When starting your own business, be cautious.

The last 30 years have seen some tough times: 20% interest rates in the early 80s, recession in the early 90s, and a near collapse of the financial system in 2008.   Those who survived financially will probably make it through the current economic struggle because they have learned how to keep going regardless of what the economy throws at them. Those dreaming about starting their own businesses should consider the following precautions.

Temper Your Expectations

Start-up businesses have high expectations that can sometimes outstrip reality.  Customers and clients need time to find you and get to know your business.  New businesses may have a “grand opening” to create public awareness. Sometimes, opening prices are below normalized mark-up prices and people flock to the location to take advantage of savings. Start-up entrepreneurs should not hinge their expectations  on crowds of “cherry pickers” who take the best you have to offer and then do not return when your prices go back to normal. 

Do Not Over-Extend Yourself

Start-ups often overestimate their ability to produce or deliver products. It is better to be up front with your clients that you cannot meet their deadline and negotiate a mutually satisfactory timeline, rather than disappoint when you fail to meet expectations. Keep in mind that when you set a deadline your clients will be making their plans according to your promise. 

Arrange Advance Financing

Many start-ups underestimate the working capital required to get the business off the ground. Creating sales can require unexpectedly high amounts of working capital. Unfortunately, it is all too easy to overestimate sales and the speed with which receivables will become cash. This miscalculation leads to underestimating the time required for a business to generate sufficient funds to be self-financing.  

In today’s economic environment it is hard to tell when a small business may become profitable.  Some small online-business bloggers boast of being profitable almost immediately because of the low cost of getting into an online business. More conventional businesses with bricks-and-mortar locations and the associated costs may take a year or even two just to break even. Thus the entrepreneur should project operating cash needs for HST remittance, loan repayment, rent, inventory, utilities, wages, and vehicles and, of course, personal income needs for at least a year. The entrepreneur must also recognize that in addition to everyday working capital needs there will be capital expenditures for computers, cash registers, equipment, leasehold improvements, and vehicles, of which will drain working capital.  Most financial institutions will assist you with capital loans, revolving lines of credit and credit cards.  

Collecting funds after the job is completed can be tough.  Clients may not want to pay or may delay payment for two or three months.  These delays may cause problems with HST remittance. HST is recorded when the sale is booked and must be remitted regardless of whether the funds have been collected. 

Requesting a deposit before a job begins has several advantages. First, a deposit indicates the client is committed. Second, a deposit is not considered to be a sale and therefore remittance of HST is not required. Finally, if the client delays payment after the sale the deposit should be sufficient to cover the HST and provide some working capital.

Control Expenditures

Good cash management requires that you should anticipate the best and worst circumstances that are likely to occur over the next fiscal year. As owner-manager you know you must pay rent, utilities, suppliers and employees each month. Rent and utilities are essential to staying in business. Staff, vehicle expenses and inventory are major costs over which you have some control and can be projected with some accuracy. It is important to isolate those areas where cash flow needs are variable. Your findings may indicate that you should lay off staff and do the work yourself, drive your own delivery vehicle rather than use a courier or arrange for on-time delivery of inventory rather than stock the shelves.

Project Your Needs

Optimism is what buoys entrepreneurs but reality can sink them. Start-ups often purchase goods or hire employees in excess of requirements. Consider inventory and staffing an essential part of your projections.  Better to have shelves that need replenishing and a skeleton staff that is always busy than shelves full of unsold products and excess staff that drain cash reserves.

Stay the Course

When business is slow self-doubt will creep into any owner-manager. The temptation will then arise to branch out into areas only marginally related to the core business or areas of expertise identified in your original business plan. Such acts of desperation confuse clients and damage your brand. Energy squandered on these distractions is energy taken away from maintaining the quality of your product or service which now risks becoming substandard. If your business plan was sound in the first place and you have rational belief in your ability to succeed, maintain focus on your strengths. This does not mean you should not look into branching out into other areas but always ensure that the new area does not take away from your strengths.

Adopt a Mentor

We all need someone to guide us in making business choices. Start-up entrepreneurs should not be hesitant to approach experienced owner-managers in their community. Not only do these individuals possess knowledge and experience that takes years to acquire but they may also connect to networks of people who may be able to offer guidance. Joining a local business association may also be helpful.

Statistics Tell the Story

Ninety-eight per cent of businesses in Canada have fewer than 100 employees but employ 48% of the private-sector labour force and create just over 30% of Canada’s GDP. About 21 per cent of small businesses produce goods and 79 per cent produce services. Chances are self-employment will be in the future for many. Cautious optimism is the essential ingredient of survival.

Computing may be moving off premises and becoming a utility.

