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23 March 2016

Written by Jim McManaman MFA, Posted in Financial Planning, Solution One Blog

Retirement anxiety: Even the secure have questions

 

 

“When Jeannette Gallant and Stephen Rautenbach sat down last fall with their financial adviser, the Vancouver couple asked the question that looms large for baby boomers like them: Will there be enough money for retirement?” – JENNIFER LEWINGTON

 

My Two Cents...

The closer you inch towards retirement, the more you understand the need to feel financially safe and secure. 

You may find yourself asking questions like: Have I made the right investment choices? Have my decisions been too high risk? Is my money secure? Will my family's future be provided for?

Or you may have done no planning at all and you may be asking yourself: “Is it too late to start now?”

If this is the situation you find yourself in, then it’s time to take control of your present and future financial life. While the process can seem daunting and never ending, I can assure you there are some steps to take that will ensure you are provided for when the time comes. 

In this article, you’ll read about similar questions being asked and will be given some advice on the next steps to take in order to begin preparing. 

And here’s a spoiler: It’s NEVER too late to start planning for your future. 

To read the full article, Click Here. 

16 March 2016

Written by Jim McManaman MFA, Posted in Solution One Blog, Investing

Investing Mistakes you're Probably Making

 

“How many mistakes can you make investing? There are so many ways to lose money investing in stocks and (these days, with interest rates poised to rise) even bonds; it’s hard to say what is the single biggest mistake. That would be whatever loses you the most money, which is usually hard to predict in advance.”Moneysense.ca

My Two Cents...

As this article points out, humans are emotional by nature. We tend to let those emotions govern our actions – even when we know we shouldn’t. When we let our emotions begin to sway our judgments regarding our investments, we run the risk of doing the exact opposite of what we should do in any given situation. 

But it can be near impossible to deny our emotions and face every investment in professional manner. It takes years of practice and often requires outside opinion. That’s why it’s often best left to professionals who have the experience needed to put their emotions aside and make the best and proper decisions when necessary. Timing truly is the key. 

Jonathan Chevreau explains several of the mistakes people managing their own investments tend to make, the steps to take to avoid those pitfalls, and when it’s time to begin considering stepping back and letting a professional manage the account for you. 

To read the full article, Click Here.

09 March 2016

Written by Jim McManaman MFA, Posted in Financial Planning, Solution One Blog

Thriving as a single-income family

It takes two incomes to raise a family these days. Or does it?

 Kimberly Roy loved her job. As a freelance graphic artist she was able to work from home, with clients she respected, on projects she loved. Eventually, however, Kimberly and her high-school sweetheart husband, Todd, decided to start a family. After much deliberation, the couple chose to adopt a boy from South Korea. That’s when things got…different.”Moneysense.ca

 

My Two Cents...

It seems like a no brainer these days that both parents are forced to work in order to provide for their families (or even to simply keep their heads above water). But what happens when you sit down and do the math. Does it make more sense to continue in the hectic and stressful life of having both parents maintain full time jobs? Or is it still possible for a family to survive on a single income? 

In this article, you’ll read about one family’s journey through adoption and how they decided to make the switch to living off of a single income. 

While the idea is scary to many of us and you may already be asking yourself how they possibly manage to maintain a positive financial situation, the author lays out a number of suggestions and methods that will help you make a judgment on whether or not it would be possible for you to follow this family’s path. 

While the idea of having your yearly income cut in half is overwhelming, consider what you spend on childcare and other outside services (lawn care, housecleaning, take out, etc.) You might be surprised and how much of your yearly income you’re actually spending on those services that having a stay-at-home-parent could eliminate. 

To read the full article, Click Here

02 March 2016

Written by Jim McManaman MFA, Posted in Solution One Blog, Investing

 

Canada Trails Pack on Fund Fees

 “A revised version of a controversial academic study on mutual fund fees around the world still shows Canada's fees to be the highest of 18 nations. When early versions of Mutual Funds Fees Around the World circulated last year, Canada's mutual fund industry howled in protest at the finding Canada topped all other countries in its Total Expense Ratios (TERs) -- the equivalent of Management Expense Ratios or MERs.”- National Post

 

My Two Cents...

