Offline Earnings during the last Decade

I have been working out of my home since March 2003, doing both ‘online’ and ‘offline’ work. Basically … whatever works – is my work. Everything I do to earn income is my HBS Management Consultants (HBSMC) business as I am the Proprietor and consider everything to be a division or a subset of this business. Honestly, I don’t really care what I do .. as long as I earn money. If certain aspects of my business needs concentrating on and is producing at the expense of another aspect of my business, I tend to go where the money is, because I believe in the bottom line being my end result.

These figures that follow do not include my “online” earnings – just those earnings that represent the “accounting, bookkeeping, income tax preparation, systems and consulting” portion of my “offline” earnings. I am stating them as a percentage to further dilute the possibility of figuring out what my earnings truly are. I will say that for the physical dollars involved, I still consider myself to be a non-profit organization, if anybody asks If people I know ask … I would suggest that I spend 75% of my time doing offline work and the other 75% doing online work! That’s right – I don’t sleep much~

* YEAR ENDS – this includes all work related to financial statement preparation, T2 Corporation preparation and filing, T3/T4/T5 and other election preparation and filing, as well as valuations, and sub-contracting related to preparation of year ends by other accountants. This also include personal income tax preparation of the owners or shareholders of the businesses that year ends were performed, as well as financial remuneration calculations and financial planning.

* MONTHLIES – this includes monthly accounting, GST and PST and Payroll Deduction calculations, consulting and systems analysis and training, and other ongoing matters. Most monthly accounting turns into year end accounting, but I keep and bill the year end work separately as year end work.

* INCOME TAXES – this represents personal tax clients that I only prepare income tax returns on an annual basis, although may include subsequent reviews, planning and going over assessment notices or filing T1-Adj amendments.

Without scientific proof or accounting reconciliation, I feel that the income tax portion of my business represents more than 75% of my offline software and office expenses during the year, and about 65% of my time keeping up with research, meetings, and my own professional development (if any) as I do work on my own and I have to keep current and updated.

The year end work is by far the most lucrative because it takes more time to prepare and there are usually no stops and starts. Working 15 hours on one corporate client can be done in 2 days where, 15 hours of personal income tax work takes much longer … printing, assembling, meeting clients, filing time, and going over subsequent assessments and reviews. You can’t meet everybody ‘on their way home from work’ when it’s convenient for them.

The monthly accounting work is by far the most regular, because it is recurring work. Often, it also helps with the cash flow budgeting expenses. The only problem is that most monthly clients need to be done by the end of the month, and the clients don’t get all the stuff until the middle or latter part of the month – yet have it all ready for me. Usually the last week of every month is almost worst than tax season time-wise. A few monthly clients prefer to supply me the information quarterly, although I do 3 monthlies each time. This always adds to the stress and time management when GST is due at the end of the month and I receive 3 months on the 28th or something like that.

Offline Earnings Estimate for the next Decade

I don’t think it’s fair to drop my personal income tax clients – THIS YEAR. I should have prepared them last year, but I was distracted when my father got ill, who passed away December 25, 2010. My goal this year is to inform my personal tax clients of my decision to maintain and focus on my corporate clients in the future, as I have to start thinking of my own bottom line. This is a very hard decision for me to make, because I can say that for the most part, my personal tax clients have been more loyal and always there for me over the years and personal relationships have grown over the longest of time that I have dealt with my clients since 2003 and many many years for some who were also clients of my father while he was practicing Chartered Accountant.

I think 50/50 mix between the monthly and corporate work is a good mix. I know I could increase my rates and earn more if I lean towards the year end work, but have less stress and probably maintain the current rates with the monthly and bookkeeping work. Normally I do all the year end work for my monthly clients. There is a possibility of me doing month end work, and letting other accountants or Chartered Accountants get involved and do the year end work. I have lot to think of in 2011.

Answer: Start All Over.

If you came here looking for a way to fix your broken cell phone .. you probably should continue your search elsewhere. I have no answers for you to save your broken cell phone

Here’s my story – but, please wait before you call me an idiot:

I just upgraded my cell phone and signed a new 3-year contract August 21, 2009 and had a pretty nice Blackberry 8230 Flip Phone.

On November 1, 2009 .. I accidentally left this beautiful phone in my pants pocket and it went through the entire wash load and full hot dryer cycle. We heard some noises during the dryer cycle, but never put two plus two together. When the cycle was complete, the phone was loose out of my pocket, the battery was out, the back was off, the SIM chip popped out, and the glass on the inside of the phone was smokey. It would have been too late anyway.

That Cell Phone Was Toast!

I’m not going to brag about how many different ways I tried to save this phone – but bottom line is that it is just a paper weight now – toast – fried – useless!

It did not look good.

So what are my options?

