Retail therapy

How to be a savvy online shopper.

If you’ve purchased something on the Internet recently, you’re in good company. Last year, 26.8 million Canadians bought goods or services online.[1] Nowadays, you can buy almost anything online, from groceries and electronics to clothing and home furnishings – it’s no wonder that roughly one-third of respondents to a 2019 survey indicated that they planned to spend more money online in the coming year.[2]

Why shop online?

Some people appreciate the convenience of online shopping, some like the wider choice and, for others, the lure of a good deal is what brings them to the internet.

Always open

Many of us don’t have time during business hours to go shopping. For the busy professional, the shift worker or the parent of young children, the only spare time to shop may be at night or in the wee hours of the morning. The internet is open 24 hours a day, seven days a week, 365 days a year. No bricks-and-mortar retail outlet can match that.

Easy and convenient

Whether because of traffic snarls and extortionate parking prices in urban centres, or driving distances in rural areas, it can be a pain to get to the store. Online shopping avoids all that – the traffic, the crowds, the lineups and the over-eager sales-people. Even better, deliveries come right to your door. Online shopping can save you time and the hassle of going out and getting the item yourself.

More choice

Unlike traditional retail stores, with online shopping, the world is your oyster. Your options are no longer limited to your local area, and you can access goods from almost anywhere in the world.

Cost savings

If a retailer can manage with fewer bricks-and-mortar stores, it saves money. So, to provide shoppers an incentive to make purchases online, retailers often make discounts and special offers available. Shoppers can also subscribe to a retailer’s emails so they never miss a deal.

Product comparison and reviews

Many Canadians do online product research to figure out what they want to purchase and where they’ll get the best deal. You can easily compare products and prices from a variety of retailers online. Consumer reviews are another benefit, letting you read what people are saying about a product or service before you buy.

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‘Tis the (spending) season

How to keep your credit rating in good standing during the holidays.

The holidays can be a magical, yet expensive, time of year for many Canadians. In this season of giving, we are often tempted to overspend on gifts for loved ones. We attend more parties and social gatherings with friends, family and work colleagues. And with the kids on break from school, it’s also a popular time of year for travel.

Many people finance their holiday fun with credit cards. In fact, six out of 10 Canadians are willing to go into debt to purchase gifts.[1] It can be easy for holiday spending to quickly spiral out of control, and before you know it, you receive a credit card bill in January that you aren’t able to pay off right away. In a recent survey, three in 10 Canadians admitted that they struggle to pay off debt after the holidays.[2]

Using credit with care

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The financial realities of farm retirement

How much money does a Canadian farmer need to retire? According to farm finance and transition experts, it depends primarily on the intended lifestyle and a personal definition of financial security.
Getting a hard number, however, means developing a plan that aligns retirement goals with business and savings realities.
Set realistic goals
Brent VanParys is an Ontario-based accountant and business transition services expert. He says lifestyle factors like place of residence, travel goals and whether leaving assets for successors is a priority are some of the most important considerations in determining retirement needs.
Business owners, VanParys says, should go through a “comprehensive financial planning exercise” with a trusted advisor to see what their future might look like based on current realities – as well as how their lifestyle could be adapted.
“They may need to change their lifestyle or definition of financial security in order to meet all of their expectations,” VanParys says.
Colin Sabourin, an investment advisor and financial planner based in Winnipeg, says making a good plan starts with totalling expenses to see how much is needed each month. From there, look at the time frame, how much has been saved and how much can still be made.
When expectations and financial realities don’t line up, farmers can either retire later, save more money or find a new source of income such as taking more investment portfolio risk.
“They only have three options. You can’t keep all three… If they don’t want to do any of them, they have to be comfortable with not reaching their goal,” Sabourin says.
A comprehensive look at expenses and savings

3 key questions to ask when starting a business partnership

Going into business with someone? Here’s what you’ll want to keep in mind as you secure your finances.

For an entrepreneur, finding the right business partner can be very gratifying — revolutionary, even.

You gain a teammate to bounce ideas off of as you grow. Plus, your business can benefit from the unique strengths and talents you each bring to the table.

That said, mixing your interests and resources with another person could be challenging. That’s why it’s important to secure your business together and ensure you’re both protected and prepared for the unexpected.

As you establish your partnership, it may help to ask the following questions. The answers you come across can help you start your partnership on a strong foundation of mutual benefit, trust, and respect.

