MRSB Group will be a proud sponsor and participant in The Georgetown Conference this fall. Partner Everett Roche shares his thoughts on this important event.
It might not be a topic that is consistently on your radar, but the state of Atlantic Canada's rural communities has garnered enough concern to warrant attention from some of the region's brightest minds, including scholars and business leaders. MRSB Group is excited to take part in and support The Georgetown Conference, Rural Redefined, a promising initiative taking place in Prince Edward Island this fall that will address the crucial issues affecting Atlantic Canada's rural communities. With so many economic challenges facing rural areas, this three-day conference is all about embracing the spirit of these places, challenging the myths surrounding their global viability and empowering local leaders to enact positive change. Local businesses, community leaders, artists and everyday citizens will converge and engage in meaningful conversations about our rural communities and what can be done to give them a positive boost in these rapidly changing and unpredictable times.
As an Island owned and operated professional services group, we have partnered with many individuals and businesses in rural Atlantic Canada, helping them to achieve their goals. During the past three decades we have gained a deep understanding of the challenges they face including aging local demographics and an ever-accelerating pace of technological advancement. Despite the fact that challenges do exist, my mindset is one of abundance versus scarcity. The next ten years will be a period of unprecedented opportunity and a new era of entrepreneurship. As large bureaucracies collapse in the coming decade, tens of thousands of new, agile startups will drive technology-based growth.
I am confident that the exchanges and insights shared during The Georgetown Conference will result in new actions and strategies, empowering business owners, community groups and especially our future entrepreneurs to take crucial steps toward change. As an event sponsor, MRSB Group is excited to be part of the solution and supports the proactive, results-oriented approach being embraced by all involved. As the partner in charge of MRSB Consulting Services, I will be taking part as a conference participant and hope to come away with creative new business ideas and contacts. MRSB Consulting Services Business Development Officer, Stacey Evans will also be present for the many keynote addresses and panel discussions the conference has to offer. I am confident that the issues raised and lessons learned will be applicable to our work as we continue to serve clients across Atlantic Canada and in Europe.
I would like to congratulate the organizers of this event and the community of Georgetown, which truly stands for all that is rural Atlantic Canada; a proud heritage, proximity to the riches of the Atlantic coast and a prime opportunity for revitalization at a time of emerging possibilities. We would also like to give our sincere congratulations to event co-chairs Wade McLaughlin, John Bragg and Paul MacNeill, three local leaders whose knowledge of both Island communities and the Canadian landscape at large are sure to bring wise insights to The Georgetown Conference. I suggest we think global, think abundance and most importantly, think about growing new entrepreneurs in our unique corner of the globe.
As small businesses grow, one of the most common questions owners are faced with is, "Should I incorporate?" There are a number of advantages and disadvantages associated with taking this step, which generally depend on the entrepreneur's individual preferences and current situation. The Globe & Mail last year published an informative article on the pros and cons of incorporation, which include added costs, potential tax benefits and liability issues. And yet, making the important decision to turn your company from a sole proprietorship into a corporation can depend as much on the type of business you run as on how much profit you bring in each year.
Before you jump in and decide that it's high time you joined the multitude of incorporated businesses out there, ask yourself a few questions that will help determine whether this really is the best choice for you.
What type of business are you operating and are there liability risks?
If you run a services-oriented company where there is the potential for your clients to hold you in breach of contract, the liability protection that comes with incorporating is probably worth the extra money you will spend doing so. Especially if you feel that you cannot afford to put your personal assets at risk for the sake of the business. Remember that under Canadian law, a corporation can acquire assets, be sued, enter into debt and commit a crime - just like an individual! However, the benefit of limited liability that comes with incorporation might be deemed irrelevant if your company is unable to secure a loan and the lending institution insists on personal guarantees from you, the owner.
How much revenue does the business bring in and are you able to income split?
One of the commonly assumed perks of incorporating your business is that you as the owner will be eligible for significant tax planning benefits. The truth of the matter is - that depends. There may be specific rules governing your business or profession that will determine whether you are eligible for tax savings. For example, the ability to split income with a spouse or adult child is one of the main benefits of incorporating, but professionals (e.g. lawyers, dentists) need to be aware of who is authorized to hold shares of a professional corporation; some provinces allow family members to hold shares, while others only allow members of the profession. Also, you should ask yourself if there is enough income to allow for splitting and will the tax savings outweigh the costs relating to incorporation? Another consideration is whether you are spending everything you make personally or are able to leave some of the earnings in the company, thus taking advantage of lower corporate tax rates. The Government of Canada recommends that business owners seek the advice of a lawyer or accountant to thoroughly assess the potential tax advantages incorporation can (or cannot) offer your business.
Do the financial and borrowing demands of your business warrant incorporation?
Now let's talk a bit about the costs associated with owner-operated businesses versus incorporated ones. The start-up and licensing fees associated with sole proprietorships are substantially lower than corporations, so this is a fairly straightforward tick against incorporation if you are just starting out as a business owner. However, corporations usually have an easier time raising capital than sole proprietorships, since incorporated businesses can typically borrow at a lower interest rate. In general, financial and lending institutions view corporations as less risky than other types of business so accessing funds may be easier. Of course, if you choose to incorporate you will likely require the services of a lawyer, accountant or both, so this is another cost to keep in mind.
These are just some of the issues to think about before you make the decision to incorporate your business. Whichever route you decide to take, doing your research and understanding the ins and outs of the process are crucial first steps. And remember, if you decide that now isn't the right time, it's possible that next year will be.
