What are the Legal Implications of Not Filing Taxes after One Year?

March 01, 2020

All resident corporations (except tax-exempt Crown corporations, Hutterite colonies and registered charities) must file a T2 income tax return for every tax year, even if there is no tax payable. Non-resident corporations also must file a T2 return in certain situations. These returns must be filed no later than six months after the end of each fiscal period, failing to do so will result in penalties.

The penalties for filing your tax return late is 5% of the unpaid tax that is due on the filing deadline, with an additional 1% of this unpaid tax for each complete month that the return is late up to a maximum of 12 months. This penalty will be even larger if the government issues a demand to file the return and it had assessed a failure to file penalty on the corporation in any of the three previous tax years. In such a case, the penalty would then be 10% of unpaid tax when the return was due, plus 2% of this unpaid tax for each complete month the return is late up to a maximum of 20 months.

Importantly, these aren’t the only penalties which companies may face. Additional penalties companies may be subject to include, but are not limited to, an instalment penalty and a variety of other penalties for not reporting income, false statements or omissions, misrepresentations, non-compliance with mandatory internet filing and more. It is important for your business to consult with a tax expert and, if needed, hire a tax lawyer to ensure your company is abiding by tax requirements to which it is subject. Doing so will allow you to plan for your company’s future and avoid unexpected fines and penalties which can throw off your company’s business plan.

That said, in practice, you may not always be able to file your taxes on time.  The key is to minimize the likelihood you will receive an unexpected letter or phone call from the CRA requesting an examination of financial records.  An audit is much more likely to be triggered if you have not filed your taxes for multiple years, rather than one year.  Thus, if you are more than one year behind, you would benefit by filing for the least recent year(s), rather than making no progress to catch up.

Entrepreneurs: Excelling in Products or Services? But What about Good Communication?

Freddy Velez*

March 01, 2020

It shouldn’t be only a question of word of mouth. Today it is not enough to excel offering products or services that all your clients appreciate and speak about. Effective communication is key to a company’s success. Having worked in corporate communication, journalism and marketing, I can attest that mastering the art of passing information along is very often undervalued and ignored. The basic example of how communications impact an organization can be compared to spilling water on a boardroom table. If it is a flat table, the liquid will go all over without direction and spill on the floor. A complete mess! If there are channels, the spill can be controlled. Not communicating at all is a form of communication -what a paradox! It is water spilled all over.

If the message is inappropriate or goes to the wrong audience, the image of the company can become muddled or confused; the consequences of which are numerous and costly. Communication is about contacting a targeted audience, the market, the prospect and current clients. Yes. That is also part of marketing and advertising, but communication is also about giving direction to employees. Letting them know about the goals, the achievements, and the challenges of the company, so they feel they are engaged and part of the game. There are other stakeholders to consider in a communications plan as well such as the company board of directors or the partners, the suppliers and those in charge of outsourcing projects for the company. In some cases, even media, government offices and community entities could be a target of communication.

Key things to consider

Here are some key points to consider when passing along any type of communication – from internal memos to executive summaries, social media posts, and press releases.

  • Define your audience. When you know who you are talking to, you know which channel is the most appropriate. Narrow your audience to the minimum possible but don’t leave out any important recipient. It is not always about reaching large audiences but, instead, to be efficient and to avoid saturating your audiences with information that may be not relevant.
  • Determine the right channel. Oftentimes you could be tempted to use as many channels as possible to communicate. Be careful… some channels are intended only for specific audiences. In social media, for example, Twitter users tend to like unbiased information and opinions while Facebook is seen as a popular information tool among those who are 30-year-old +. Also, when dealing with a crisis, it could be better to send an official bulletin and call a press conference rather than avoiding any public declaration or media appearance.
  • Be clear and concise.Get straight to the point. Time is of the essence nowadays and no one pays attention to long articles, successive / linked social media posts or more than three-page-long executive summaries. You have three seconds to get the attention of a reader on social media or the Internet.
  • Let it to the experts. Some small entrepreneurs and even some medium and large size companies, don’t have a team or a professional to manage communications. Investing in communications is not a waste of money, it is rather a way of saving money or increasing productivity and revenue. If you can’t afford to hire a professional at least contract someone as a consultant or freelancer. In the long run, it will pay off.

* Colombian-Canadian communications specialist based in Toronto. Special contribution for Duke Heights BIA. velezfreddy@hotmail.com

Starting a business? Avoid these classic entrepreneur pitfalls

January 01, 2020

Written by: Atul Oka, Senior Director of Strategy and Business Development, DUKE Heights BIA

Becoming an entrepreneur is a dream to which many of us aspire towards. There are many first-time entrepreneurs as well as experienced pros who sometimes make the same typical mistakes despite their best efforts. When you are finally ready to take the step and dive in, it may be worthwhile to keep an eye out for these common issues which could make or break your dream before it is fully realised.

