On Oct. 16, 2017, Finance Minister Bill Morneau announced that the Liberal government intends to lower the small-business tax rate from 10.5 to 10 per cent, effective Jan. 1, 2018, and to nine per cent effective Jan. 1, 2019. Tax cuts are sure to be welcomed by many, as they often are, but it is important to keep in mind that the reduction in the small-business tax rate has implications that go well beyond tax savings for small businesses.

To understand some of the implications of the recent tax cut, it is important to first understand a fundamental concept in Canadian taxation known as “integration.” Integration is achieved when the treatment of income earned by a corporation and distributed to an individual shareholder in the form of a taxable dividend is comparable to the treatment of income earned directly by the individual. To achieve integration, corporations pay tax on the income they earn, and when a dividend is paid, the shareholder is required to include the dividend in the computation of his/her income plus a grossed-up amount. The shareholder is then entitled to a claim a credit (known as the “dividend tax credit”) to offset the corporate tax payable by the corporation and avoid double taxation.

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For many small business owners, it’s difficult enough keeping customers happy without thinking about the stuffy world of finance. But money management isn’t something you can afford to ignore. Doing so can easily send the company off the rails. According to Industry Canada, 3,116 businesses turned off the lights in 2014 because of insolvency.

Here are five common mistakes small businesses can make, which can lead to disaster further down the track.

Ignoring your numbers

Unless you are an accountant, your core area of expertise won’t be in managing financial statements. It is tempting to focus on the practical aspects of your business and leave the accounting until later. This is perhaps the worst possible mistake for a small company.

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Taking a page out of its 2015 playbook when the government raised taxes on the wealthiest one per cent so that it could, in its words, “introduce a middle class tax cut for nearly nine million Canadians,” Finance Minister Bill Morneau on Monday linked a cut in the small business tax rate to a planned rethink, rework and partial abandonment of the recently-announced small business tax proposals.

On Monday, the government announced that the small business rate will drop to 10 per cent on Jan. 1, 2018 and to 9 per cent on Jan. 1, 2019. The rate, which is currently at 10.5 per cent, applies to the first $500,000 of active business income. The current rate came into effect on Jan. 1, 2016, shortly after the government came to office. The rate was frozen as the government “paused on further reductions in order to better understand the use of the small business tax deduction and the potential to be used as a tax planning tool for the wealthiest of Canadians."

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The All-New QuickBooks® Online Desktop App is Here! Our QuickBooks apps for Mac & PC allow you to run QuickBooks Online up to 46 percent faster when visiting the client page.* And, it’s free to download and begin using immediately if you’re already a QuickBooks subscriber.

You can always use QuickBooks through your browser, but here are some of the unique features of the QuickBooks app that will make your time more productive:

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For most small businesses, financing can be a challenge. Whether you need bridge capital to keep the business running in tough times, or structured debt for long-term growth, it pays to have a strategy for seeking out those elusive financing dollars. Statistics Canada found that just over half (51.3 per cent) of businesses requested external financing in 2014.

Equity-based financing options like venture capital often make the headlines, but less than one per cent of small businesses requested this in 2014. Debt-based financing is far more common, as is trade credit from suppliers.

Here are five financing options to turn to, depending on the type of small business you run, and its situation.
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