Because I just signed up 2 months ago with a 36 month lease, I had 34 months left to go. This Blackberry 8230 phone cost me $49.99 with a 3-year plan, and the cheapest you can buy it was $349.99 with a 1-year plan. Without a plan – they would sell me a phone for $699.99.

MTS has an option to buy out your contract, whatever it is, to $30/month up to a maximum of $400. This seemed like the best thing to do – So I did.

Crunching The Numbers

Currently, with my current plan, I basically have a data plan ($90/month) and buddy plan for my wife ($33/month) and with taxes it costs me about $137/month.

Over the next 34 months – I would have to pay $137×34 = $4,658.00 .. plus a new phone costing $699.99 plus taxes $783.98 for a total of $5,441.98

I opted to go with the same phone that my wife has ..

FEATURES:

* Full QWERTY Keyboard
* 1.3 megapixel camera and video recorder
* Integrated music player
* Bluetooth® profiles: HF, HS, FTP, DUN, OPP and BPP
* Mobile Web
* Downloadable ringers and screensavers
* MicroSD expandable memory (up to 4GB)
* Speakerphone

* To buy out the old contract, I opted to pay the max $400.00 plus taxes $448.00 .. this would be added to my next month’s bill
* For a brand new 36-month contract, I had to buy this phone for $29.99 plus taxes or $33.58 .. this was to be paid up front cash
* To buy another phone, gave me a $40.00 plus taxes = ($44.80) credit on my bill applied to the buyout fee
* While I was paying cash, I purchased a 2GB sim Memory card to store pictures and mp3′s .. I did not want to risk putting the 1GB card from the blackberry into the phone after it’s been through the wash and dryer – $19.99 plus taxes = $22.38
* Subsequently – I was at the Shopping Centre and purchased a really nice hard shell cover to protect it $14.99 plus taxes $16.78 similar to this one, except black and more purple and green strokes on it

* Because the LG Rumour doesn’t need a data plan, and I figured I can live without that as well, I am saving $25/month plus taxes.
* There was a sale on at the time I renewed this, (damn you phone company!) and the exact same plan cost me $5/month cheaper than what it did 2 months ago.
* My plan was the mega plan and has unlimited text, and opted to increase my wife’s buddy plan to unlimited outgoing text messages, besides unlimited incoming which, costs another $3/month plus taxes.

Summary

My Plan = now costs me $90-25-5 = $60/month plus taxes
My wife’s plan = now costs $33+3 = $36/month plus taxes

>> total $107.52 month

On a comparison level, for 34 months .. (with taxes)

* buyout $448.40
* new phone $33.58
* credit on purchase ($48.40)
* Accessories $39.18
* new monthly cost $107.52 x 34 – $3,655.68

>> The total cost of this buyout and new cell phone plan will be $4,128.44 over 34 months

Conclusion

I’m actually saving $5,441.98 less $4,128.44 = $1,313.54 (or $38.14/month) by placing my new Blackberry 8230 Flip Phone in the Washer and Dryer, and buying a new phone!

With logic like that .. now, how can you still call me an idiot for doing that?

Be at last .. The Tale of the Giant Stone Eater ..

Hear this the tale of the giant stone eater
Gather round boys and girls and listen
To the tale of the giant stone eater
and how the earth was ravaged
during the years of the great stone shortage…

– The Sensational Alex Harvey Band

(this post isn’t about stone shortages, it’s about my cell phone service .. feel free to get a cup of coffee, or brew some tea… take your shoes off and rest awhile!)

Background – Summary Recap

On November 10, 2008, I renegotiated all my telephone and communication needs, and gave up my home “lan” line, transferred the number to my cell phone, and have been using this ever since. At the time, last November, the mobility company wouldn’t renegotiate my contract, and suggested that I just come back in six months or so – after May 2009 – as, my existing contract never expired until November 2009!

If you recall from my November post, the “negotiated” monthly cost for the two cell phones I have under the buddy plan (one for myself and one for my wife), was to be about $50 in total. Truth be told, November and December 2008 and even January 2009 came in about that price – plus $8.95 activation fees and taxes and really cost about $66.00 per month.

Then .. February 2009 came along – “T4 Season”.

Halfway through the “T4″ season which, is in February each year for me , I am doing a lot of client wage slip preparation and filing to Canada Revenue Agency. I am in contact with many clients, and Canada Revenue Agency and I contacted my cell phone company to inquire what my current plan was, and how many minutes I had used on my plan for the first 15 days of February … I had used 292 minutes of a 300 minute plan on the February 10th cut-off *whew*. I knew I had to do something, because there was still the remainder of February .. then comes “Tax Season” which, can basically be anywhere from March 1st to June 15th for me.

I did a minor ‘minute-adjustment’ on my combined cell phone plan on February 15th, and upgraded the plan to 700 minutes per month, for something like $80.00 per month. You see, if you have ever tried to contact Canada Revenue Agency (1-800-959-8281) you can be left on hold for a long while! Without a home LAN line anymore, everytime I would call (during the day that is) is billable time. I was allowed to talk to other people who also had cell phone service from the same service as I did (MTS Mobility Inc) for free.

