Tax Time and HST

Problem

As tax time is here I have been thinking about my method of accounting. I am very organized, and keep EVERYTHING but I know there is room for improvement.  Things are getting a bit more complicated now that I have a sole proprietorship, a partnership and income from my part-time work as a fitness instructor. I am often tempted to hire a book-keeper or accountant - but that costs money! Besides, I like to learn new things and I want to understand it all, despite the elevated stress levels that comes with it!

Solution

One of the things I am doing to make things easier for myself – and for our Cent$ible Students business - is to switch to the Quick Method of Accounting. I always assume these tasks are complicated. But guess what! It was a simple one-page form that I filled out and mailed to the Tax Services Office.  I could have also have done this online, but that would have meant looking up my tax information from my 2011 return as this information was necessary to register for an online account. Do I know where this is? Yes of course! However sometimes I like the old paper method as I can keep a copy in my files and take a quick walk to the mailbox for some fresh air. For those that want to do this online, here is the link:

http://www.cra-arc.gc.ca/mybusinessaccount/

Result – Savings?

Do I know how much money this will save me this year?  

Since I don’t know how much I will earn this year, I cannot calculate the actual savings. Ultimately I will not have to remit the full amount of HST I collect using this method.  Instead of paying the full 13% I only have to pay 7.8% on the first $30,000 of income and 8.8% on income above that amount. So, if I made $30,000 then I would pay $2,340 instead of $4,500! That is a savings of $2,160!

So, I will be a little smarter, AND richer next year! 

For a copy of the Quick Method of Accounting guide, click here!

http://www.cra-arc.gc.ca/E/pub/gp/rc4058/rc4058-e.html#P100_5211

Being Grateful

Update

It has been a busy month! I am still trying to calculate some savings to share with you around my HST and my phone bill, but I haven't finished adding it all up yet! Actually, I need some advice from an accountant and they are rather busy this time of year. I also have had a hard time arranging a phone call in order to permit a company to negotiate my phone bill for me - not their fault - mine! (It involves my husband who is hard to schedule.) So, I apologize for the delay.

Book review

In the meantime, I read an interesting book that I wanted to share with you called, "Green With Envy: Why Keeping Up with the Joneses is Keeping Us in Debt," by Shira Boss. 

Despite my work in financial literacy, I, like most Canadians, stress about finances. There never seems to be enough money and just when I think I am getting ahead, can plan a bit for the future, the car breaks down, the tap starts dripping, a child needs glasses, braces or hockey registration! Ca-ching! The money flows so freely OUT, I wonder why others seem to have oodles of it flowing IN to pay for their expenses – and their vacations! As Boss says in her book, “We go by appearances: Others seem to be doing fine, so they must be doing fine.”

Issues with Money

Without giving you a full book review, the premise of this book is to de-mystify what goes on behind our neighbours’ closed doors. It looks at couples without children, families with young children, boomers, politicians and the rich and famous. It reveals that no matter what socio-economic sphere we inhabit, most of us have issues with money. Many of us are preoccupied with money and the security and comfort it represents to us. It is truly complicated!

By the end of the book, I was comforted to know that most people have “money issues” of some sort, but that there are strategies one can take to find financial well-being.

Gratitude Strategy

One of the ideas that resonated with me is gratitude. I do some work with organizations that serve low income Canadians and recently taught Financial Basics to a group from Toronto Community Housing.  How can I complain or even grumble about my money woes when I have a roof over my head and food on the table? Some of these individuals, although housed, struggle on a daily basis to make ends meet.  I remind myself to be grateful and consider the situations many others face on a daily basis.

Inspiration

Some of the messages from this book have re-inspired my work with young children because I am reminded how emotional money is and how we develop our values and attitudes around money at a young age. If children are taught that what you wear is more important than who you are, or that having more makes you popular or special (or whatever messages seem to be driving our societal need for consumption), than our message to Save, Spend (Sensibly) and to Share, needs to be taught early and repeated often!

 Plan for the Future

The “living for the moment” mentality and “sense of entitlement” needs to be counteracted with planning for the future, and living more conservatively. In some ways it goes hand and hand with a more environmental lifestyle as well. Less consumption, more “reduce, reuse, recycle,” helps the pocket book as well!

Can I put a dollar amount to what I “saved” in this blog? Compared to my other entries, there is not a determinable amount. However, I have saved myself some angst, some frustration as I reflect on my OWN financial situation and stop comparing myself to others – “the Joneses.”  I can make changes in my own situation; earn more, spend less, save more. I can also be more grateful.

Saving that CPP! A Quick Tip.

I am working on a couple of posts right now. One is about cutting the cost of your cable/internet/cell phone bill and the other is about Quick Method for taxes. But I had to share a great idea I heard today while doing some training for SEDI and The Canadian Centre for Financial Literacy.

