' much lower than the personal.
tax rates because of our pro-
gressive rate system. The
refit of this •
low r
he a tax rate
is lost it the business does not
• generate more income than
' the business owner needs for
• personal living expenses. A
second advantage is the con-
rcpt of limited liability. This
canprotect the personal
shareholder .would likely
have to sign a personal guar-
antee.for any debt that the
corporation would take on
unless other security could.be
given. A third advantage for
the- small business corpora-
tidn is the access to th
$500.000capital gains deduc .
tion. The shares of the a corpo-
ration . can be sold and the
gain on the sale up to
$500.000 will he exempt
. from tax. •
, There are also some dis-
advantages to- consider.
Firstly. there are additional
set up costs and fees to main-
tain the corporation. The fees
for filing the Articles of incor-
poration with the government
including lawyers' fees can
cost.' between 51.000 and
$2.000 depending. on : the
Brian E. Wightman
Certified General Accountant
64 Main St., Seaforth
(519)527-1331
Brian Wightman
• Accounting & Bookkeeping
• Personal & Corporate Tax
• Farm, Business & Indvidual
Tax Planning .
Call for a t•l. consultation at
my office, your homy or business.
527-1331
complexity of the structure of
the corporation. The ongoing
fees include the preparation
of annual financial state-
ments, two sets of corporate
income-tax returns and min-
utes of annual meetings. -
which can cost $1.000 per
year and up depending' on the
complexity of the business
operations. A further. disad-
vantage occurs if the business
incurs losses in the first few
years of operation; there is no
opportunity for the sharehold-
er to deduct these losses from
other sources of personal
income. There are also pit-
falls to the corporate structure
in the planning of your estate.
The business may own
numerous assets that you
would like to leave equally to
your children, but the corpo-
9
ration owns them and since
the corporation is a separate
entity form the owners these
assets are not available to dis-
tribute from the shareholder's
estate. The shares of the car -
,oration can be divided.
between your children' how-
ever, you are forcing the chil-
dren into the. joint operation
.of your business.
There are many other
variables and goals to evalu
ate in order to make thisdeci-
sion and it is recommended
that it be given careful con-
sideration ,.in consultation
with your lawyer. accountant
and other professional advi-
sors.
Brian E. Wightman. CGA
See Page 16 for more -
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