The idea has no doubt crossed your mind. Perhaps it was during a particularly brisk February morning while you were digging your car out of two feet of wet snow before heading to the office. Whatever the trigger, we've all thought at one time or another, "working in the Caribbean is an attractive prospect!"
The concept of MRSB Consulting Services extending its professional profile into the Caribbean was initially put forth by Partner Lloyd Compton after his stint as Manager of Financial Services and International Business Sectors at Ernst & Young, Barbados from 1998 to 2001.
Recognizing that consulting services – including business plan development, financial assessment and sector strategy development – would be increasingly important to Caribbean development and global competitiveness, we began exploring the potential for partnering with companies and entrepreneurs in the region. Not surprisingly our consulting team was ready and willing to don their summer best and jump aboard this promising initiative.
Now two years into launching our Caribbean strategy, several components have proven especially important on the road to building positive business relationships in the region:
There are many similarities between Prince Edward Island and island nations in the Caribbean, from priority focus on tourism, agriculture and renewable energy to the challenges and opportunities of being a rural island economy. These cultural touch points have uniquely positioned MRSB to understand the needs of the region and to develop strategies to help effect change. As a respected Canadian firm, MRSB is able to provide experienced and objective services to meet our Caribbean clients’ needs.
Building regional knowledge
Our consultants have had the chance to visit the Caribbean region several times and we regularly monitor government and media websites to stay current with local social and economic events. MRSB has also taken advantage of the opportunity to participate in trade missions organized by Trade Team PEI, Innovation PEI, ACOA, PEI Tourism and the Greater Charlottetown Area Chamber of Commerce. We have now participated in four trade missions to Barbados and Saint Lucia and they have proven to be invaluable opportunities to build networks and relationships in the region.
Expanding our network of Caribbean experience
MRSB has been working to build a network of professional partners in the Caribbean and of local professionals who have experience in the region and are interested in collaborations. We have learned and gained a great deal through our international partners. MRSB continuously seeks to partner with experienced professionals and to build our network of resources in the Caribbean.
Finally, after dedicated monitoring of opportunities, writing proposals and expressions of interest, participating in trade missions, following up (and following up some more), we are happy to say that the firm has recently secured several exciting Caribbean projects. Our team is currently working with entrepreneurs in Barbados on business development projects funded through the Inter-American Development Bank. These engagements are especially rewarding as they have given MRSB Consulting Services the opportunity to help entrepreneurs and countries in their social and economic development efforts. Our team has shared some fantastic experiences and feels privileged to be doing what we do best – at home and abroad.
Mary Ann Donahoe, Tax Manager with MRSB Tax Services, provides some insight into the 'why' and 'how' of planning your Will.
Your Last Will and Testament is one of the most important steps toward ensuring your family and assets are protected for the long-term.
For many individuals, business owners and even parents, planning a Last Will and Testament is the last thing on your mind. You are busy and, in all likelihood, will have plenty of time to put your financial affairs in order for the benefit of your family. Especially for those in their 20s and 30s, a Will can seem like a slightly morbid document that only bears thinking about once middle age is in full swing. But planning the transfer of your assets and making your final wishes known should be a key component of tax and retirement planning for any individual, regardless of age or financial standing.
One of the biggest selling points (if it can be called that) when pitching the idea of a Will to the younger generation is that if you sit on the decision and the worst does happen, the courts will be the ones to decide how all of your assets are distributed. For example on Prince Edward Island, your spouse automatically receives a third of your estate while your children receive the remaining two thirds. Other Canadian provinces have similar laws. This scenario can cause significant tax issues and can also leave your spouse without planned living or retirement funds and possibly without a home.
Conversely, having a say in how your assets will be distributed, how your spouse will be supported, who will care for your children and who will inherit your business is important for your present peace of mind as well as the future of your loved ones. A properly structured Will allows for maximum tax planning opportunities available to the executor and can result in significant tax savings. Speaking with a tax advisor is a smart move, as they can take you through all the necessary steps and you can reap the tax benefits of being an early planner.
Assuming you want to get started with your Will planning, or that you would like to give what you've already drafted up a second look, here are some key considerations to keep in mind:
- Name an executor and a secondary executor. This is critical as you want to designate the right person to follow through on your wishes. Whether family, friend or trusted advisor, your executor should have the knowledge and compassion to be able to deal with any sensitive matters that arise
- Take advantage of the opportunity to transfer property to a spouse, allowing for a deferral of tax on your property until the passing of both spouses
- Consider the use of a spousal trust to effectively transfer individually owned property
- Ensure that your executor has the ability to liquidate your assets if this is determined beneficial
- Name a guardian for any children under the age of 18 so that they will be cared for until they reach the age of majority
- Consider a Trustee to manage any property transfered to children until they reach an age where they can responsibly manage their own affairs (preferably 25 - 35 years of age)
- Consider any specific bequests or donations you may wish to make to individuals, entities or charities
- If you are a business owner it is critical that your Will work in conjunction with othe guiding legal documents such as shareholder(s) agreements, family trusts, etc.
- Consideration should also be given to Power of Attorney and health care directives
- Finally, your Last Will and Testament should be reviewed periodically to ensure it is up to date, reflecting any recent changes that may have happened
The cost of a Will is usually reasonable and the benefits far outweigh the potential legal costs of not having one. It will take some time and a little effort on your part, but planning your Last Will and Testament is just another step toward ensuring you are ready for whatever the future may bring. Whomever you choose to help draw up your Will, they should be knowledgeable enough to provide advice on estate matters and patient enough to answer all of your questions.
Remember, it can be too late, but it can never be too early.
Have a question about tax planning or preparing your Will? Contact our Tax Services team here.