Cloud computing is not quite here yet but its simplicity from the user’s point of view makes it very attractive.  Nevertheless, there are significant legal and technical problems primarily of security and privacy that need to be resolved before cloud computing can come into universal use. 

What Exactly is Cloud Computing?

The central idea behind cloud computing is that data will no longer be stored on the hard drives of the office servers, desktop computers or laptops but offsite on a network of servers accessed through the Internet for a fee.  (The word “cloud” comes from the use in the IT industry of the simple image of a cloud to represent complex telephone networks or the Internet itself.) 

Types of Service

The cloud model could offer several types of service. For example, Software as a Service (SaaS) would let you load a single application onto your home or office computer that would allow you to log into a web-based server hosting the programs you need such as word processing, accounting, data base, storage, games, etc.  Platform as a Service (PaaS) would let you design your own application which would run on the service provider’s infrastructure and be delivered to users via the Internet. There would be many other services available to manage security, spam, email, and so on.

Pay Per Use

As currently conceived, the comparable business model of cloud computing is that of the utility industry.  Instead of having a generator in your basement producing power for all the needs of your home or business, you access the energy grid and draw off the amount of energy you need on a pay-for-use basis. 

Middleware

Through a process called server virtualization, a special kind of software known as middleware would maximize server capacity utilization.  Middleware can divide the capacity of individual servers into virtual environments so that each physical server functions as multiple servers.  The result is greater server efficiency because less capacity is wasted, as happens now.   The dedicated servers making up the cloud computing system would have all the applications society would need for work or play.

The host system would be owned by a company that would charge you some type of fee for providing your customized service.  

Benefits

The primary benefit is that your infrastructure, training and licensing costs will be substantially reduced or even eliminated. Hardware costs would be reduced because there would be no need to buy and house increasingly powerful computers as your business grows.  The programs formerly run by your in-house IT system would now be on the cloud network servers.  The space currently occupied by servers and storage devices would now be freed up for more productive uses. If you are currently renting space to house your servers, that expense would be gone.  Increased capacity would also be available on the host’s servers as needed. Server virtualization on the cloud system would ensure you are not paying for overcapacity as you might be doing now with your in-house system.  All you need is a basic computer, cloud-enabled appliance (e.g., television), mobile phone or tablet device capable of running the external server’s interface software which might be as simple as a web browser. 

Server Security

Time-consuming decisions about buying and complying with expensive software licences will be a thing of the past.  You will no longer have to worry about who is and who is not covered by your existing software user licences.  With cloud computing, you will no longer require licences; the company will have access to the programs it needs on a fee-for-service model. 

Easy Access

The cloud servers would be accessible from anywhere on the planet through the Internet.  But you will not have to worry that sensitive company information might be compromised if a USB or laptop is lost by an employee on a business trip; all the information would be on the server and not on the hard drive of the laptop. 

Reduced IT Staff

With software managed by the offsite server company and only basic computers required onsite, the expense of in-house IT personnel will be substantially reduced.  Fewer IT personnel will be required by your business and those who will be needed will cost less because they will not need the training now required to run complex in-house systems.  The good IT jobs will be with the server companies.

Concerns

Cloud computing could, in effect, double your security risk: once in-house and once at the remote servers.   When servers are located in-house as they are now, you know where the data is stored and can access it and maintain it physically.  You can design an authentication system of user names and passwords to control access to your own servers.  This can be supplemented with an authorization system which allows users to access only the applications and data needed for their particular job.

In the cloud system, on the other hand, you as the client do not know where the vendor’s servers are physically located and who has access to them. They may even be located in a jurisdiction outside Canada where privacy and security laws are not as tight as they are here. You also do not know the effectiveness of the vendor’s security system.  In other words, you do not have complete control over the storage and use of your own data, yet current privacy legislation makes you responsible for the security of your clients’ personal information. 

The best that can be said at this time is that you will still need in-house security at your end but the server companies will need to develop a level of security that will give their clients confidence that they are not in violation of Canadian law.  It is obviously in the server companies’ best interests to do so since they depend on the trust of their clients to keep themselves in business.

Where Are We Going?

Computer systems are becoming so complex that new ways of organizing the relationship between system and user is inevitable.  The number of computing devices in use and the complexity of each new device are both increasing rapidly and putting pressure on the architecture of existing systems.  Cloud computing as a utility is not yet a sure thing but it is looming larger and larger as a potential solution.

Check your portfolio; you may not have to pay as much capital gains tax as you thought.

As the year end approaches owner-managers can find themselves faced with difficult choices in order to keep the tax liabilities of their businesses, themselves and their families to a minimum.  Three important areas are capital losses, pre-tax remuneration vs. dividends and RRSP contributions.

