How to Live Debt Free - 12 Steps to Total Financial Freedom

"Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no help at all"
- Dale Carnegie

10 benefits to running your own business

People do not work for themselves to get rich; there's lots of research that disproves that common belief. Greed is rarely a motivation for taking the risk of free enterprise. Here are the real benefits:

1. Freedom - No boss means no petty rules, no asking permission to visit the dentist and the freedom to set your own goals.

2. Vision - You want to leave your mark on the world and change something. Running your own business enables you to do this to a greater extent than you could as an employee.

3. Control - You're in the driving seat and no one can come and close down your department as part of some global restructure. Your destiny rests in your hands alone.

4. Choice - There are no policies that dictate the car you drive, the software you use or the colour of the office wall. Your own organisation can reflect your personal taste and style.

5. Ambition - Your ambition is only limited by your ability to grow your business. Equally, if you want to stay small, you can.

6. Safety net - There are lots of insurance products out there that can provide you with a financial safety net. Long term sickness or your sudden death need not mean poverty for your family.

7. Work at home - It's likely you'll start a new business from home. That means you can get up at 0855 and be at your desk for 0900!

8. You choose your team - As you're the boss, you get to hire the people you want and not be stuck with who the boss hires to work with you.

9. Long holidays - Providing you can organise your business to allow it, you can take as much time off as you want, whenever you want.

10. Flexible - You can adapt quickly to new opportunity. You no longer have to feed ideas up the line for other's to make the decision.Over the past decade, a steadily growing proportion of the U.S. population have become attracted to the idea of having their own small business. Not only as an alternative to conventional employment, coping with early retirement or as a way of supplementing a family income, but also for the sheer satisfaction of being an entrepreneur and being rewarded solely on the basis of achievement.

Because different types of income are subject to different tax treatments, it is important to determine that the income in question is in fact from a business and not from rental (ie: renting the basement of your house), employment, a hobby, or a capital gain (ie: income from the sale of a building or land)

People in certain occupations are considered employees for employment insurance and Canada Pension Plan purposes, but are self employed for taxation purposes. Which means that income received will have the applicable taxes deducted and a T4 slip will be generated at the end of the year, but for income tax purposes they will be able to deduct from that income reasonable business expenses incurred to earn that income.

For income tax purposes as well as management of your business you should setup a simple bookkeeping system to include income and expenses. There are several systems available that will benefit you in:

1. Enhancing business information including budgeting and spotting of business trends
2. Readily accessible information that may be required from banks and other lenders
3. Faster processing of your business tax returns (income tax, GST/HST, PST) and assurance that expense deductions are not missed
4. Time savings in cheque processing and potential payroll processing
5. Organized business details in the case of a government audit

Keeping records is important because only those expenses which can be shown to have been incurred to earn income are allowable. Supporting documentation includes purchase invoices, contracts, bank statements, and canceled cheques.

Income tax records must be retained for a minimum of six years. Do not destroy receipts or account records for prior year without written permission from the tax department.

If your revenues are under $30,000 in gross sales you are not required to register for the GST, but may do so if you choose. Whether it is advisable to do so depends on the circumstances.

Business who sell primarily to other businesses may find it to their advantage to register for the following reasons:

Registrants can fully recover the GST paid for business related expenses against the GST they collect
Registrants may be able to charge a lower price than non-registrants because they can fully recover all GST costs on supplies
Business customers of GST registrants may claim input tax credits for the GST charged to them

Businesses who sell primarily to consumers, or whose product or services is very labour intensive may find it advantageous to avoid registering until required to do so.

Each case needs to be examined individually, taking into account all of the factors involved.

Individuals may claim all reasonable expenses incurred in the conduct of their businesses, provided they are reasonable in the circumstances and are incurred to earn income.

The business plan is a written summary of the overall activities of your business. It is a report on the company's sources and use of funds, management personnel, labour relations, products, services, marketing strategy, production techniques and research. It describes the past, present and future of your operation.

A typical business plan begins with a summary of your idea, the market need, the amount of capital required and the projected financial results. It then includes information about how your company is organized and who is involved. You should also include the research that you have conducted about the industry you are in, and how your product or service differs from your competition.

This is a critical step to understanding your business operation and the degree to which you have developed a business plan can mean the difference between obtaining the financing you require and not.