How a Virtual Phone System can give your company a competitive edge – without having to spend big bucks

As the Internet brings the world closer and closer together, it’s impossible for a small business to see its competition purely at a local level.  Instead, competition has now grown to be national or international in scope, and your small business needs to have infrastructure in place to maintain a competitive edge over the competition.
 
One great tool in retaining that edge is by using a Virtual Phone System.  The basic concept of a Virtual Phone System is simple: instead of having your customers contact you and your employees at different phone numbers (sometimes in different area codes, depending on the nature of your business), a Virtual Phone System brings your whole network together, under one phone number.
 
Your client’s calls are answered by a virtual receptionist, who then routes the customer to the correct extension.  Besides the obvious streamlining for your customer, this method provides a number of additional benefits to make your company competitive on a national level:

• Always in contact, no matter where you are: With a Virtual Phone System, you can change the phone number your extension routes to instantly.  That means you can always be in contact with your customers, no matter if you’re in the office, or on your mobile. 

• Give a big company feel: Having all of your employees under one joint number gives your customers a “big company” feel – no matter if your employees are in the same office as you, or half way around the world.

Q&A extensions to free you up from unnecessary phone calls: If you have common questions you receive 

• a number of calls about, a Virtual Phone System can help eliminate the human time required to answer them, with automated Q&A extensions. Your customer can get the answers they need, without ever having to contact you directly.

Ready to gain the competitive edge you need to take your company to the next level?  Then sign up with Virtual Call System today.

Click HERE to sign up now.
 

Small Business Leadership Skills: Keep Focused

There is a condition that is common to many entrepreneurs. Many suffer from it in varying degrees. The condition is commonly known as Multiple Idea Syndrome (MIS).
 

     MIS manifests itself by creating a temporary inability to effectively focus on one’s business ventures due to an abundance of new business ideas that crop up daily in the mind of the entrepreneur. The result may be impaired management techniques, lack of leadership, and reduced attention to business development.
 

     Such is the mind of the entrepreneur. One good idea leads to another and opportunity is always just around the corner, waiting to be found. However, danger also lurks around the corner. New ideas are wonderful.  But, a business has to be continually nurtured and properly cared for. If you are the spearhead behind a business, it’s up to you to provide the leadership and spirit to keep it moving.  There is a time and a place for everything. Pitching continual new ideas may not be the best management technique for your business.
 

     You have a vision of where you would like your business to go. Keep to it! Don’t allow yourself to veer from the path you planned by constantly trying new ventures at the expense of the ongoing one. You are the backbone of your business and must provide the leadership for others. Inspire through hands-on management. If you are perceived as being “all over the place'” your business will suffer. Set a course of action and lead your team to follow that course.
 

     And what of new ideas? Abandon them? Of course not. Just be sure that you don’t lose focus of plan one before you set plan two into motion.
 

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E-commerce Provincial Sales Taxes

E-commerce has greatly increased many retail sales. Businesses, large and small, can now reach customers from coast to coast with relative ease, if they have a presence on the internet. However, a very interesting – and tricky – question arises from all these sales. Does a website vendor in one province selling taxable goods and/or services to customers in other provinces have to charge and remit other provinces’ sales taxes?

Would that the answer were simple and straightforward. Just as taxes differ from province to province, so do the requirements for inter-provincial commerce.

Keep in mind that when dealing with tax related issues, it is better to err on the side of caution. Therefore, you should consult with your accountant and/or tax advisor to verify your own personal situation. Similarly, you can obtain detailed information from the finance/revenue ministries of the specific provinces in which you are conducting online business.

There are a number of factors that will determine your tax collection situation. As many small business owners are aware, you are exempt from charging and remitting the GST if you are a small supplier. However, even a business with small supplier status may have to register for GST if they conduct business in provinces that currently have HST (Harmonized Sales Taxes). The GST is part of the HST. Therefore, de facto, you will have to charge and remit provincial taxes in those provinces.

Some provinces have passed legislation requiring out-of-province vendors to register for their provincial taxes. Other provinces “suggest” registering.

Were you aware of the fact that if you, as a vendor, do not collect RST (retail sales tax) in a specific province, the responsibility falls onto the purchaser?

The tax issues are complicated and the requirements, and loopholes, are plenty. Before pursuing your sales in other provinces, check the tax requirements carefully with a qualified tax professional.
 
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Rating Online Business: The Star Rating System

Many of us have been a victim of the stars. No, this doesn’t refer to astrology. Rather, the star rating system that is prevalent on many internet shopping sites has led many a shopper astray.


One of the big questions is who determines how many stars a product or a site rates? Another thought is how accurate is the rating? Also, who monitors the accuracy and validity of these ratings?
 