You may or may not have heard about these studies and findings. 

If you have, you may have done additional research yourself or kept watch as new data entered the equation. If this is the first you’re hearing about, I’m guessing that you have some questions. To be honest, we all did/do. 

But even beyond that, you want the numbers laid out in front of you, making it easy to compare and see for yourself what the fuss is all about and whether or not there is cause for concern here in Canada. 

In this article, you’ll get a chance to read through the findings, the arguments, and the explanations all written in a straightforward manner that will allow you to form your own opinion. In addition, you’ll also find some alternative solutions that may help to ease your frustrations. 

To read the full article, Click Here.

24 February 2016

Written by Jim McManaman MFA, Posted in Financial Planning, Solution One Blog

 

What's holding you back?

 “Why aren’t you a millionaire yet? You can make all the excuses you want, but according to acclaimed speaker and author Steve Siebold, the only thing holding you back is, well, you. In his latest book, How Rich People Think, Siebold shares the secrets of the wealthy and determines what it is that sets their thinking apart from the rest of the world.” - Moneysense.ca

 

My Two Cents...

You always thought you were capable of living life to its fullest potential. From the time you graduated high school you had extreme goals and high ambitions. 

And then life happened. 

Now you’re finding yourself struggling to keep up and no matter how hard you try to save up money and live the “successful” life, it always stays just out of your reach. According to author Steve Siebold, you have no one to blame but yourself. 

If you can stop making up excuses for yourself (and he lists the main ten that we’re all guilty of) then rising above the humdrum 9-5 office drone workplace is a very realistic possibility. And who really wants that life anyway? Doesn’t the idea of being your own boss thrill you? Doesn’t the idea of seeing your dreams and goals become a reality make your heart begin to beat a little faster? 

We want you to be the most successful that you can be. We want you to be happy. We want you to be living life to the fullest. But in order to do that, it’s necessary to re-align your goals and remove all possible excuses from your mind. 

To read the full article, Click Here

20 December 2015

Written by Jim McManaman MFA, Posted in Solution One Blog

 
How To Get Out of Debt
"It’s no secret that debt is becoming an ever-growing problem in Canada. In September, Statistics Canada announced that the ratio of household debt to disposable income in households rose to 164.6% in the second quarter of this year. The stats may seem dire but with some careful planning and patience, debt is a hurdle that can be overcome.” - Prajakta Dhopade MoneySense.ca
My Two Cents...

In this Digital Age where our society promotes and encourages lines of credits (even going as far as to punish you for a lack of credit) it’s no surprise that many of us are finding ourselves behind in payments or struggling to keep our heads above the credit water, so to speak. 

There are companies out there who offer “too good to be true” methods of getting out of debt and raising your credit score, but guess what: they usually are too good to be true. And some of those methods can leave you in worse shape than you already were. 

We encourage you to take the time to get out of debt in a way that will not only relieve your stress and improve your quality of life, but will also leave your credit score intact and prevent you from ever finding yourself in the same battle against credit cards ever again. 

With this straightforward and laid out plan, we are confident that you can be debt free and on your way towards a brighter (and financially lighter) future in no time at all. 

To read the full article, Click Here

03 February 2015

Posted in Solution One Blog, Tax Planning


Tax tips for new homeowners

house-puzzle-piece
 
If you’re house hunting, or recently you’ve snagged your dream home, you should take advantage of these helpful programs from CRA.

Claim the first-time home buyers’ tax credit on your income tax return. It’s a non-refundable tax credit of up to $750. To qualify, you or your spouse or common-law partner must have bought the home, and you can’t have lived in another home you or your partner owned in the last four years.

If you also qualify for the disability tax credit, you may qualify for the credit even if it’s not your first home purchase.

If you’re about to make a purchase, consider CRA’s home buyers’ plan. It allows you to take money out of your RRSP to help buy your home. You can withdraw up to $25,000, and you have up to 15 years to replace the money in their account. The money can also go towards buying a home for a related person with a disability.