Yet – in March I used about 400 minutes; in April I used about 800 minutes; in May I used about 700 minutes; and June I used about 500 minutes. For July and August, it seems that I’ve been averaging less than 300 minutes per month. My Cell Phone bills have been averaging around $130.00 with taxes.

And Then It Started

In April 2009, during the middle of my tax season .. being the super busy accountant and income tax preparer that I am .. one of my super duper techniques in keeping my two Papillons engaged while I was working .. was giving them these rawhide “chip bones”. Well, our little Sophie would always prevail and since what’s hers is hers, and what’s his is hers, and what’s ours is hers …. poor Maxxie never really had any “chip bones!”.

Well, one morning, after working most of the night, I went to sleep and placed my Samsung phone on my night table. I keep the ringer on maximum levels, in case I forget and leave my cell phone in my jacket pocket, and also have it on vibrate mode, in case I’m out and about as I keep the cell phone in my left pants pocket. I must have had many phone messages that morning, because my cell phone vibrated off the night table, and on the floor .. and now Maxxie had his own personal “Chip Bone”!

UGH // he chewed the whole cell phone, chipped the glass edges with his teeth, chewed off the back and bent it all up, almost chewed through the battery itself .. and there are permanent bite marks on my #3 #6 and #9 keypad!!

“Just two more months” … I kept saying. I couldn’t wait to upgrade! But, I didn’t upgrade. Instead, I bent the back and forced the battery into the phone, and vacuumed all of the glass bits out of its edges – and, the phone worked fine once again. When summer came – (oh wait, we had crappy weather here and never actually HAD summer here in Manitoba) – time passed quickly and I did nothing.

DISASTER: Saturday August 15, 2009

It’s been pouring rain for days now, and we went to visit my father-in-law in the nursing home. I ended up being parked about 1/4 mile away and pretty much did the 100 meter dash and still got soaked. It was a pleasant visit, but when I was leaving, I went to my pocket to check my messages .. and .. my cell phone was not in my pocket anymore.

Fortunately for me, someone turned in my phone – they were walking briskly behind me, while I was dashing inside, and noticed my cell phone fall out of my pocket and into the ditch filled with water. They bravely scooped it up and left it at the front reception desk.

But, the phone didn’t fare too well .. with the bent up back and broken glass pieces, that is. It took a day before I knew if it would work at all .. and, then the display had this warpie “lucy in the sky with diamonds” type of psychodelic look to it. The ringer did not work, although vibrate did. The back And, if I phoned out and talked to somebody, it was a waterlogged and intermittent sound. As far as I was concerned .. I had no cell phone.

It’s Time To Upgrade!

Oh Boy .. Sunday night and I’m excited … and my wife is even excited. It would seem that she is as bored of her phone as I was .. and it’s about time to renegotiate, being August and all. But, what do you get? What do I need? What do I want?

I called Customer Loyalty first thing Monday Morning and started the negotiation request and research plans and phones. I had a few things on my plate that I needed to flush out first, but if I did my homework, I could go out on Tuesday and pick up a couple of phones.

But, that wouldn’t work. Picking out the phones is half the fun! My wife wanted in. And, we’re going Thursday. So, I agreed to that and we did renegotiate and upgraded our cell phone service last night.

Meet My Wife’s New Phone – LG RUMOUR

FEATURES:

* Full QWERTY Keyboard
* 1.3 megapixel camera and video recorder
* Integrated music player
* Bluetooth® profiles: HF, HS, FTP, DUN, OPP and BPP
* Mobile Web
* Downloadable ringers and screensavers
* MicroSD expandable memory (up to 4GB)
* Speakerphone

Meet HART’s New Phone – BLACKBERRY PEARL 8230 FLIP

FEATURES:

* SureType® QWERTY keyboard
* Supports multiple email accounts
* Instant, text, picture and PIN-to-PIN messaging capabilities
* 2.0 Megapixel Camera with flash and digital zoom
* Video Recorder
* High resolution 240 x 320 pixel colour internal display and 128 x 160 pixel colour external display
* HTML web browsing
* Tethered data capabilities
* Media player
* 3.5mm stereo headset capable
* Bluetooth® 2.0 including the following profiles – Mono/Stereo Headset, Handsfree, Serial Port Profile and Stereo Headset (A2DP)
* Supports microSD™ expandable memory (1GB memory card pre-inserted)
* Includes Desktop Software that allows user to synchronize calendar, address book, tasks and memos between smartphone and desktop
* Password protection, keyboard lock and sleep mode

What This Cost Me Today

COST OF PHONES
- We signed up for 36 month contract, until August 2012 ..
- The LG Rumor phone cost $29.99
- The Blackberry 8230 Pearl Flip cost $49.99

