Dean Constand
   Certified General Accountant
      Dean Constand (CGA)
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        Newsletter Page 1 - Toronto Certified General Accountant

      Newsletter December 2008

      Dear Client or Future Client:

      I hope that this newsletter finds you well as we all look forward to spending time with family and
      friends during the holiday season.

      Given the current economic downturn, this newsletter will be outlining some helpful suggestions
      for small business owners and employees as they maneuver the economic storm.

                                How to Weather the Economic Downturn

Small Business Needs
  • Don’t lay off employees – skills shortages and aging boomers are not going to go away
    regardless of the economy; when the economy recovers you don’t want to be scrambling for
    good workers
  • Review the TD1 form with your employees in January 2009 so that their tax deductions are less
    and their take home pay is higher during the year, thereby boosting morale during this economic
    downturn (see Personal Income Tax section below)
  • Don’t slash prices – consider bundling products and services together to make them appealing to
    customers, and be creative about your offerings
  • Extend better payment terms with customers, but don’t let customers stall on payments
  • Communicate with customers; improve existing products and services, and develop new ones
  • Diversify your customer base – are all your eggs in one basket?
  • Negotiate better payment terms with your suppliers, as this is a form of free financing
  • Don’t keep slow moving stock that ties up your working capital
  • Stay close to your team of advisers – accountant, banker, lawyer, investment adviser
Personal Income Tax
  • Pay down personal debt:
    1. Income tax debt is not like credit card debt - the government wants its money and it
      wants it soon; the government has the power to collect money by contacting your bank
      directly and demanding payment, freezing your bank account, garnishing your wages,
      possessing your assets; if you owe on your taxes, focus on paying that first.
    2. Credit card debt is probably the most common debt for many Canadians; think of a
      reduction in your credit card debt as a 20% return on your investment during this
      economic downturn!
  • Create emergency savings – have at least three months of your salary set aside as an
    emergency fund; the new Tax-Free Savings Account (TFSA) provides an opportunity to begin
    the emergency fund (discussed at the end of my newsletter)
  • Don’t draw on your RRSP in times of emergency – an RRSP is designed as a long-term savings
    vehicle, not as a temporary emergency fund; here’s why:
    1. If you need to access your RRSP funds during this crisis when your investments are down
      in the stock market, you will be forced to realize your paper losses and eliminate any
      hope that they could rise in value again in the future
    2. If you withdraw funds from your RRSP, you will have to pay income tax on the withdrawal,
      which can be significant based on your income level at the time the funds are withdrawn
    3. If your RRSPs are invested in mutual funds, and if you cash them early, you may be
      penalized
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Dean Constand (Toronto Certified General Accountant)                                       Email Contact: accountant@deanconstandcga.com

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