02 February 2015

Posted in Solution One Blog, Tax Planning

How to optimize after-tax income
understanding-the-new-wealth-surtax2
 
When running a private business, you need cash flow to support your lifestyle. The challenge is minimizing personal taxes, while optimizing income. But removing money from your company for your benefit requires careful planning.

Here are some of your  options to extract cash. Each has unique considerations and income tax consequences.

Salary and/or bonus

These options are deductible by the company and taxable. Generally, to be a tax deductible expense, the payment must be considered reasonable for business purposes. And, yes, it’s probably unreasonable to pay your 14-year-old child $50 an hour to stuff envelopes.

Payments to active owner-managers for salary and bonuses aren’t subject to that rule. They are, however, subject to withholding at source, which means income taxes together with the employer and employee portions of CPP/QPP contributions. If you’re a significant shareholder who owns 40% or more of the corporation, or have employees who aren’t eligible for employment insurance, then there are no employee or employer contributions required.

Withholding of CPP/QPP applies to income levels up to $52,500 in 2014, and is not applicable to the first $3,500 of income. Employer contributions are deductible to the company, while employee amounts create a tax credit and provide longer-term future value. Effectively, CPP/QPP is not considered an expense.

Income tax on employment income is a more significant concern, as top marginal tax rates are between 39% and 50%, depending on where you live in Canada.

Dividends

Dividends are derived from your company’s after-tax profits. There are two types: eligible and ineligible. The distinction is based on the tax treatment applied at the corporate level. For instance, a corporation that pays a low tax rate because of its eligibility for the small business deduction can pay ineligible dividends. Meanwhile, eligible dividends flow from income are taxed at regular corporate rates.

The top effective tax rate on eligible dividends ranges between 19% and 36.06%. Rates for ineligible dividends hover in the 27% to 39.15% range, depending on province.

There is no withholding mechanism on dividend income, so you net a higher amount at the time of payment. However, taxes are still payable, although they would be delayed until the income tax deadline in April. A regular flow of annual dividends mean you’ll have to pay tax in quarterly installments.

Capital dividend election

The Capital Dividend Account (CDA), available to private companies, offers a source of tax-free dividends if the account holds a positive balance. Credits to the CDA arise from the disposition of capital property, eligible capital property, the receipt of capital dividends from other companies, and the receipt of life insurance proceeds. Review dispositions or receipts from these sources to evaluate the opportunity for payment.

Paid-up capital reduction

Your company can return your original investment if it reduces the paid-up capital in its shares. Depending upon original financing and past transactions, this can provide a lump-sum source of non-taxable income. But there’s a possibility of inadvertently creating a capital gain. You can calculate that by looking at when a reduction exceeds the shareholder’s adjusted cost base. This strategy is best used in consultation with professional tax advisors, who can evaluate past transactions that impact the outcome.

Repay shareholder loans

If your company owes money to shareholders and has available resources, it can repay outstanding loans at no tax cost. For example, a company may bonus-down to the small business limit by paying a bonus to the shareholder. The shareholder often lends back the after-tax bonus to finance business operations. Over several years, the outstanding amount of the loan owed to the shareholder could be substantial. This strategy provides another source to access lump-sum amounts of cash.

Transfer an asset

You can sell a personally owned asset to the company. This tactic is best employed when the asset is currently used or could have value to the company. For instance, if you personally own a piece of land used by the business as a parking lot, the land could be transferred to the corporation. An outright sale at fair market value would generate cash for you and, although tax consequences may arise, the low-tax nature of capital gains can be more efficient than other options.

Alternatively, if your asset has a high adjusted cost base, a section 85 transfer could minimize any immediate tax consequences on the transfer, and provide cash, tax-free, equal to the tax cost of the asset. Section 85 allows for a tax-free transfer of an asset to a corporation in exchange for consideration that includes debt and company shares.

Evaluating each option to scrutinize the tax costs will help you get the money you need for your lifestyle in the most efficient manner.