CREDITS ON RENEGOTIATION
- I received a $35 credit renewal fee
- I received a $40 credit for hardware upgrade

ACCESSORIES PURCHASED WITH PHONES
- I upgraded the LG Rumour with a microSD™ expandable 2GB memory card
- I bought a special plastic to protect the glass on the Blackberry Flip Pearl 8230

KEEP IN MIND
- I use my phone all the time for my offline business, and casual usage
- My wife just uses her phone for casual usage, including text messaging

MY PLAN
- $34.95 All access business plan – anybody in Manitoba (home/lan line, cell phone line) with MTS is for free, 300 minutes (I think I’ll be okay with this)
- $25.00 surf and turf/text plan – unlimited browsing, 100 free outgoing text messages
- yada yada yada activation fees, same value plus features for call display, voice mail, etc
>> Probably will cost me about $90 or so with taxes each month on my plan. I do have the option to upgrade $25 for 250 more minutes next tax season otherwise it’s $0.50 for overage minutes, but I think that now that my plan includes calls from people with HOME PHONES that are MTS too, I won’t need that.

BUDDY PLAN
- $9.95 buddy plan
- $10.00 text messaging, 100 outgoing unlimited incoming
- yada yada activation fee and value plus features
>> Probably will cost me about $33 or so with taxes each month.

AM I BETTER OFF?

1) My wife is happy with her new cell phone tremendously!

2) I am happy with my new cell phone!

3) I am paying about $120-$130 now anyway for our phones – and, that didn’t have data internet browsing on my phone – I think I will use the browser alot! Well, maybe not a lot – but, when I use it … it will be for a reason. Also, I can manage my contacts via my own USB port and can upload mp3s or pictures for screensavers etc on the 1GB microSD flash card.

In conclusion, I don’t think I’m really saving anything at all .. and now we’re locked into another contract for 3 years .. but, I think this is all we need for our telecommunication needs .. (and we have new phones to boot!)

I should note, that we were very grateful that the cell phone rep was able to magically transfer all of our contacts on our old Samsung phones to our LG Rumour and Blackberry Pearl Flip phones respectively .. I have about 275 contacts with multiple phone numbers alone .. *whew* .. He certainly never offered this service, but it just goes to show that it always pays to ask!

Generally, when I prepare year end financial statements for my clients, I perform either of these 3 tasks:

1) I prepare everything and write up the books at the time of preparation of the company’s year end financial statements
2) I do the monthly accounting throughout the year, and then do the year end financial statements before continuing with a new fiscal year
3) The client has internal or part-time bookkeepers who do the monthly accounting and then I just perform the year end from information supplied to me.

One of these part-time bookkeepers on task 3) just couldn’t understand the concept of reconciling a bank and that brings back memories for me, because I used to work with people who had the exact same attitude, and always created problems with their short-cuts.

Here are a couple of posts I did back in 2006 regarding this topic if you want a refresher course:

* Reconciling both your BANK and CASH accounts – Part I
* Reconciling both your BANK and CASH accounts – Part II

IMAGINE THE FOLLOWING FACTS

* June 30, 2009 you receive your bank statement and it shows $1,680.00 ending balance

* June 30, 2009 you cheque book balance claims you should have $1,800.00 ending balance

THIS IS NOT RECONCILING YOUR BANK

* Adjust your cheque book balance to $1,680.00 to “reconcile” and agree to the bank balance

* Complaining to your bank manager that the bank balance should be $1,800.00 and to please put back $120.00 bank error immediately.

WHAT IS RECONCILING THEN?

Reconciling your bank is when you take each balance you want to “reconcile” to .. and come to the same and usually different balance. It is rarely one balance or the other balance and often in between the balances.

In this case, the “reconciled” bank balance is the final general ledger balance of “Bank” that we would want to see on our monthly statements or year end financial statements.

If you were to make a flow chart – it would look like this:

BANK BALANCE (bank statement)
\/
\/
RECONCILED BALANCE (financial statements – adjusted balance)
/\
/\
OUR BALANCE (cheque book register – unadjusted balance)

EXAMPLE – RECONCILIATION OF THIS BANK

(I)

Our Cheque Book Balance: $1,800.00

LESS: June Service Charges: ($20.00)

EQUALS: Adjusted Cheque Book Balance: $1,780.00

(II)

Bank Statement Balance: $1,680.00

LESS: Outstanding Cheque – not yet cleared
Property Tax payment June 30th ($500.00)

ADD: Oustanding Deposit – cleared in July
Instant Teller Deposit after hours + $600.00

EQUALS: Adjusted Bank Statement Balance: $1,780.00

Important Observations

* Both the adjusted bank statement balance and adjusted cheque book balance agree (this is the “reconciled balance”)
* You do not adjust your cheque book balance to the bank statement balance (you only adjust for items that you do not have recorded already)
* You do not claim your bank statement balance is in error and complain to your bank manager to put money back (otherwise you will look like a fool)

AND THAT’S HOW YOU RECONCILE YOUR BANK!