Capital Losses

If you have an investment portfolio outside your TFSA, RRSP or RRIF, you should review it with your investment advisor to see whether you could reduce your capital gains by taking some capital losses before the end of the year. Since capital losses can be carried forward from prior years to offset gains in the current year, review your last tax return with your Chartered Accountant to see whether any capital losses are available.  Keep in mind that any sales to create capital losses must be made at least three trading days before the final settlement date of December 31 in any given year. 

For 2011, because of the way the holidays fall, the last day to sell a stock may be December 23.  Check with your broker to make sure.  Further, if you sell the losing stock to get the benefit of the capital loss but would like to repurchase it to retain a position in the company, you must wait 30 days or you will not be able to claim the capital loss (the superficial loss rule). The capital loss would also be denied if your spouse were to acquire the stock either from you or on the market within that 30-day period and continue to hold it at the end of that period.

Next Year’s Capital Losses

Investors who realize capital gains (net of capital losses) in 2011 but have no losses carried forward will pay tax on the capital gains.  However, because capital losses can be carried back three years, capital losses generated in 2012, 2013 and 2014 can be used to recover taxes paid on the capital gains incurred in 2011.  Just in case you are thinking of selling a security at a loss in order to create a usable capital loss then repurchasing under your RRSP umbrella, remember the superficial loss rule will still apply.

Pre-Tax Remuneration vs. Dividends

Salaries and bonuses to owner-managers or family-member employees should be considered as a way of reducing corporate taxes.  Your Chartered Accountant can determine how additional remuneration to family members will impact the collective tax liability of the family. Your Chartered Accountant may also be able to time the payment of remuneration to reduce the corporate taxes paid while deferring the personal income tax liability to the following year.

Payment of cash dividends is another option. Cash dividends are paid out of retained earnings, i.e., after the corporate income tax has been paid, and attract a lower income tax rate than remuneration, which is deducted  in computing corporate income and therefore before the calculation of the corporate tax liability. 

The choice between cash dividends or remuneration can become contentious where tax rates vary among family members and where not all family members are shareholders. Taking dividends rather than salary, for example, will impact CPP and future RRSP contributions. Thus, it is advisable to be aware of the impact on each family member and to obtain shareholder consensus on the preferred means of remuneration.  

Although dividends may be declared any time in the year, they are not taxable until they are actually paid.  Any plan to defer payment to a later calendar year should be discussed with your Chartered Accountant as it impacts the corporation as well as the individuals receiving the dividends.

RRSP Contributions

Owner-managers who decide to give themselves or family members a raise to reduce corporate taxes, may put themselves in a higher income tax bracket. Then, the only means of reducing personal taxable income may be to contribute to an RRSP.  For 2011, the RRSP limit is $22,450.

Keep in mind that, if you have not yet made the maximum contribution (the lesser of $22,450 or 18% of 2010 earned income minus any pension adjustment) for the 2011 calendar year, you have until March 1, 2012, to do so. The cash realized from a dividend or salary deferral from 2011 received in 2012 can therefore be used to top up your 2011 contribution.

The On-Time Payment Rules for Taxes

There is some confusion as to what constitutes paying on time. Some payments are considered to have been made only when received by the CRA; other payments are considered to have been made when mailed.

For clarification, section 248(7) of the Income Tax Act reads:

For the purposes of this Act,
(a) anything (other than a remittance or payment described in paragraph 248 (7) (b)) sent by first class mail or its equivalent shall be deemed to have been received by the person to whom it was sent on the day it was mailed; and

(b) the remittance or payment of an amount

            (i) deducted or withheld, or

            (ii) payable by a corporation,

as required by this Act or a regulation shall be deemed to have been made on the day on which it is received by the Receiver General.

Payments at Financial Institutions

Payments for HST, income or withholding taxes made at any financial institution belonging to the Canadian Payments Association will be accepted on the day they are processed. A payment made at an Automated Teller Machine (ATM) must be processed the same day to be considered paid on the payment date. Payments will be late if they are made after public banking hours since many financial institutions do not process the data until the following day. Payments made Friday after closing are usually not processed until the following Monday.

If, however, the due date falls on a Saturday, Sunday or public holiday, the payment will be considered “on-time” if the funds are processed by the financial institution or received by CRA on the next business day.  For example, if the deadline is Saturday, April 30, and the return is mailed on April 30 but not received by CRA until Monday, May 2, it is considered to have been received on time.  If, however, a payment required by Tuesday, April 30, is mailed on April 30 and not received until Wednesday, May 1, it is considered late. 