13 January 2015

Written by Jim McManaman MFA, Posted in Solution One Blog

We Run the Numbers...

You Run Your Business

blog-run-numbers

Our main job here at Solution One Financial is not to prepare income tax returns but to provide peace of mind for our clients.

Yes, the technical job we do is to prepare an accurate corporate, business and personal tax return for our clients, but we go far beyond that.

As our slogan says, "We Run The Numbers... You Run Your Business." Let us help you forget about the drudgery of Bookkeeping and Tax preparation so you can do what you do best, Run Your Business. Imagine if you could focus more time on your business, especially in the area of sales, marketing and business planning/development. Who knows where you could be in 5 or 10 years! And if you don't have a passion for these, or other specific aspects of your business, i.e. sales, DELEGATE, but don't abdicate. I always recommend that clients farm out areas of their business that they dislike or upon which they tend to procrastinate. This allows them to focus on what gets them up in the morning.

During our process we want you to feel secure in the knowledge that we took our time; that we thoroughly examined your documents, asked all the right questions and prepared your tax return in a way that doesn't attract the attention of CRA. At the completion of your return, we'll explain in simplified terms our analysis of your company numbers and make suggestions for moving forward.

That's our goal each year, to help our clients understand their numbers and use that understanding to help improve their business. With a better understanding and appreciation of the numbers you're guaranteed to be more successful than if you ignore them.

Within these web pages you're not going to get a lot of technical information about preparing tax returns; there's lots of that available else where and on the web. Our hope is to give you ideas to help grow your business and allow you to focus on your passion.

29 December 2014

Written by Jim McManaman MFA, Posted in Financial Planning, Solution One Blog

blog-profit-strategy-1Profit Strategy #1

Planning for Profit Made Easy

When new business owners think of business plans, they usually think of a complicated document completed to secure financing. For that matter, many experienced business owners also think of it that way.

Obtaining needed financing is a key reason to complete a business plan, to be sure. Why, however, do you think lending institutions require them? Is it to have a better understanding of your business, or is there something more to it?

Many studies have been done on the effectiveness of drafting and actually using business plans. They all seem to agree that companies that have a plan and implement it tend to fare better. I've seen this over the years with my clients, as well as with my own businesses. The reason for this is simple – FOCUS. Mind you, there are stories about the entrepreneur who scratched out his idea on a napkin and went on to make millions. But I bet he had both focus and a passion for his idea. What he didn't have was an overly large document to confuse things.

So in my opinion, it is important to write out your plans and even more important to have a strategy to execute those plans. In the long run, writing, implementing and regularly tweaking those plans will result in far greater returns than did the initial financing.

As previously mentioned on this site, creating a business plan doesn't have to be a daunting task. You should be able to put it together relatively quickly. You already have the ideas in your head; you only need a simple format to organize them so they can be easily seen and reviewed regularly.

To accomplish this, we use The One Page Planning & Performance System (TOPPPS). TOPPPS is a breakthrough business application. It takes the best of The One Page Business Plan® process to the web to create a powerful strategic planning and performance management system that helps your company:

  • Accelerate growth
  • Increase revenues and profits
  • Develop stronger communication between divisions
  • More effectively implement your business plan
  • Develop high performance leaders
  • Focus people and resources on achieving goals

The One Page Business Plan is a proven business tool that uniquely links Planning, Strategy, Performance and Accountability. It's simple, it's easy and it works because the system:

  • Requires every manager has a plan... a One Page Plan
  • Uses easy to understand language
  • Teaches systems and critical thinking
  • Fosters organizational learning
  • Clearly identifies excellent and poor performers
  • Fosters 360 degree accountability
  • Integrates performance and progress reports to plans

The Web Based One Page Planning and Performance System features:

  • Standardized One Page Business Plan template
  • Drill down navigation with click-thru organization chart
  • Linked Performance Reporting to each Objective
  • Progress reporting to each Planned Action
  • Color-coded Plan Status Reports
  • Flexible system for approval of plans
  • Secured and Controlled Access to system
  • Online input and updates

Successful author, thinker and businessman, Tom Peters*, says,

"The One Page Business Plan is an out-and-out winner. Period. It makes great sense to me as a so-called business thinker. But the acid test was applying it to a start-up I co-founded. We spent several days drafting our one pager – and have been editing it ever since. It is a powerful, living document; the very nature of which has led us to important new insights. The One Page Business Plan = the proverbial better mouse trap!"