The only journal entry that the bookkeeper would make in this situation, is

DR: Bank Charges – $20.00
CR: Bank – ($20.00)

AND NOT:

DR: Cash Shortages – $120.00
CR: Bank – ($120.00)

OR WORSE YET:

(no journal entry – but instead a letter is written and delivered to the attention of the Bank Manager to inform them of theft by their tellers or computer)

And, the final G/L Balance at the June 30, 2009 would be: $1,780.00 – a balance inbetween the unadjusted cheque book balance and the ending bank statement balance

Grrr …

I hope that makes sense .. it’s one of the little things that irks me in my ‘dayjob’ ..

A lot of my clients ask me all the time if they can destroy their financial records e.g. from 2002 now – since it’s six years ago – and I thought I would post my views what CRA means by the following news release.

The following is now available on the CRA Web site:

Did you know…

That as a general rule, you must keep records and supporting documents, which are required to determine your tax obligations and entitlements, for a minimum of six years?

Whether you have electronic or paper records, you may destroy your records earlier than your required retention period if you receive written permission from the Canada Revenue Agency (CRA). To get permission, you or an authorized representative must apply in writing to your tax services office and provide the reason for your request. Business owners (including partners, directors, and officers) who have registered for My Business Account can check their list of authorized representatives online at http://www.cra.gc.ca/mybusinessaccount.

If you are uncertain of your required retention period or wish to determine whether you must obtain written permission from the CRA before destroying your records, visit http://www.cra.gc.ca/records

SOURCE: CRA Newsroom

In general terms, Canada Revenue Agency will probably only review you for the last 3 years. If they find something worth investigating, they can go back another 3 years (hence the 6 year guideline). But, this term starts at the end of your last assessed income tax return. So, for instance – if you are just filing your 2008 income tax return and it has not been assessed yet, they can still review your 2007, 2006, and 2005 returns. And, if they find something in 2005 income tax return, can also request to review 2004, 2003, and 2002.

However – there are two things that you should note:

1) This rule doesn’t apply to fraud or income tax evasion – if they have good reason to believe this, CRA can go back indefinitely.

2) The years in review are subject to review 100%. For instance, if you have a rental property in 2002 being reviewed for repairs and maintenance costs, CRA can request to review all information about this rental property since you purchased the property.

This is quite true for any business, or person with a business or rental property or any self-employed income (IN MY HUMBLE OPINION) …. If you have assets – start a permanent file and KEEP everything – until you no longer have a business or are self-employed – or sell that asset … that is, for six years after you sell that asset actually!

Electronic Data and E-Commerce

With the internet and business online becoming more popular .. “keeping records” also means keeping records of your computer data that may not normally be kept, as if you created that data. This is and will continue to be one of the hardest challenges, with the new technology and new computers always being updated. Note the final paragraph of this CRA tax tip:

Backing up records

You should make back up copies of all your business information that has been recorded on rewritable media, such as computer hard disks, floppy disks, CDs, DVDs, tapes, and cartridges. This will ensure that you do not accidentally lose, delete, or erase this information.

You should store the media containing the recorded information in an environment free from hazards that could affect the media. These hazards include magnetic fields, direct light, excessive moisture, and temperature extremes.

When you keep back-up records in a different medium, you should follow the media manufacturer’s suggested procedure. You should give particular attention to the suggested shelf life of the medium.

If you contract with an outside party for the retention of your electronic records, you are responsible for ensuring that they are made available upon request.

Requirements for backing up electronic files

When you keep backups of your electronic files, you have to ensure that the backed-up files can be restored in a format that we can access and use.

SOURCE: CRA Business Topic News
READ MORE: Here

Keep your records to support your income tax and benefit return

Another news release is now available on the CRA Web site:

News Release

Ottawa, Ontario, April 8, 2009 … Canadians who plan to file their income tax and benefit returns electronically, or who do not file information slips and receipts with their paper-filed return, should keep their tax records on hand in case they are contacted by the Canada Revenue Agency (CRA).

After returns are filed, the CRA begins work to verify the income reported, as well as the credits and deductions claimed. These reviews are an important way that the CRA makes sure that Canadians are paying their taxes. For the 2007 tax year, about 2.8 million individual returns were reviewed and an extra $889 million in tax was assessed by the CRA.

Some of the first reviews of deductions and credits are done when returns are filed, and before taxpayers receive their notice of assessment. However, most reviews take place later in the year, as the CRA works to verify the information on an individual’s return and compare it with the information provided by other parties, such as an employer, a spouse, or a common-law partner.

During this review process, the CRA may contact taxpayers to ask for more information on income sources or dependants, and may ask for copies of receipts or information slips to support claims, related to:

* medical expenses
* charitable donations
* child care expenses
* spouse or child support payments
* moving expenses

Keeping your records on hand makes it easier to respond to these requests, and will help you explain your tax and benefit situation to the CRA if you do not agree with your reassessment.