Seek Advice from Your CA

Addressing capital-gains-and-loss issues, salaries, pre-tax remuneration or dividends, and RRSP contributions with your Chartered Accountant before year end should be foremost on the minds of owner-managers at this time of year.  Some ways of reducing tax liability may be time sensitive and require a review of available options with shareholders and family members.

Unpleasant and unacceptable behaviour at work can be very costly.

Incivility in the workplace is serious. The costs of damage control are real in terms of both time and money. 

If employees show disrespect for each other, a fragmented and uncooperative culture will soon spring up. Victims of rude behaviour may take more sick days or fall behind in their work because of stress. They do not want to work with the offending individual; a reduction in productivity and increased errors can result.

Employers Have a Duty to Support Civility

The courts have established that employers have a duty to create a workplace conducive to the well being of the employees. In the landmark lawsuit, Stamos v. Annuity Research & Marketing Services Ltd., in which Ms. Stamos was awarded a generous judgement, the judge determined that “an employer’s failure to prevent the harassment of an employee by co-employees is an obvious breach of this duty, and has been held to be capable of amounting to constructive dismissal.” In other words, it is ultimately up to the employer to defuse any situation that could lead to a breakdown in the social order of the workplace.

Staff may quit because of a tolerated lack of respect. Meetings can be side-tracked by acrimonious behaviour of individuals seeking personal retribution rather than dealing with business issues. Failure to meet deadlines because of personal issues could ultimately lead to difficulties meeting clients’ needs.

The Many Faces of Incivility

Here are just a few of the common forms of unacceptable behaviour:

• No credit for a job well done
• Employees not owning up to their mistakes
• A meeting sabotaged through non-participation
• Domination of a meeting or conversation
• Not sharing responsibilities for maintaining a clean locker room or kitchen
• Causing embarrassment or humiliation to others
• Displays of anger
• Abusive language
• Sullen and petulant withdrawal from the company community
• The silent treatment.

An individual incident may be explained by someone having a bad day; a pattern, however, may be the first signs of a social breakdown within the company.

Client Impact

Rudeness to clients and suppliers can take many forms. With the increase in cultural diversity in the business community, care must be taken not to offend. Rudeness may be something as simple as failure to greet a client or failure to follow up a complaint in a timely manner. The fact that perception is reality to most people means that employees must at all times project politeness and courtesy to anyone who comes into contact with the business. Disrespect will mean an increase in complaints and a decrease in client confidence.

Client comments about disrespectful staff may indicate more than a single problem employee; indeed, it may indicate the corporate culture is changing: orders are down, production time is up, staff sick time is increasing, a hostile tension exists within the office, and you are constantly listening to complaints from department heads.

Addressing the Issue

Combating the insidious impact of internal incivility needs to be planned.

The First Step

Determine what may be considered as incivility within a workplace. Obvious issues such as rudeness, profanity, negative comments concerning other employees, management or other departments may be considered as a base point to open discussion.

The Second Step

Meet with all staff. A general discussion should address the positive benefits of civility. Do not point the finger; instead, stress how a civil working environment will benefit individuals and organization alike.

A more civil working environment will result in improved:

• Communications as misunderstandings and arguments are reduced
• Employee cooperation
• Productivity as employees focus on work rather than interpersonal issues
• Attendance and punctuality
• Client confidence in service and product
• Capacity to reach corporate goals or make internal changes
• Management effectiveness as energy spent dealing with personal conflicts is channelled into completing projects
• Understanding between employees with cultural differences.

The Third Step

Management defines and explains what they expect employees to do to improve civility. Although these expectations are general in nature, management should encourage all employees to adopt the following:

• Communicate with courtesy and respect
• Adhere to rules and regulations
• Say thank you after assistance
• Offer fellow employees the same encouragement you would want from them
• Congratulate someone on a job well done
• Listen to fellow employees for ideas that can be transferred to the workplace
• Set up a suggestion box, either electronic or paper, for employees’ ideas. Don’t just collect them; actually review them and discuss them with employees.

Management is Key

Like everything else in the company, civility comes from the top down. Management’s first role is to ensure that a culture of civility becomes engrained in all employees.

The concept of civility can be incorporated into performance evaluations. By stressing the individual employee’s responsibility for personal and corporate improvement, management reinforces the need for a positive change within the individual.

Management must respect all employees, whether in upper management or on the line. All issues should be addressed quickly: point out any inappropriate activity but make the transgressing employee understand you are willing to listen to their side of the story. Work with the employee to correct the situation. Documenting all meetings will establish whether this was a one-time occurrence or a pattern.

Civility Benefits All Stakeholders

Civility in the workplace will make a better working environment, which in turn will result in happier employees, better service and production, an increase in client confidence, and a more robust bottom line.

Mismanaged email is mismanaged time.