*Tom Peters, Author of:
In Search of Excellence
Thriving on Chaos
Liberation Management
The Pursuit of Wow!
The Circle of Innovation
Re-imagine!
and The Little BIG Things

Free Download

Executive Briefing of "The One Page Planning & Performance System"

Press Releases:
The Million Dollar Round Table (MDRT)
The American College

01 December 2014

Written by Jim McManaman MFA, Posted in Solution One Blog

One-Page Business Plan — Does it Work?

Do you waste a lot of time struggling to put together your small business plan only to leave it in the drawer, never to be seen again?

blog-business-planOr do you even bother writing one, knowing it's a daunting task.

I know, I've been there. In the past, I read all the business plan books, used the various software packages and wasted several weeks, which I will never get back. And still, after the completion of the plan and approval from the bank, the whole ordeal (and the plan) miraculously disappeared from my mind.

I never gave up though. Over the years, planning would pop back into my mind. I'd be sitting in some seminar only to be reminded by the latest guru that I needed to plan. Back to the drawing board I'd go trying to overcome this behemoth of a task called business planning. Some of it must have made an impression on me though or I wouldn't be where I am today.

Convinced that there had to be an easier way, I continued to look. About three years ago I stumbled on to a fellow by the name of Jim Horan, the author of... you guessed it, the "One Page Business Plan." I was intrigued.

So much so that I purchased all of the books and the software, then started to study his method. It was pure genius, but oh so simple. Of course, part of me said, "It can't be that easy;" I know some of you are saying that as well. But it is.

Once while having a coffee, I told a friend about this process and how simple it was. He said, " Our business is much too large and complicated to do a plan up on only one page." Obviously I didn't do a good job at explaining it. Have a look at some of One Page Business Plan's clients.

Without getting into too much detail, I'll give you an overview of the process. Remember the most important planning you do is for your business and for yourself, not the bank. After you get the financing from the bank, on going planning will put more on the bottom line then the bank ever will.

So here we go. There are 5 key elements for a One Page Business Plan:

1. The Vision Statement - What are we building?

2. The Mission Statement - Why does this business exist? (Not the money reason)

3. Objectives - What results will we measure this year?

4. Strategies - How will we build this company over time?

5. Action Plans - What is the work to be done this year? (Who & by When)

That's basically it. Once you complete your plan, it's easy to review, update and to see what's next. So give it a try. If you'd like more help with this, give us a call.

18 November 2014

Written by Jim McManaman MFA, Posted in Solution One Blog

If You're Not Good With the Numbers... Get Better - You Have To!

If this describes you, then you had better hire a bookkeeper; this one act could save your business.

blog-not-good-numbersMany of my clients don't know the inner workings of Solution One Financial. And why should they care? Everything seems to move along smoothly year after year.

Like most business owners, we have similar goals; we have successes and failures (or should I say challenges). We want our clients to be happy with our service and our employees to enjoy coming to work each day.

When I started our business I did most of the administrative duties: bookkeeping, taxes and other tasks I really did not enjoy. Particularly the bookkeeping. Because I disliked and did not get paid to do our own books, procrastination was often an issue. I would scold myself and get back on track for a while only to fall off the wagon again. This wasn't helping my business and it was keeping me from focusing on tasks that I did do well.

So years ago I made a decision to hire a bookkeeper. Now I know some of you are saying, "Wait a minute, Jim. You're in the business; what's the big deal?" First of all, I was one of those entrepreneurs who couldn't let go. You know, the "Nobody can do it as well as I can," syndrome. And secondly, if I did use someone in house, I would invariably switch the task to something that paid. I was like the plumber with the leaky pipes at home.