Receiving a request for receipts or documentation does not mean you are being audited by the CRA. When an individual is selected for an audit, the CRA tells them that their tax and benefit situation is being reviewed and calls to arrange a meeting to begin the audit.

For more information about reviews of returns by the CRA, go to http://www.cra.gc.ca/reviews.

SOURCE: CRA Newsroom
I recommend that all my clients at least familiarize and read Canada Revenue Agency’s “Records” page – at least once – http://www.cra-arc.gc.ca/records/

Well .. you might be sitting in your rocking chair wondering if it’s still possible to reduce some of your income tax that you will owe for 2008 .. and then look at the calendar and realize that it’s December 31, 2008 now – and time is running out!!

EMPLOYMENT INCOME

* Deferral of My Paycheque

If I were an employee receiving a paycheck on the 15th and the end of the month, I might consider asking my employers to withhold my cheque until 2009. Amounts paid in 2008 are taxable in the year received. Of course, in the scheme of things 2009 will have one extra paycheque included in your earnings.

* Payment of Employment Related Expenses

If I were part of a union, I might pay my union dues or any other work related dues that you normally deduct on your tax return – for the following year in advance. Receipts issued are based upon payments they receive in a calendar year.

INVESTMENT INCOME

* Stock Losses etc

Unfortunately, there is nothing that can be done today to help me reduce my taxable income, as dispositions of capital property must be realized in the accounts, and I believe in 2008 December 22 was the magical date you needed to clear the transactions .. Dang you weekends of 2008!!

* Investment Expenditures

I do have investment income, and as such .. investment related expenses are deductible if paid in the calendar year. These type of expenses could be interest on investment loans, investment couseling fees, safety deposit box rentals, and yes .. your accounting fees.

RENTAL INCOME

* Minor Maintenance

If I owned properties, I might incur expenses to remove the snow, or for the performance of minor repairs and handyman work around the property.

* Major Maintenance

If I owned properties, I might decide to upgrade my electrical or plumbing and / or even purchase major appliances that may be supplied in rental properties. Unless these are replacements of existing assets (like non-working stoves etc) generally these improvements and assets are capitalized and only a portion of the capital cost allowance (depreciation for income tax) would be recorded. One half normal rates are taken, but if you were planning to purchase assets in the next few weeks anyway .. you get a bigger bang for your bucks by purchasing the asset today. You might want to note that you should not only pay for the items today, also take possession today.

BUSINESS INCOME

* Deferrals

Generally, it doesn’t matter when you receive your income .. if it is earned in 2008 you should accrue the earnings in 2008, not when received. However, the good news is that you are also able to accrue expenses used to generate that income. So, even though you don’t actually pay for expenses today – as long as you engage the service, receive the products or purchases today, or incur costs that help promote or sell products or used to collect monies from receivables .. they can be deducted.

* Last Minute Expenses

I always buy my liquor for gifts and to have around for promotion in my work-at-home space around Christmas time, so I am covered already but *cough,cough* if I didn’t do that by now, I could probably run out December 31st and get my gifts covered. Because I do a lot of personal income tax returns and such, last week I stopped over at my local Office Depot and loaded me up on copy paper, Post-It notes and staples etc, even though I probably won’t need to use them until mid-January or so.

* Asset Acquisitions

Pretty much same reasoning with both the above deferral paragraph – and the rental major maintenance paragraph above. If you are purchasing a vehicle, that may be financed (and not paid today) .. be sure to take possession of any major asset purchase today, December 31, 2008. Do you need any new office furniture? Office chairs? Bookshelves?

* Bonuses to Employees

If you are going to give your staff or employees a bonus anyway, and didn’t during the Holidays and now feel like a scrooge .. PAY your employees today to claim the deduction. For those considering ‘bonus’ payments to spouses, children and/or relatives .. I would suggest you cough up the money, and pay it. Do not redeposit into a shared bank account, or presume it doesn’t matter because you have a joint bank account.

* Business Use of Home Office

If you are self employed – and claiming a portion of your house expenses against your proprietorship business income, pay your Utility bills today (heat, lights, and water) at least to include the payments in this year’s calculations

* And speaking of being Self-Employed …

Every December 31st I go to my local SuperLube and get an oil change .. just so I can get a factual documentation of the mileage reading on my car at the end of the year. This way, when I calculate personal vs business miles – it is quite easy because I know exactly how many kilometers I have driven during the year.

MEDICAL AND DONATIONS

* Medical Expenses

If I would have thought about taking an eye test recently, I probably would have purchased new glasses if ended up needing a new prescription and be sure I paid for them before the end of the year. I’ve recommended to a few clients who are paying monthly payments for their child’s orthodontist billing that if they can afford to pay off the dental bill .. do so before December 31st.