“Where did the day go?” is undoubtedly one of the most used expressions as 6 p.m. rolls around and owner-managers review the issues that did not get taken care of during the day. The demand on an owner-manager’s time comes from all sides whether government, employees, suppliers or customers. It sometimes seems that the longer you are in business the more demands are made on your time. The solution is not necessarily to work longer hours but rather to use time more efficiently.

One of the best ways to make better use of your time is to reduce the amount of the day spent answering email.

Reduce Personal Email

The working world cannot do without email. Unfortunately, many colleagues and friends use business email to send us pictures, jokes or articles. While many of these may indeed be entertaining, reading them is a huge waste of time. The best way to handle this traffic is not to open them at all and to ask colleagues to limit emails to work-related issues.

Pavlov’s Dog

Don’t respond to every email the moment you hear the “ding.” If you choose to respond, the current task has to be put aside; if you choose to read it but not answer, the time spent is doubled because you will have to read it again when you respond later. The best way to avoid fragmenting your time is to review email in batches at set times.

Keep Responses Brief

Try to keep your response to three sentences or less. If it requires more, you should probably write an attachment.

When using “RE:” in the subject line, define the issue being addressed. For instance, if the received email is asking whether you can attend a budget meeting, ensure the response indicates exactly what your email is about. State “Attendance at budget meeting” and the contents would be “Cannot attend budget meeting on November 1.” Direct and specific wording prevents assumptions and misunderstandings.

Define the Topic

Subject lines should be simple and clearly identify the subject of the email. Poorly written subject lines leave the reader guessing what the email is actually about. If a longer email is necessary, it should not be structured like a detective story with the most important information at the end. Instead, put the key idea in the first paragraph and any supporting argument or data in the second and any subsequent paragraph(s).

Spam

Ensure your server can eliminate it before it gets to your inbox.

Filter

Create a “read later” file for things you want to read but are not urgent. If you have online subscriptions, for example, set up a special file and a “white list” that lets in only those subscriptions and keeps everything else out. These items can always be reviewed on break.

Don’t Check Your Email First Thing in the Morning

Checking your email when you first begin to work may seem like a great idea. If you already have a busy agenda, however, reading your email can divert you from more important things. If you have the bad luck to open an email that seems urgent, you may not give yourself enough time to consider the subject matter properly.

Use Your Laptop or Desktop for Email

Small keyboards and small screens can make reading, editing or responding to emails and attachments frustrating. Using a smartphone to respond to email enquiries is much more time consuming than using a full-size keyboard and desktop monitor screen.

Direct Messages to Where They’re Needed

Some smartphones may include a proprietary email address that is only accessible, or most convenient to access, from the device. For your business email, either don’t distribute your device email address, or make sure that all messages are forwarded to your main inbox. Constantly checking your smartphone for messages as well as the other devices is needless duplication of effort.

If your job description requires you to respond immediately, consider setting up a second purpose-specific inbox (e.g., webmaster, emergency support, etc.) or mail rules that direct the important email to the smartphone.

Be Specific

The immediacy of email and texting creates disjointed conversation. It often takes four or five emails or text messages to finalize appointment details. To eliminate this chatter, be specific. Instead of “Meet me for lunch to discuss a project,” say “Take a cab and meet me for lunch at XYZ restaurant on 123 Queen Street at 12:30 p.m. Bring the ABC project file so that we can discuss it.”

Email Metrics

If managing your email saved 10 minutes per day over the course of a 240-day work year, you have found 40 hours, i.e., an entire work week! Not only does controlling communication save time and therefore money, it also keeps you and everybody else focused on the projects at hand.

Tablets

Instead of being made of stone, modern tablets are light, portable and can improve your productivity.

Just when laptops had virtually replaced desktop PCs in most office environments, a revolution began in tablet computers, sparked by Apple’s iPad. Now, only two years after the original iPad launch, there are close to 20 companies marketing some kind of tablet.

What is a Tablet?

Well, the simplest explanation is that tablets are slate-shaped portable computers that use a touch screen or stylus to operate them. Four broad categories have evolved to describe the many variations on the tablet theme now available to the consumer:

1. A convertible tablet PC is a laptop that incorporates touch screen capabilities. It looks just like a notebook computer except that the screen can be rotated 180 degrees and folded “backwards” over the keyboard in such a way that the screen remains face up.
2. A hybrid tablet PC allows the keyboard to be detached.
3. Booklet-style devices are exactly as they sound, incorporating a dual screen tablet that allows folding like a book.
4. A typical slate-style tablet device incorporates one touch screen and has no keyboard. This is currently the most popular style.