What happens if your business partner is unable to work?

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What happens to an RESP if your child doesn’t go to school?

RESPs are a great way to save for your child’s education. But what if they choose not to go? Don’t worry, there are plenty of options.

When 20-year-old Ariel Hartman was in high school, she didn’t worry about how she would pay for her post-secondary education. Hartman’s parents had set up a Registered Education Savings Plan (RESP) to make sure there would be money to help pay her tuition.

Hartman’s RESP was a joint family effort. Her parents put in what they could and relatives contributed as birthday gifts.

They did the same thing for her brother; however his RESP is unlikely to go toward post-secondary education.

“My brother just graduated from high school last May and he doesn’t want to go back to school. He’s not a university or college guy,” says Hartman. She’s hoping her parents may transfer the funds to support her grad school tuition.

What happens if you don’t use an RESP?

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4 surprising myths about life insurance

Finding the right life insurance plan doesn’t have to feel confusing. Don’t let these myths stop you from getting the coverage you need.

Buying life insurance that’s tailored to your needs can be an invaluable source of financial protection. Especially when it comes to protecting your loved ones during a challenging time. But how do you make sense of your life insurance needs when there are so many myths?

Luckily, you can gain more confidence in your decisions by arming yourself with the right knowledge. Here’s the truth behind some of the most common life insurance misunderstandings. By debunking these myths, you’ll have a better understanding of how to get the most out of life insurance.

Myth 1: Your employer’s life insurance coverage is enough

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4 money questions to ask yourself

Want a better understanding of your financial assets and how to protect them? Start by asking yourself these questions.

A home. A family. A business. Chances are, there’s something – or several things – in your life that you want to protect financially. But how can you make it happen? To start, it helps to recognize the financial value you contribute to all the important parts of your life. Asking yourself these money questions can help you understand your worth. And what you can do to protect yourself from setbacks.

1. What are your greatest financial assets?

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Take the emotion out of investing

A common mistake is to make decisions based on emotions. In good times, investors are excited, they want to invest more and often “buy high.” When markets turn negative, investors become fearful and decide to cut their losses and “sell low.”

The investing emotional roller coaster shows what an investor may experience as their investment rises and falls. The key is to stay disciplined and committed to your long-term investment plan to avoid riding the emotional roller coaster. There are ways to manage emotions when you encounter uncertainty in the markets. Speak to your advisor – he or she can help provide the knowledge you need to help you stay focused on your long-term goals.

 

Source: https://www2.manulifeinvestments.ca/rs/819-OWT-537/images/take-the-emotion-out-of-investing-en.pdf

© 2019 Manulife. The persons and situations depicted are fictional and their resemblance to anyone living or dead is purely coincidental. This media is for information purposes only and is not intended to provide specific financial, tax, legal, accounting or other advice and should not be relied upon in that regard. Many of the issues discussed will vary by province. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. E & O E. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value. 

 

 

Partnership, sole proprietorship or corporation?

Understanding the basic business ownership structures in Canada.

If you’re a small business owner or are thinking about starting your own business, you’re in good company. Small businesses account for 97.9 per cent of all businesses with employees in Canada and are also the largest private sector employer, providing jobs for almost 70 per cent of the private sector labour force.[1]

While the sky’s the limit for what kind of business you own, there are just three main ownership structures for your business: sole proprietorship, partnership or corporation. Even if you already own a business, the structure that worked for you at the start may not be the one you need now. Understanding what structure is right for your business can help determine a number of things – such as who is responsible for taxes, business decisions and legal matters. Here is a brief overview of each structure to help you get started.

Sole proprietorship

Most small businesses in Canada are sole proprietorships, owned and controlled by one person who has all the legal rights and responsibilities associated with their business. You make all the decisions and reap all the profits, but you also bear all the responsibility if something goes wrong. A sole proprietorship is not considered a separate legal entity from the owner, so if your business incurs debts, claims can be made against your personal income and assets to pay them.

This structure is best suited to a small or a start-up business. Registration is quick and easy and start-up costs are low. From a tax perspective, owners are able to deduct business expenses from their income, which reduces the amount of tax payable. If your business isn’t doing well, you can deduct losses directly from your income. However, if your business becomes profitable, it could put you in a higher tax bracket, significantly increasing your tax burden. In that case, it might be time to shift to a corporation.