Also – you can deduct medical expenses for any 12 month period ending in the year, so you would have to double check your 2007 unclaimed medical expenses and see if it pays to claim a different period this year other than a calendar year.

* Charitable Donations

December 31 is the last official day that you can donate to a registered charity and receive an official charitable donation receipt for 2008. Receipts are either mailed before the end of February 2009 or can often be downloaded straight off of the internet now.

One Of The Best Ways To Figure Out What You Can Deduct

… is to look at your last year’s return. Don’t take advice from someone like me or other information that you find on the internet. Look at your last year’s tax return, ask your own accountant or tax preparer questions, and even check out CRA’s website http://cra.gc.ca or just do a google search!

The new 2009 tax forms come online January 6th 2009 and I know myself, I probably won’t be upgrading my software until the end of February or first week of March 2009 (I concentrate on T4′s T5′s etc first) … but, here’s a screen image of the 2007 income tax returns.

A while ago, I popped an extra $1,000 CDN$ into my paypal account. Although I have posted a few times in this blog about the rising foreign exchange rates here and here, I didn’t think much of the running balance in my paypal account.

All I do recall, is that I had about $XXXX dollars in $CDN plus $YYYY in $USD … then October 2008 $ZZZZ revenues in $USD was added to my paypal account .. and for some reason – silly me – I thought $XXXX + $YYYY + $ZZZZ = My Balance! But, I was wrong – as I found out today – I needed to pay some bloggers for the HART-Empire Network today and had to dip into the $CDN balance fund.

This is what is going on with Paypal

The *REAL* foreign exchange rate at the moment is 1.2247 rate. This means that if I had $1,000 USD I would get $1,224.70 in CDN on conversion (before fees). Conversely, the rate is 0.81653 the other way around, which means that if I had $1,000 CDN .. I would only get $816.53 in USD.

As you can see – Paypal converts my $CDN dollar monies at the rate of 0.788523, which means that my $1,000 CDN gets converted into $788.52 USD

In a single transaction – paypal just scooped ANOTHER 2.8% (0.81653-0.788523) fee from me and my money – on all conversions. This is in addition to the selling fees and/or receiving fees deducted from my account on other transactions.

According to Paypal

Currency Conversion

PayPal launched Multiple Currencies to facilitate payments among our diverse base of international members. PayPal is pleased to offer conversion rates that are competitive with those of other consumer services.

The most readily available information on currency exchange rates is based on “interbank exchange rates”. Interbank exchange rates are established in the course of currency trading among a global network of over 1,000 banks, and are not available through consumer or retail channels. Consumers may use these rates as a reference, but should not expect to use interbank rates in transactions that involve currency conversion. To obtain actual retail rates, contact your local financial institution or currency exchange, or check the rate displayed in your PayPal transaction.

oh – wait! According to Paypal’s help, they do not really use “REAL” banking and foreign exchange rates .. they use “INTERBANK EXCHANGE RATES” …. Well – here is what the latest interbank exchange rates shows up to be .. 0.8090 … or, rather 1.6% more than what paypal uses.

So I lost a little money today in Foreign Exchange

Am I happy? Well, there’s nothing I can do about it. So, I accept Paypal’s income generating policy over and above ‘real’ foreign exchange rates. But, I’ve added a new category in this blog … the “GrrrRrRRrrrr” category.

I didn’t have to take out a bank loan today to fill my car’s gas tank!

I shop at Safeway .. and that price includes my 7cents off as a Safeway Club Member .. but, it only took about $45 to fill my gas guzzler car! I think we’ve all noticed that gas prices are going down everywhere, but I thought I would pull out the chart for Winnipeg to see how the prices have been going on around here, since both the Canadian election (October 14, 2008) and the America election (November 4, 2008)

Not Much of a surprise in the Foreign Exchange Rate

October 29, 2008 was the high so far in 2008 at 1.2308 conversion … and the rates actually appeared to be on a decline up until the American election (1.1499) but has slowly been creeping upwards to 1.1942 close of today. I must admit .. I’m not watching these rates closely, but as I’ve mentioned in the past – my online ventures are all in US Dollars and if the rates dip UPWARDS around the 26th of each month and then back afterwards – I’ll be okay with that! (that’s the date I usually get money transferred from my paypal account to my Canadian bank account heh)

Got any Gas Price stories or foreign exchange stories you want to share?!

What I’ve Got Now

1) HOME ACCOUNT (About $180/month)

* Home/Business phone line with the extras
* Digital TV
* DSL Internet

2) MOBILITY ACCOUNT #1 (About $50/month)

* My cell phone with basic extras
* My wife’s cell phone (buddy plan)

3) MOBILITY ACCOUNT #2 (About $90/month – big hits over summer overages)

* My EVDO account – currently, maxed out at 500MB transfers per month. The July/August summer usage ended up costing me about $800 – being connected in the middle of nowhere so I can run my http://HART-Empire-Network.com/sites/

4) FAXING CAPABILITY

* I’ve got an all-in-one machine that I can fax out, and if I push a button I can receive faxes on my home phone line. But, this was getting a little annoying so last month I resurrected the Fax-to-Email option with a toll-free (vanity) fax line number.