Each of these types is designed to appeal to users with specific needs. Potential buyers looking to move to a tablet format had best understand their computing expectations before making a purchase. With prices ranging from $250 to $1,200, purchasers can find a wide variation in capabilities. Thus, anyone thinking of a tablet should try as many demo products as possible to find the right fit for their needs and pocketbook.

One of the first considerations should be the operating system. There are a number of competing operating systems:

Apple iOS

• Leads the market with over 60% market share
• Used on both iPhone and iPad, iOS is optimized for mobile devices
• Accesses a significant library of “apps” for iPhone and iPad to meet nearly every need

Google Android

• Also expanded to include tablets and smartphones
• Supported by an active developer community with a large number of apps available
• Supported by many manufacturers

BlackBerry Tablet OS

• Used on the PlayBook tablet, it is intended to replace the BlackBerry smartphone OS as well on future models
• PlayBook is optimally paired with a BlackBerry smartphone
• An emulator to run Android apps is also set to be released

Microsoft Windows 7

• Runs on desktop and laptop computers as well as tablets
• Larger and more PC-like models may run Windows; can run regular software for Windows
• Supported by many manufacturers

Except for the Windows-based devices, most tablets are not designed to be full computers and are instead optimized for their small-form factor and limited hardware.

The evolution of touch-screen technology may make the need for a physical keyboard redundant in many circumstances. The operating system and most apps are optimized for a gestural interface and support a touch-based on-screen keyboard; however, most devices are capable of supporting a discreet QWERTY keyboard which would be more suitable for heavy office-style use, such as word processing, spreadsheets and creating presentations. Certainly a keyboard attachment is in order if the device is employed primarily as an office computer.

Hardware

Tablets come in all sizes ranging from seven inches for a “pocket size” unit to the convertible tablet computer with a 12.1-inch screen. As size increases, so does weight with one seven-inch model weighing in at a mere .45 kg, with others ranging from .60 to 1.8 kg.

Screen resolution varies by manufacturer and operating system, but is generally in the range of 1024×768 (SVGA) or 1280×800. Style of image may be an issue with the smaller units but turning from portrait to landscape mode will satisfy those that require a larger format.

Tablet battery life is of utmost importance. With battery life ranging from 4 to 10 hours, many units may need to be recharged during a typical workday.

Use of slower mobile-optimized CPUs is most likely not an issue as most tablet operating systems are optimized for that form factor. iOS, Android and BlackBerry Tablet OS are only intended to supplement PCs and smart phones by offering something in the “middle.”

Storage capacity could potentially be an issue since flash-based memory is most typically used. Flash memory is more expensive than hard drives. While 64 GB of storage is generally the top of the range for a tablet, laptop computers could feasibly support a 750 GB hard drive and generally start with a minimum of 250 GB.

Compatibility

Because of their size, tablets have forsaken the CD and DVD drives. While this loss can be overcome by transferring data onto a computer then importing or syncing to the tablet, in many cases physical media are no longer required. Apps and music can be purchased online and downloaded to the device. The next version of iOS is set to include a cloud storage feature called iCloud that will automatically synchronize your data to the Internet and other iOS-based devices. The other vendors may have similar innovations planned for their platforms. The move to cloud offsite technology may make the need for traditional storage media unnecessary for many businesses.

All models regardless of manufacturers are capable of handling application software but not all apps can be cross-platform. For instance, a popular application for iOS may not be available on Android, or vice-versa. This is another compatibility issue that should be considered before making the final purchase.

Compatibility with existing office computers is important. Make sure the tablet offers good support for the document formats you use most often. Compatibility with your smart phone may also be a consideration. In addition to compatibility, running the same applications on both devices may save money as you would not need to purchase them twice.

Users of laptops and smart phones probably take for granted all the built-in features manufacturers have provided. To ensure the tablet is able to handle your current and future needs, consider the following features:

• Built-in camera or cameras that allow simultaneous seeing and transmitting
• Bluetooth and Wi-Fi capability
• Ports that handle USB and HDMI connections
• Ambient light sensors
• Speaker and microphone
• GPS capabilities
• Secure disk encryption
• Quick battery replacement

Outlook

The future bodes well for tablets. Researchers have predicted that by 2015, tablets will make up 23 percent of PC sales in the United States. This implies that the tablet will find a significant user base but will not replace the laptop or the desktop as a computer of choice. At present there is significant competition in the operating systems and even more competition in the hardware. Purchasers may wish to consider whether to get an early understanding of existing products and applications or wait until the market pushes forward those tablets and applications that provide the most value for the dollars spent.

New CPP rules affect employees over 60.

In 2009, important changes were made that affect contributions and pension benefits for the five-year period 2011 to 2016. The purpose of these changes is to adjust benefits actuarially according to whether a person chooses to take those benefits before or after age 65.