So I took the leap and hired a freelance bookkeeper to come in every 2 weeks to keep us up to date. Now we are never late with anything, and I have the profit and loss figures at my fingertips. Life is good.

Having that task under control felt so good that I started to consider other areas that could be delegated. While driving home one day thinking of just that, a sudden recollection of a Financial Planning seminar I attended in San Diego popped into my head. This was no regular Planning seminar; this was attended by a large number of the big hitters in the United States. I took a lot of information away from that 3-day event.

Within thirty minutes of the seminar's opening, Bill Bachrach, the facilitator, asked for a show of hands. His question was, "How many of you Financial Planners out there, have your own Financial Planner? Someone with whom you entrust all of your finances?" Well it was quiet at first, and then to my amazement, a number of hands went up. My first thought was that no one who was already in the business and was in his or her right mind would need or even consider using a Financial Advisor. Bill went on to say that among those individuals with their hands up were some of the most successful financial advisors in the country. Most were multi-million dollar producers and, for the advisors reading this, the majority were fee based. Bill went on to explain why he thought that it was one of the most important initiatives upon which we could embark. He felt that if we were to entrust our finances to an advisor with a highly successful business, one much larger then ours, we could not help but stretch our own practice.

So to get to my point, I applied that thinking to our Tax practice. I began my search for an Accounting firm that was functioning at a much higher level than ours. We found that firm in Ottawa and have been using it ever since. Was it a worthwhile decision? Absolutely. I now have far more time to focus on my business' growth and my ideal clients. I also have access to an expert in my industry, someone with whom I can explore new ideas. And he holds me accountable as well.

Bottom line: know your bottom line and get some help.

16 October 2014

Written by Jim McManaman MFA, Posted in Solution One Blog

You Can't Do It All Yourself

Your real job as an entrepreneur is to grow your business

blog-cant-do-itSmall business owners are busy and tend to be experts in one specific area, usually something about which they are passionate: their trade or perhaps their hobbies. Some are serial entrepreneurs who love business, no matter what the widget.

I know not all small business owners are entrepreneurs who want to build something unique or to leave a legacy. I'm talking to those who began with passion and a vision, but who now find their passion waning slightly and the vision they once held, slightly blurred.

To attempt to wear all of the hats in your small business is a guarantee to put you on the road to failure or, at the very least, mediocrity. As your business grows you need to reach out and find experts to assume responsibility for areas in which you may be weak.

In school, we were taught by our teachers and encouraged by our parents to, "Work hardest on your weaknesses," Spelling, or perhaps Mathematics. What happened? Well, hopefully we improved somewhat, although this is unlikely. Imagine if we had been encouraged to work on our strengths, to indulge our passions. Who knows where we would be today.

In the business world, you need to focus on that which inspires you; feed on the potentialities. Let others do the things that challenge or bore you; things that you can't avoid doing, so you procrastinate.

If this sounds like you, then you need to take a hard look at your business and the person in the mirror.

Your real job as an entrepreneur is to grow your business. There are only three ways to achieve this:

1. You can increase the number of clients you have – marketing;

2. You can sell more frequently to your customers – constant follow up; and

3. You can increase your average sale price. Most business owners (90%) focus in on increasing the number of clients and it is the least effective and the least profitable.

So how are you going to achieve this? By taking the time to plan. If you work day in and out in your business without taking the time to ask yourself how it could be improved, it won't. No one else is going to do it; you are at the helm. Most businesses fail due to internal factors, such as poor planning, or inadequate or non-existent marketing, not external factors such as the economy, competition, or the government. So it's up to you.

Even an hour a week can make a huge difference. Set aside some time when you can be away from the office or store, away from your family and other distractions. Turn your cell off and don't check email. Focus for a solid hour on only planning and of course, implementation of that planning.

How can we help? We're not marketing experts, however we can assist you with your business planning, bookkeeping, business structure, tax planning etc. Give us a call; we'd love to give you a hand.

Do you have an idea for a Blog Post?

We're always looking for your input and suggestions!

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