Partnership

A partnership is established when two or more people pool their financial, managerial or technical resources to operate a business. Each partner has a share in the management of the business, its assets and profits (or losses) – according to the partnership agreement in place. There is no legal separation between the business and the partners, so business debt claims can be made against the personal assets of each partner. Because partners are held responsible for business decisions made by the other partner(s), it is highly recommended that you put a partnership agreement in place that outlines the authority and responsibility of each partner, as well as how the income will be allocated.

A partnership is best suited to a small or a start-up business and it’s fairly easy and inexpensive to form one. Income from a partnership is allocated to the partners and taxed as personal income on each partner’s own tax return. As with a sole proprietorship, if the business has losses, the losses flow through to the partners and offset other income on their personal tax returns, lowering their taxable income.

Corporation

Unlike the other two structures, a corporation is a separate legal entity, independent from the business owner(s), and required to file its own tax return. Any number of people can form a corporation, an entity that can buy, own and sell property – and also become involved in legal action. The big difference with a corporate structure is the liability, because the corporate entity bears the legal liability rather than the owner(s). Setting up a corporation is usually complex and more costly than a partnership or sole proprietorship.

When a corporation earns income, it pays tax at the corporate level, often at a significantly lower rate than that of individuals. However, when a shareholder draws income out of the corporation, it is taxed at the personal level. Business owners can use the corporation to defer taxes, take advantage of income splitting and capital gains exemptions, and plan for retirement by limiting the amount of salary they draw.

Finding the right business fit

Every business is different, so speak to your advisor today to better understand all the financial, tax and legal implications of each business structure. Your advisor can refer you to a team of specialists that can help structure your business in the way that makes the most sense.

BUSINESS STRUCTURES AT A GLANCE

Sole proprietor

Ownership: One person

Setup and registration:

  • Quick and easy registration
  • Low-cost setup
  • Minimal working capital required

Legal status and liability:

  • Business not a separate entity from owner
  • Owner personally liable for any debts

Tax treatment:

  • Taxed as personal income
  • Business expenses and losses can be written off from personal income

Capital considerations: Difficult to raise capital for expansion, etc.

Death of owner: End of company

Partnership

Ownership: Two or more people

Setup and registration:

  • Low-cost setup, shared between partners
  • Quick and easy registration
  • Legal partnership agreement recommended

Legal status and liability:

  • Business not a separate entity from owners/partners
  • Partners personally liable for any debts

Tax treatment:

  • Taxed at each partner’s personal income level
  • Business expenses and losses can be written off from personal income

Capital considerations: Difficult to raise capital for expansion, etc.

Death of owner: End of company, unless provision has been made in the partnership agreement.

Corporation

Ownership: Any number of people

Setup and registration:

  • Legal registration comes with costs and complexity
  • Annual fees for accounting/legal
  • More oversight, with compliance and annual filing requirements

Legal status and liability:

  • Business is a separate legal entity
  • Owners have very limited liability for corporate debts

Tax treatment:

  • Business files its own tax return
  • Taxed at the corporate rate
  • Can be used to defer taxes or for income splitting

Capital considerations: Much easier to raise capital

Death of owner: Continuous existence; ownership is transferrable.

© 2019 Manulife. The persons and situations depicted are fictional and their resemblance to anyone living or dead is purely coincidental. This media is for information purposes only and is not intended to provide specific financial, tax, legal, accounting or other advice and should not be relied upon in that regard. Many of the issues discussed will vary by province. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. E & O E. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value.

[1] 1 www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html

The family dollar juggling act

FOR PARENTS, DAILY LIFE CAN SEEM LIKE A JUGGLING ACT.  Adults in the family have a schedule, priorities and commitments.  Kids have a schedule, priorities and commitments.  Sometimes they match up.  Often they don’t.  As a result, many families become experts at keeping multiple balls in the air.

Fortunately, when it comes to financial planning, there are ways to reduce stress by introducing flexibility and improving balance within the family circus.  Families don’t have to give up the present for the future – or the other way around.  Instead, they can balance their short-term, mid-term and long-term needs, assigning some money each month to a variety of financial goals.  The truth is, many decisions don’t have to be “one or the other” – and that gives families flexibility to plan, save and spend in a way that works best for them.

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