Today

Under current legislation, individuals already receiving CPP benefits, and those who have deferred receiving benefits but have reached the age of 70, do not make CPP contributions. If benefits are taken before age 65, the amount is reduced by 0.5% per month for each month the pension is taken before the age of 65.  For example, a person taking benefits at age 60 would have the benefit amount reduced by 30% (5 years x 12 months x 0.5%). If, however, the person begins taking the benefits sometime between their 65^th and 70^th birthdays, the amount increases by 0.5% for each month deferred.  For example, if a person does not start taking the benefits until age 70, the pension amount increases by 30% (5 years x 12 months x 0.5%).

Starting in 2011

The following changes will be phased in during the five-year period:

1. The CPP monthly pension amount will increase by 0.57% in 2011, 0.64% per month in 2012 and 0.70% in 2013 for each month the person defers taking the pension in the years between 65 and 70.  For example, a person who becomes 70 in 2013 or later would enjoy a 42% increase in monthly benefits (5 years x 12 months x 0.70%). 
2. Beginning in 2012, the CPP monthly pension amount will decrease by a larger percentage if taken before age 65. The standard reduction will be 0.52% in 2012 and rise annually until it reaches 0.60% in 2016.  Thus, a person reaching age 60 in 2016 who chooses to take the pension then would see the monthly amount reduced by 36% (5 years x 12 months x 0.60%) compared with what would be received if they had waited until age 65.
3. The number of low or zero earnings years automatically dropped from the monthly pension calculation will be increased in the years 2012 and 2014.
4. Effective 2012 employees will no longer have to stop working in order to start receiving their benefits. 
5. Employees over 60 but under 65 and receiving benefits while still working will be required to make CPP contributions.
6. Employees 65 to 70 and receiving benefits while still working will be able to choose whether they wish to continue contributing.
7. Self-employed or employed individuals who started to collect their pension, disability or survivor benefits prior to 2011 will not be impacted by the new rules.

The Impact

The impact on employers is not obvious at first blush but there are some interesting considerations that each employer and self-employed individual will have to address when hiring new staff.

All employees who reach the age of 60 but have not yet reached 65 will have to have CPP contributions deducted from their pay. All employers will still have to contribute an equal amount of CPP premium on behalf of the employee.

If an employee is over 65 and opts to continue to pay CPP premiums, the employer will have to match the CPP premium contributions made by the employee.

New Rules Affect Payroll

As can be appreciated, the new rules could have a significant impact on payroll, especially if there are a large number of employees between the ages of 60 and 65 who are already receiving their pension benefits. Under the old rules, the employer was not required to withhold CPP once the employee was taking benefits and therefore was not required to provide any matching contribution. The new rules will mean the employer will have to both withhold and match the contribution.  Employers with long-term employees in this age group and making maximum contributions to CPP will have to consider factoring an additional cost into operating budgets. For 2011, the maximum earnings level for contributing is now $48,300; after deducting the $3,500 basic exemption, the calculation for the employee’s amount at a rate of 4.95 percent works out to $2,217.60.  This is the figure the employer will now have to match for each employee previously exempt from contributing. 

If an owner-managed business has 10 employees in this age range, the cash flow requirement amounts to an additional $44,352 per annum ($3,696 per month), a figure large enough to have a significant impact on the employer’s bottom line.  

Self-employed Individuals Will Contribute Twice

Self-employed individuals in the 60-65 age bracket who opted for early CPP benefits will take the same hit as their employed peers. Given the $48,300 maximum eligible earnings level, individuals filing as self-employed will be required to pay $4,435.20 per year which represents the individual’s share plus the “equivalent of an employer’s share”.  In other words, the self-employed person will in effect contribute for himself as an employee and match himself as an employer. To offset the overall cost to the self-employed, the rules allow for a tax credit on the “equivalent to employer’s share” of $2,217.60. This amounts to 15% of the $2,217.60 or $332.64 and reduces the cost of CPP to $4,102.56. 

Naturally, self-employed individuals who hire employees will be subject to the same deduction requirements as incorporated owner-managed businesses.

Employees Over 65 May Defer Benefits

Employees between 65 and 70 may elect not to apply for CPP benefits.  Employers are nevertheless required to deduct and match the contribution until the end of the month,  before the month the pension becomes payable or the month in which the employee turns 70. To be clear, employers must remit for employees aged 60 to 65. It is the employee’s choice to opt out of paying between ages 66 and 70. 

Minimizing the Impact of CPP

It is extremely important for owner-managers and self-employed individuals to be aware of these changes and be compliant. It is also very important to make sure employees understand how the changes affect them. 