In many instances, the answer to all three questions is identical: the owner of the site. This is not to say that all ratings are fabrications. Many websites are quite honest and respect the consumer market. However, there is no limit to sites that serve as clearing houses and have little or no control over who posts products or services for sale.
 

In reality, the star rating should be used to reflect an average of opinions from actual consumers. However, fears of honesty and good old fashioned greed have led many sellers to conduct virtual opinion polls of likewise virtual customers.
 

The truth is that it is highly unlikely that all products and services have top notch ratings. Even a superior product is bound to have its critics. On the other hand, studies conducted by market research groups have shown that 65 percent of word-of-mouth is positive and only 8 percent is negative. In other words, it is quite likely that many shoppers who have not been pleased by the product or service they purchased online may prefer to say nothing rather than spread negative feelings.
 

The bottom line is that a website is no different than a conventional store in terms of purchasing. Don’t believe everything that you read. Do your own research. Speak to friends who have purchased that product or frequented the seller. Educating yourself is the best consumer protection.
 
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Government Financing for Small Business

One of the most difficult results of the financial recession has been the drastically reduced amount of credit available to small businesses. Banks have become highly selective in granting loans – the lifeblood of many a business.

An important program in Canada’s Economic Action Plan is the Canada Small Business Financing Program (CSBFP). This program is designed to help small and medium-sized businesses access financing. For-profit enterprises with gross annual revenues of $5 million or less may be eligible for loan amounts up to $350,000 and $500,000 for real property.

The CSBFP is administered by Industry Canada in partnership with private sector lending institutions across all the provinces and territories. In total, more than 1200 service locations have been established to facilitate business owners seeking loans. The government does not participate in the lending process, nor does it make the decisions. The final decision is solely at the discretion of the financial institution. However, in order to encourage lenders to make loans that they otherwise might not, the federal government will cover a portion of losses due to default. A lending institution with a portfolio greater than $500,000 will be eligible for reimbursement of losses up to 12 percent of its portfolio’s value.

Loans to small and medium-sized businesses are not guaranteed under the CSBFP. Business owners should discuss their needs with a financial officer at a participating financial institution. Upon approval, the loan will be registered with Industry Canada.

This program is not available for farming businesses, not-for-profit organizations, or charitable and religious organizations.

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Small Business – Less Tax

However you dissect the finances of a business, specifically a small business, cash is the primary component of the bottom line. The more cash in the coffers, the more flexibility the business has.

The current global recession has dealt extremely harshly with Canadian small businesses. Reduced sales and credit restrictions have pummeled the cash flow of many worthy enterprises.

The Canadian government, seeking to ease the plight of this important and large sector of the country’s business community, has established several stimulus programs through its Economic Action Plan to provide much needed economic relief. Realizing that continued growth of small business is dependant upon available cash, the federal government has passed legislation that increased the amount of small business income eligible for a reduced federal tax rate of 11 percent. Effective January 1, 2009, the eligibility cap was raised from $400,000 to $500,000. Canadian-controlled private corporations that claim the small business deduction are eligible for this credit. By increasing the eligible income by 25 percent, the federal government is helping small businesses retain more of their hard-earned cash. This, in turn, will help stabilize the business community, create new, much-needed jobs, and promote economic growth throughout the nation. It is estimated that this reduced tax rate will cost the country more than $120 million over the next two years. However, with nearly half a million Canadians out of work, it is a wise investment and money well spent.
Canadian businesses can obtain detailed information from the applicable federal government agencies.

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To Buy the Competitor or Not to Buy

Although the state of the economy is still uncertain, this should not affect whether a company should pursue acquisition of a competitor, if that is its intent. Rather, one should be somewhat more prudent and disciplined in how one evaluates the potential purchase.

During these recent difficult times, the markets have naturally focused their attention on companies in distress. This should not translate into a belief that the entire business sector is in ruins. However, as the competition may be in dire straits due to the present financial crisis should not be a reason to abandon ideas of purchasing that company. Careful assessment of the competitor is crucial. Seek to understand why that company is losing money. Will your investment merely save a struggling enterprise that was on its way to closure anyway or are there other factors at play that will make this a worthwhile purchase?

It is important to dissect the company and understand how it works. Were there management problems? Did the company mismanage its relationships with its customers and suppliers? Were the employees mistreated and, therefore, did they not perform well? Is the machinery sub-standard, thus affecting the product? Examining the company with a fine-toothed comb will allow you to make an effective decision as to whether this company can merge with yours. Similarly, it is important to do a proper evaluation of your own company. Are you in a position to absorb this company? Do you have the management capabilities for this merge? Will your staff cope with the additional production and sales? Will you need capital to overhaul machinery? Similarly, examine your goals. Perhaps you are only interested in expanding your customer base. In that case, go directly to the competitor’s customers, rather than affecting a buyout.