The other day I was lamenting the drop of income that occurred this January on Chris' pay cheque. It happens every January. I should be used to it by now, but I am not. It is the CPP that comes off each month until he reaches the maximum yearly contributions in July. Then, all of a sudden, we have more money to spend, and spend we do. We quickly adjust and forget all about this re-adjustment that is going to happen again in January.

Found Money!

This year, I am going to take that $374 and put it into a savings account! I am going to continue to live on the budget I have from January to June and save the $374 each month from July to December. I may put the extra money into our RRSP or maybe try to pay off some of our car loan. I have not decided what to do with the extra $2,244, but I am excited to "find" this extra money! Thanks to Jeanette from the United Way for sharing this great saving technique!

Have a great weekend!

Outlet Shopping....are there really bargains?

Outlet Shopping

In our Managing Finances workshop, Cent$ible Students does an activity around being an educated consumer. We discuss consumer situations, including the pros and cons of shopping at an Outlet Mall.

The mission

This past weekend we were in Niagara Falls, NY for a hockey tournament. Although I was excited about the hockey, (really, I was!) I admit I was also excited about shopping at the outlet malls! I had been very good lately, careful about my spending and I had created a list of things I “needed.” I could use a new white blouse, some grey dress pants and maybe a comfortable wrap or jacket that I can wear when presenting workshops. The kids also had a few things they needed, including a new pair of jeans for Ben and a bathing suit for Brenna.

So, with our mission in mind, we hit the mall. (After the hockey game of course!)

Quality

When we talk about Outlet Malls in class, we discuss the quality of goods. Are they the same as what you find in a regular mall? In some cases, the stores actually produce a separate line of clothing. I was hoping to find a jacket at The Gap that I had seen at my local mall, but I discovered all the products were indeed different. Guess I proved my own point!

Price

We were also disappointed to find that there were not the bargains we expected. Chris was looking for a new pair of running shoes. The price point was the same. He had researched prices ahead of time (something we suggest students do!) and there was not a bargain to be found. He figured it would be better to wait to buy them in Toronto where he would not have to pay the exchange rate and he could return them if there was a problem.

Travel

If we had not been in the USA already, it would definitely NOT have been worth the trip for bargains. We also talk about this our workshop, especially around Black Friday when many families travel to the US for the big bargains. Although it can be a fun family get-away, if you are truly looking to save money, you have to remember to factor in the price of gas, food and hotel if you are staying over night.

Results – Good and Bad

Did we buy what we wanted to shopping-wise? No, but we did find a Panini maker at Target that was on our list of “wants.” Chris loves to make sandwiches and we thought this would be a great way to use up leftovers. Good news, it was a great price. It was ten to twenty dollars less than what I had seen it advertised for in Canada. Bad news, I got it home, heated it up, only to find out it is defective! Luckily I checked the warranty, called the number and I can take it to a place locally that will either fix it or replace it. Still, it would have been a lot easier if I had bought it here and could have just returned it to the store! Lesson learned!

True Value

Hockey-wise the weekend was a great success. We had a wonderful time with the team even though we didn’t win the tournament. The memories created, the friendships formed are the real value of the trip.  But Outlet Mall shopping in the US  proved NOT to be the great money saver most of us Canucks think it is! 

The Business Bank Account....the Results are IN!

Step One

For my first activity, I thought I would explore something that has been bothering me for a while -  Bank fees. The first account – and the easiest for me to tackle - is my business bank account.  I have had a business bank account for many years for my sole-proprietorship, JB Consulting. It is with the TD Bank where I currently have my personal account. It made it easy to transfer money:  I would get my pay cheque, deposit it and then transfer it to personal account. I might make a maximum of 6 transactions per month, usually only two. I originally paid $10.95 per month. It has since gone up to $14.95 per month, or $179.40 per year. 

Just not right!

Fast forward to today and most of my work comes from Cent$ible Students for which we have a separate business account. (More on that another day!) However, I have to keep my JB Consulting account as I still invoice some work through my sole-proprietorship. But, some months I have to actually transfer money from my personal account just to pay the bank fees!

Not happy with this situation, I explored TD to see if they had any other options. The most affordable option was $9.95 for a Pay As You Go account. It would have saved me a little, but still expensive in my opinion as this was the base fee. 

The Search

I decided to research other banks. I explored the FCAC online banking tool but it only looks at personal saving and chequing accounts.

http://www.fcac-acfc.gc.ca/eng/resources/toolcalculator/banking/index-eng.asp.

I discovered a great blog that had already done most of the work for me,  http://www.milliondollarjourney.com but the particular article on business bank accounts was written in 2009 so it was probably needing some updating. (There were some other great articles here that I am sure I will check out again later!)

I finally researched the individual accounts myself. There is a lot of information to shift through and much to consider. Location is important to me, as I need it to be convenient for me to deposit my cheque. Cost is obviously important too.  

 

The Complicated Results….

