Top 5 Money Tips to Implement Before 2013 is Over

Less than a month left until a new year is upon us. To set you up for a great year ahead, here are my Top 5 Money Tips to implement before New Year’s. The best part? There is a “gift” for each one you implement!

1. RRSPs - This year’s maximum contribution room is 18% of earned income up to $23,800. Review your RRSP contributions - now is the time to plan for how you will fill your remaining contribution room in time for the March 3rd deadline. If your employer offers a matching retirement savings plan, check to make sure you are taking full advantage of your employers generosity! Oh go on, show your spouse some love - contribute to a spousal RRSP, as the benefit is the opportunity of income-splitting at any age. If you are expecting a year-end bonus, consider allocating it to your RRSP. Your “Gift” will arrive in April in the form of tax savings!

2. RESPs - If you already own an RESP, your contribution for 2013 has to be in soon. If you are a Grandparent planning to purchase Christmas gifts, just imagine how much more you will be remembered and appreciated for a gift of an education, over another toy. Most children tire of their toys within a few weeks or months, an education is a gift that lasts a lifetime. Your “Gift” will be receiving the Canada Education Savings Grant equal to 20% of your contribution up to a maximum of $2,500 which will be deposited to the RESP for each year you contribute.

3. Charitable Contributions - Make a charitable contribution before the year's end and receive a tax credit for the 2013 tax year. Contributions to your favorite charity are a great way to help those in need. Plan a family dinner around the topic of community service and giving back to your community. What a great way to educate your children about gratitude, while teaching them not everyone is so lucky. A few timely charities are Toys for Tots, Salvation Army and the Children’s Miracle. Your “Gift” will be receiving a 15% federal tax credit on the first $200 donated, and a 29% credit on any amount above $200. Spouses can pool their donation receipts to maximize tax credits!

4. Get Organized - Gather up the receipts for your tax deductible expenses such as medical bills, business expenses, children's fitness and art programs, tuition, and text books. By organizing now, you may even find an opportunity to make last minute purchases which will qualify for a tax reduction or credit when tax time comes around. Your “Gift” will be in the form of increased tax savings.

5. TFSAs - The Tax Free Savings Account 2013 limit is $5,500. Finally, you planned carefully all year, maximized your RRSP and RESP contributions and you have a little saving room left - don’t forget to top up your TFSA. Your “Gift” will be tax sheltered investment growth for as long as your money is in the TFSA. Bonus “Gift” is that money withdrawn is also tax free. Wow, I bet you didn’t realize the CRA was so generous!

~ Lise Andreana, CFP, CPCA, Continuum II Inc.

Buy-Sell / Shareholder Agreements for Business Owners

What does a Shareholder Agreement actually DO?

As Industry Canada will tell you, a shareholder agreement (also known as a buy/sell agreement) is an agreement - in writing - entered into by some (usually all) of the shareholders of a corporation. All those who are parties to the agreement must sign it. These agreements are specific to each company, but typically deal with the same issues, such as:

~ What happens at retirement
~ How the Captial Dividend Account (CDA) will be used

~ How disputes between shareholders will be resolved

~ How insurance will be used to fund the purchase or sale between parties

~ Tax implications and advantages - who gets them and when

~ How long shareholders will continue to be paid if they become disabled. Who will buy their shares, and for how much?

~ How shares will be dealt with at death. What formula will be used for the purchase price? Will the company buy them back as a redemption, or will a person buy them from the estate?

Buy-Sell Agreement Checklist for Business Owners

Many business owners are under the impression that if they are business partners with family members an agreement isn't necessary. This could not be further from the truth, and often becomes even more important because situations can arise where you could go from being partners with your brother one day to being forced into a partnership with your sister-in-law the next.

Ultimately, shareholders have a say in the significant business decisions of the company while everyone is in the same position, healthy, and working. They are not necessary for a one-person corporation, but very valuable when there is more than one shareholder or if you are looking to bring in additional investors as you grow your business.

The content and wording in your shareholder agreement is crucial. The liability, tax, succession planning and management implications are huge. It is essential to get it right.

You need to consider factors such as (to name but a few) classes of shares, capital gains exemptions, insurance, and what type of "triggering events" will impact buy-sell procedures (death, bankruptcy, critical illness, and buy-outs).

To assist you in creating a document that works best for your business, we have created a Buy-Sell Agreement Checklist. You'll find it on our website in the Continuum II Inc. Business Owner's Resources Toolbox, full of helpful templates and tools to ensure you are making informed decisions on everything related to your business.