Research is your best business ally.

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Deferring Tax to the Next Generation

No doubt many independent business owners have seen their company’s worth decline in the last year. However, chances are very good that the value will rise again. If the company owner thinks that the rise will be substantial over the next few years, there is a wonderful opportunity to take advantage of a unique tax savings and defer the capital gains tax on the projected growth to the next generation.

The method is known as an “estate freeze.” Essentially, the “freeze” caps the share price of the owner. Any future growth in the share price is passed on to the next generation of shareholders.

The method is as follows: the owner of the business gives his common shares to the company and takes back an equal amount of preferred shares. These preferred shares can issue dividends to the owner, thus allowing him livable income. Meanwhile, the common shares are issued at nominal value to the future owners, whether it may be family members, employees, etc. From that point forward, growth in the company is accrued to the new shareholders. Should the owner die, calculation of the capital gains tax is based on the value at the time of the freeze, not the accrued, increased value. This can provide a substantial savings on capital gains. Numerous companies have become financially strapped having to pay large capital gains taxes. The estate freeze can greatly reduce that tax bite.

Some companies have already done “re-freeze” while others have added trusts that name beneficiaries who will own the common shares in the future. All these moves are intended to reduce capital gains taxes, now and in the future, as much as possible.

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Organizing Your Corporation – The Basics

The internal organization of your corporation is a vital initial step. Even the smallest of companies must adhere to these organizational steps. An orderly beginning will direct you to a well organized business.

Although you were required to list the first members of the corporation’s board of directors when you incorporated, this group essentially gets the business “off the ground.” At the first meeting of the corporation’s shareholders, the permanent directors are elected. While all this may sound rather grandiose for a small company, keep in mind that your rights and obligations are no different than the “major players.”

At an early date in the corporation’s organization, one of the initial directors will call an organizational meeting. All the initial directors must receive notification in writing at least five days prior to the meeting. The notification must indicate the date, time, and location of the meeting.

What is the purpose of this meeting? Several items, which must appear on the agenda, may be discussed:

• creating by-laws of the corporation (the by-laws have to be ratified by the shareholders at the first annual meeting);
• adoption of forms of security certificates and corporate records;
• appointment of officers;
• authorizing issuance of shares and/or other types of securities;
• appointment of an interim auditor until the shareholders ratify the appointment;
• organize banking protocols; and
• discuss any outstanding pertinent issues.

Keep in mind that it is imperative to keep written minutes of all meetings as well as copies of all documents, agendas, correspondence, etc. An orderly set of records may be very useful for you at a later date. It also may be necessary in the future should there be any need for clarifications by government or other official agencies.

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Why Should I Incorporate My Business in Canada? – Part II: The Advantages

So you are thinking about incorporating. Here are some more advantages as well as potential pitfalls of incorporating:

Limited Liability

As we said in the previous post, a corporation is a separate legal entity from its owners, and the main advantage of that is that the owners, or shareholders are for the most part not liable for the corporations debts and obligations. They can only lose the amount they invested in the corporation. The creditors can only have claims against the corporation itself and not the shareholders.

Perpetual Existence

Being a separate legal entity, a corporation does not cease to exist if the shareholders, directors, officers or members die or retire. The ownership of the corporation and it shares can therefore be easily transferred. The corporation itself may also own property, enter into contracts and sue or be sued, independent of any individual involved.

More Potential Sources of Capital, More Attractive to Investors

Corporations can issue different classes of shares as well as different debt instruments, such as bonds, in order to raise capital. Sole proprietorships and partnerships cannot do so as easily. This makes it easier for corporations to attract investors as opposed to the other business forms.

Tax Benefits

Among other tax benefits, incorporating would cause your business to pay income tax at a lower rate than as a sole proprietorship or partnership. It would also be possible to carry forth losses of previous years that offset the profits of subsequent years.

Credibility and Prestige

Incorporating can very well lend greater credibility and prestige to your business dealings that you would not have otherwise. You might be seen as a more established company as opposed to before you incorporated.

Now that we have discussed some of the advantages, here are some formalities you should be aware that you would be subjected to upon incorporating:

Higher Start-up Costs

The cost to incorporate, including government fees, may be higher than those to initiate a sole proprietorship or partnership.

Maintaining Records

In order to provide shareholders with information, a corporation must keep meticulous records, as well as hold meetings and elect directors.

Double Taxation

This may seem like a disadvantage, however it can be minimized. The corporation pays taxes on its income and the shareholders pay taxes on their dividends (profits). But the corporation’s business expenses, such as salaries, can be offset by its income.

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