As I mentioned in my “teaser” entry last Friday, I did close my TD Business account.  When I got out my Master Business Licence to open a new business account I discovered that my JB Consulting Master Business Licence had expired last May! I called and discovered that they give no notification about this (you have to renew every 5 years) and that to renew, I would just have to pay the required $60 and I would be back in business.

This gave me an idea. Since I don’t do much JB Consulting business anymore, I could bill using my own name, NOT pay the $60 to get a new business licence and use a personal account instead! Eureka! I called an accountant friend, Marot Merner  - http://www.margotmerner.com and she agreed, based on my situation, that this would be a good solution! 

The Big Save

So my final conclusion is business banking is expensive. I could not find a truly reasonable account. I was leaning towards the RBC eAccount since I do most of my banking online, and the CIBC Basic Business Operating account was offering 3 months free on their $6.00 per month base account. But both had the potential to cost more than expected if some months required additional transactions.

HOWEVER, there are some great personal banking options including ING Direct Thrive Account and PC Financial. I already had a PC Financial chequing account that I had set up when I was saving for a vacation and had not used since.  I decided that this FREE account would work! It will be my new “business” account to keep my newly named “Jenni Bolton” business separate from my personal account. Problem solved! 

Total savings:  $60 (business licence) +  $179.40 (for the TD Business Account) = 

$ 239.40. 

 I worked hard for that!

Let's hope my next challenge is not as complicated!

It's coming!

I bet you thought, sure, she has given up already! No news. Well, did I ever open up a can of worms! I have so much to tell! I am going to just give you a teaser today. My focus this week was my business bank account. I was tired of fees. I spent the first week researching and the second week stewing on what to do. I did cancel my business bank account though!  (It felt a bit like breaking up!)

I will write more soon. I have to sort a few things out first. Might have to be in two parts. I will report back early next week........please check back then!

My idea of WEEKLY  blog might be too ambitious! This stuff does take TIME!

Happy Friday!

My Year of Living Cent$ibly

Where To Begin?

I am a self-employed facilitator. I have two children, an 11-year old boy and an 8-year old girl. I co-founded Cent$ible Students www.centsiblestudents.ca with Caroline Munshaw to help students learn to save, spend and share. I teach fitness. I manage the money at our house. I have lived in Toronto all of my life. I love a good bargain. I am new to blogging and Twitter.

Personal Challenge - Walk the Talk!

My year of living Cent$ibly is a personal challenge. I talk about financial literacy all the time. I have worked with at-risk youth, newcomers to Canada, students from kindergarten to Grade 8 and even delivered sessions at homeless shelters in Toronto. I have trained others how to deliver the curriculum in my role as a trainer for a wonderful organization called SEDI www.sedi.org and the Canadian Centre for Financial Literacy www.theccfl.ca. I want to make sure I walk the talk!

The Inspiration

I talk and read a lot about money. I am passionate about what I do. Yet there are areas in my life that I would like to improve financially. Why don't I do it? Sometimes it is fear. I want to find a no fee bank account but have so much connected to my current account that I worry I might forget to transfer something over and miss paying a bill. Mostly it is lack of time. I am busy trying to build a business and manage a household. But I wonder things such as, do I have the best rate for my insurance? Do I have the best cell phone plan for my needs? Finding out would take a lot of phone calls and seems like an onerous task.

The Plan

Each week I plan to set a goal and write about it. One week I might examine my cable and Internet contract. Is there a cheaper alternative to my current situation?  Another week I may find a way to save more or share a tip I have discovered. I may also share some of the resources I use in my work, or comment on interesting articles and ideas.

The Potential Outcome - For My Family and Yours

Financial literacy is defined by the National Task Force on Financial Literacy http://www.financialliteracyincanada.com/definition.html as "having the knowledge, skills and confidence to make responsible financial decisions."

I have a lot of knowledge about financial literacy and am always learning more. I hope to apply this knowledge and use my skills to improve my family finances and hopefully gain more confidence about my decisions. 

I hope you will share this journey with me as I apply the lessons and advice I give and receive on a daily basis. I respect that we all have different values and attitudes around money, so your experiences and choices may be different. For me, that is what financial literacy is all about. Making the best choice for your own circumstance, but having the ability and the necessary resources to make decisions that you are comfortable with and confident about.

I hope that with me you can take some time to reflect on your own financial situation and perhaps we can learn together from my personal challenge.  I look forward to hearing your ideas and comments on what you do at your house to manage financially. 

One Final Thing

My mantra is balance. I may not always choose the cheapest alternative. I may eat out more than I want to as my family rushes from activity to activity. (I am a hockey mom!) Sometimes my choices may not be the best for my bottom line, but it is the best for my family - and my sanity! It will be this journey, this introspection, that will help me to find ways to save money and to understand more about the choices I am making. Are they truly the right choices... for me? Are you making the right choices for you? Let's explore this together!