Not creating a business plan is perhaps one of the most devastating mistakes a business owner can make. While sounding like something only larger businesses, or those looking to rise capital through traditional lenders need to do, a business plan allows you to think holistically about your business and assists in identifying potential issues in your idea.

Before starting any new venture, draft a simple business plan that identifies your proposed product or service, the costs involved, your funding needs, your competitors and potential customers, the market opportunity, and any realistic challenges you envision. If a business plan is just too complex to start with, try the simpler Business Model Canvas to get you started.

If you have not already completed a financial and cashflow forecast as part of the business plan, it may be worthwhile spend some time doing that now. While forecasting is not perfect, it will help you better manage and plan for your businesses funding needs. Some entrepreneurs misjudge costs, and end up spending more than they budgeted for or expected to, while others do the opposite and by trying to be careful and frugal, end up spending too little to give their business a realistic chance.

Another common challenge for any start-up is the selection of business partners. In many cases, you are not able to successfully launch a business venture on your own. You often need to rely partners and investors. Once major risk to any new business is in bringing onboard too many people. This can lead to the dilution of profits and sowing confusion on the business strategy. While key partners bring their own expertise, the old proverb about too many cooks still holds true.

Knowing your market and effectively marketing to that market is critical. Make sure you know who your target market actually is. Is there a specific client profile that needs and wants your products or services? Are you trying to sell your delicious abalone dish to people looking for a quick take away meal on the way home after a hard day’s work?

Know who you need to target your marketing spend towards to minimise wasted spend, but also make sure to target your market in the right way. What format of media does your market utilise and is most exposed to? Is it the “Selfie” generation or is it Mr Wilson from next door who is reluctant to use that Nokia 3310 that his son bought for him over twelve years ago? You know your product or service is useful and has a market. Don’t do your business a disservice by not letting the people who need it the most know.

Entrepreneurship can be the adventure of a lifetime but, like any adventure, it can also be fraught with pitfalls. Try and create the best possible chance of success for your business by avoiding some of these common mistakes.

3 ways to drive profitability

Written by: Atul Oka, Senior Director of Strategy and Business Development, DUKE Heights BIA
Dec 01, 2019

While most business owners want to increase profits, most do not have a plan to do so. Some say they will increase profits by boosting sales. But how will you boost sales? Will you hire more salespeople? Can you afford more salespeople? Will you leverage additional sales channels through which you can sell your products or services?

Will you try and help any customer that comes to you? Can you afford to do everything for every customer? Do you know which products or services are worth your time to produce or deliver? Do you know which products or services are actually profitable once you take input costs, overheads, salaries (Yes this includes your salary as well), delivery and other costs into account?

Will you perhaps expand to another location or add additional products and services? What will this entail?

It seems that no matter what the initial idea, some thought and planning may be required to make this a reality. This “plan” is often called a business strategy. It could be either a strategy for a specific functional area such as marketing or sales, or alternatively, it could be a complete and comprehensive business strategy. Developing a business strategy can be difficult but it is often the difference between success and failure. If your business does not have business strategy, speak to someone who can help you create one.

Creating a niche for your business is important in making your business different from your competitors and does not force you to compete with large companies with scale, that can offer the same products or services at a cheaper price. Every business should think like their target audience or customers. Know their exact needs, motivators, wants, dreams, goals, and interests. Find out what is valuable to your customers and what they are willing to pay a little extra for. Ever wonder why Starbucks (a normal coffee shop) was able to differentiate enough to grow much faster than their competitors?

Finally, it is important to create internal targets and goals. This helps to determine how well you are doing. One way to measure progress toward achieving your business goals is to use key performance indicators (KPI’s). Another is to use customer satisfaction as a benchmark for external performance and success.

KPIs provide us with an immediate snapshot of the overall performance of our businesses. To be used effectively, we need to measure and track the key performance indicators crucial to the success of our business such as profit margins per product category, and total sales. They also play a key role by providing vital decision-making information. (Do we sell more of product A or Product B? Which one is actually more profitable?)

Customer satisfaction can be measured using the Net Promotor Score (NPS) which we discussed in our last article. Have you done this for your business yet? How high is your Net Promoter Score?

“Profitability is coming from productivity, efficiency, management, austerity, and the way to manage the business” – Carlos Slim