What Takes Place Today

1) I renegotiated a new deal with my EVDO account to get a reduction in the monthly (contract) price by about $30/month and doubled the tranfser limits to 1GB. This actually is the promotion price for “new” customers, but I convinced Mobility that I am customer loyal and deserve that too! They are backdating it to the start of this last month’s bill October 8, 2008.

2) I replaced my home phone line with a D-Link line. Basically, this means that it’s like a ghost number and line coming into my house that still feeds me DSL high speed internet and Digital TV, but there is NO MORE HOME PHONE LINE.. I will not be able to fax out anymore with my All-In-One.

3) I cancelled my own cell phone number, but kept the home phone number and have transferred this home phone number to my cell phone. This home phone number will be my all-exclusive cell phone number. My wife has her number, and I have mine .. and they both end in the same 4 digits But, there is no LAN line in our house.

4) I am using and promoting my Toll-Free Fax Line number more with my business, which is going through http://MyFax.com .. Clients can actually send me faxes now (which is fax-to-email on my end) via email. So can I! I can send people faxes either from the online website or my gmail account and like that I can send a fax from anywhere in the world I have internet access, and back to that “living in the cloud” concept. Instructions how to do this is on my business card site http://HBSMC.com

5) I have resurrected my http://MagicJack.com VoIP/USB phone jack that any phone plugs into for outgoing calls (if wanted) in my home. I have a (707) California number, all paid up until 2013 that will NOT cost me anything to call or receive anything anytime in Canada or U.S.A. Currently, I have one phone jack that’s those VTech 6.0 cordless phone but I was at Best Buy this weekend, and I was thinking of upgrading it to new set of 4 phones for $80 that I can place around the house strategically. Currently, this doesn’t work that well on my laptop and Vista with my Skype Phone jack but that’s another story (and future post).

So, that’s pretty much it!

Here’s a summary of what all this will cost me … or, actually save me really…

* Savings on EVDO per year ($90-65)*12 = ($300.00/year)
* Savings on Home Phone (Approx $70/mo) = ($900.00/year)
* Extra increase of Cell Phone costs I think I need (Approx $7/month) = $84.00
* Cost of new Toll-Free Fax Line ($13×12) = +$156.00/year

>> total savings = ($960.00 plus taxes) or about $80/month.

PLUS! I should mention that increasing my EVDO transfer rate from 500MB to 1GB probably will knock off about $150 from my extra billing next summer – assuming same conditions and usage as in 2008.

Worth it? I think so. Time will tell if NOT having a home phone LAN line will be annoying and this savings not worth it. The worse part, is that my cell phone isn’t too bad – but, I don’t like it. It’s got a dinky camera and I think I’m locked in for another 2 years on my plan. I tried to see if they would ALSO renegotiate that contract and maybe I can get a better phone that may be more suitable to my business – online and offline. Perhaps with a keyboard for better text messaging, or one of those 3G phones or Blackberry phones etc etc etc. Right now, it would be too costly to get a new phone as I would have to pay full rates. They suggest I try again in 6 months to renegotiate.

QUESTION: Do you have both a LAN home phone number and a cell phone number? Or, do you just have one phone number and that’s it?

I’m curious how everybody else is doing things! Please leave a comment and tell me your story!!

I first placed the Entrecard script on this blog back in January 2008, and as I mentioned back in August 2008 .. I have been trying to keep EC-costs down to allow other EC users to advertise on this site relatively inexpensively.

Tomorrow, November 1, 2008, I will stop accepting purchases for daily slots and deny purchases. However, all purchases made today will be honoured and accepted in the queue (I believe that is good for 10 days) where at the end of the period, I will be removing the code. To advertise, click on the “E” on the widget in the footer below.

Get it while you can! I think it’s like 8 or 16 EC credits or something like that.

Check Out The New Sponsorship In The Sidebar

I am now using http://acruxads.com for sponsorship in the sidebar in the “Featured” section. This allows you to not only upload your own 125×125 banner but also create an ad or flyer “on the fly” in less than 5 minutes. Also, you may purchase slots based on daily rates, not monthly rates (in case you prefer shorter terms).

I have set the rates to a low introductory price of $1.00 USD per day .. more than half the going rate as per our http://HART-Empire-Network.com/advertise/ page … Prices will remain in effect until December 31, 2008 – excluding those who purchase extended terms beyond this date before the price hike!

HAPPY HALLOWEEN

Did you enter PetLvr’s Pet Halloween Costume Contest yet? Check out our Contest Entries so far!