For small business owners or owner-managers to meet the needs of both the government and your employees, you should review:

• human resources date-of-birth records to ensure employee data is up to date
• payroll records to find all employees between 60 and 65 and modify CPP deductions accordingly
• payroll records to find those employees between 65 and 70 who have already applied for CPP and ensure their files contain a copy of the “award letter” mentioned above
• cash flow requirements to make sure sufficient cash flow is available to meet the additional cash output for the employee and employer share of CPP
• job costing and charge-out rates to ensure profit on contracts is not adversely affected by increased payroll costs
• all software used to calculate CPP deductions to make sure it has been reprogrammed to take into account the changes in contribution requirements under the new legislation. It may be necessary to review each individual or record to ensure the database reflects the necessary deduction.

The Time for Action is Now

On the surface the change to CPP requirements seems innocuous enough.  Upon deeper examination, however, the changes will impact the owner-manager significantly by increasing payroll costs, skewing cash flow requirements and adding to the administrative costs of human resources and payroll departments. Forward planning to identify affected employees will reduce the risks of fines and penalties and ensure employees get the full benefits of the CPP when they choose to take them.

Retiring Baby Boomers and lower fertility rates are tightening the Canadian labour market.

In 2011 the first of the Baby Boomers will be 65 years old. Who is going to replace them? Who will fill the new jobs created by the technologies of the future? The obvious implication is that a widening gap will open up between the supply and demand for labour over the next decade that will affect virtually all businesses. 

Census Alert

Statistics Canada found some alarming figures in its 2006 census that should make every employer sit up and take notice:

• The 65-and-over population made up a record 13.7% of the total population of Canada in 2006. The proportion of the under-15 population fell to 17.7%, the lowest level ever.
• The number of people aged 55 to 64, many of whom are workers approaching retirement, has never been so high in Canada, at close to 3.7 million in 2006.
• The number of workers 55 years of age and over rose to 15.3% in 2006 from 11.7% in 2001.
• The number of Canadian workers over 40 is equal to the number of workers under 40 for the first time in Canada’s history.

Add to this the fact that fertility rates are declining and the number of retiring workers is increasing relative to the number of replacement workers. In its 2010 annual compensation survey, the Conference Board of Canada found that 54% of its respondents were already having trouble attracting and retaining talent, even in an economy coming out of a recession. This percentage will grow as labour market conditions tighten and more Boomers retire.

The census for 2011 is in its final stages of completion with results to be published in early 2012. Undoubtedly it will establish that Canada has a population with more people at the age where they can leave the labour force than people at the age where they can begin working.

Consider the Petroleum Industry

One need only look at the oil and gas industry to see the measurable effects of these problems. The Petroleum Human Resources Council of Canada recently published a report estimating that more than 30% of the petroleum industry’s current workforce will be retiring within the next decade. That’s 39,000 jobs, if one assumes low oil prices. If energy prices continue to rise, the industry will face a severe labour shortage as the demand for labour increases and the pool of workers shrinks.

The shortage of labour could hit as early as 2012. If industry activity increases because of high energy prices, demand for labour could reach 130,000 workers over the next 10 years. Some of this demand has already been built in as oil sands companies construct new plants scheduled to come on line in the next few years. Employers are already announcing shortages of engineers, maintenance workers, production accountants, environmental specialists, and several other occupations.

Look to the Future

This sobering example should encourage owner/managers in other industries to do some forward thinking about where they want to be five years from now and what their labour demands are likely to be. Things to consider should include:

• Size of current and projected staff
• Age distribution of workers
• Median and average ages
• Workers likely to retire in the next five years
• Age and skills of workers in key jobs
• Succession plans for most important jobs
• Growth plan for the company over the next five years
• Skills needed to carry out the plan
• Availability of labour for all present and anticipated jobs
• Owner/manager’s own retirement and succession plans
• Presence of any employees who might eventually want to buy the business.

In addition to these factors, owner/managers must recognize that retirements and hiring are going to put additional pressures on their businesses. If the local labour market cannot supply the labour needed in the next five years, perhaps the work may have to go where the  labour is available, i.e., outside of Canada. In other words, it might be necessary to rethink important parts of your business practices.

A tighter labour market will put upward pressure on real wages. Can you afford to compete for increasingly expensive talent in this market?  Since a tight labour market is a sellers’ market for those with the right education, skills and experience, how will you be able to retain good workers? How will you pay for the training of younger workers and for the health benefits of the older ones?

The New World of Labour

The Boomers are leaving for retirement, technology is changing, globalization is becoming more important for all businesses, new visions of the future are emerging, competition is increasing, and good workers are becoming harder to find and want more money. Making all this work for your business is going to require some hard thinking. This is the new world of labour. As an owner/manager are you ready for it?