January 11, 2013 12:43
by Brenda Stefanson, PAg
Regional Farm Business Management Specialist
Over the years, groups of farmers have worked together to capture business opportunities, allowing the group to accomplish what the individual group-members cannot do on their own. One of the first of many decisions the group must make as they undertake a business venture, is whether they will form as a corporation or a co-operative. Each of these business structures has advantages and disadvantages.
A corporation is a legal entity that has a separate legal existence from its shareholders and directors. Shareholders and directors are not generally personally liable for the debts, obligations or acts of the corporation. Private corporations are formed by one or more people and cannot sell shares or securities to the general public. Public corporations can issue securities to the public but the corporation must file a prospectus with the Saskatchewan Securities Commission, employ outside auditors and distribute semi-annual financial statements.
There are many advantages to operating as a corporation.
• Limited Liability: Generally speaking, a shareholder is only liable to the extent of his/her investment in the corporation.
• Continuity of Existence: The existence of a corporation is not affected by the death or bankruptcy of a shareholder or director.
• Ownership is transferable: Shareholders can sell or transfer shares to others.
• Tax advantages: Accountants and tax professionals are best equipped to assess the tax advantages or disadvantages of the business structure.
Some of the disadvantages of a corporate structure include:
• Corporations can be costly to form.
• Corporations are closely regulated and require extensive record keeping.
• Shareholder control is based on size of investment.
• A large investor could assume control of the corporation.
• Conflict may develop between shareholders and/or between shareholders and management.
A co-operative is a corporation organized and controlled by its members. Co-operatives are separate legal entities and therefore, share the limited liability and other characteristics with corporations. The democratic principle of “one member, one vote” is the characteristic that sets co-ops apart. Profits of the co-operative are distributed among members as patronage dividends.
The advantages of the co-operative structure include:
• Democratic control: The one member, one vote principle ensures co-operatives are owned and controlled by the people who use them.
• Limited Liability: Members are not liable for the debts, obligations or acts of the co-operative.
• Patronage Dividends: Surplus earnings are distributed as shares or cash to members in proportion to use.
There are some disadvantages to using the co-operative structure:
• Member participation determines the success of the venture.
• Decisions may take longer.
• As with corporations, record keeping is extensive.
• There is the potential for conflict between members and/or between members and management.
• There is less incentive for members to invest additional capital.
Corporations and co-operatives share many characteristics and both have been used successfully by groups of farmers to capture opportunities or solve problems.
For more information on this topic contact your Regional Farm Business Management Specialist at 306-946-3214 or the Agriculture Knowledge Centre at 1-866-457-2377.
September 21, 2012 07:43
From the Accounting World
CANADA REVENUE AGENCY 2012 CAMPAIGNS
CRA began a plan of “campaigns” three years ago. A campaign is a program of attack on specific sector of personal and corporate tax. Their approach is to send out a letter to “let you know” what the rules are (as they interpret them). They suggest that if you have been doing something incorrectly, then you have a chance to correct it without a penalty. Getting this letter from CRA can be quite upsetting as it is often worded as though you “are guilty” of doing something incorrectly.
The 2012 Campaigns are as follows:
1. Rental income reporting (including illegal suites, recreational property and personal use property.
2. Payments to non-arm’s length individuals (children, spouses and non-arm’s length individuals and companies.
3. Individuals reporting commission income, including all employed commissions (this targets restaurants (servers), hair dressers, commission based sales persons and all others reporting commission income)
August 10, 2012 06:53
Smartphones are a new way of taking your information with you, accessing it at a moment’s notice, and sharing that information in a convenient manner. Styles and name brands vary, but the point of a smartphone is to be able to connect with people through up to 3 ways:
1) Web Browsing – This is the easiest to understand, since it is like opening a web page on your computer and surfing the internet, except you can do this right from your phone to look up a product’s website, look up a phone number or address, or look up your favorite news site.
2) Apps – This is short for applications, and these are small parts of software that do various singular tasks. Some of them connect to the internet, and some do not. Facebook is an example of an app, but so is a simple app like a calculator.
3) Email – Smartphones are a wonderful way of streamlining all of your email accounts into one device for easy reference and replying. They are so convenient that you can access them with a touch of a finger. Darryl Tanasychuk,
Mobile Department Visions Electronics 2731 Faithful Ave Saskatoon,
Saskatchewan S7K 7C3
firstname.lastname@example.org 306-664-3666 Phone 306-664-4441 Fax
July 26, 2012 17:34
Gregory Buck, CA
Munro & Company, Chartered Accountants
Small businesses get attacked by Canada Revenue Agency quite often so keep the following in mind:
1. Nothing is deductible unless supported by a proper invoice, including the vendor’s HST/GST number. Don’t think a credit card receipt will suffice.
2. Register for your own GST/HST. Even small businesses can benefit.
3. Ensure you have support for all deposits made to your bank account. On audit, CRA will call that deposit “unreported income” if you have inadequate support. So that loan from Dad. Document it and get proof of where it came from. Cash deposits? If no support, then don’t deposit them in your account. Remember, CRA don’t care about your opinion. They care about facts!!
4. Keep good records. There are lots of small computerized record keeping software solutions out. Intuit’s Quicken, Microsoft’s Money or NetSuite are good starters. Quickbooks and Simply Accounting are good for a little larger business.
5. Farming activities can be filed on a cash basis. This is sometimes an advantage. If you elect to use a cash basis you cannot go back to accrual. So evaluate your options before committing. You may want to get advice from a qualified accountant.
6. Payment solutions like PayPal and E-transfer will keep your cash flow current. They are easy to use and immediate.
7. Provide your financial information to your tax professional early. It takes time to plan!!
June 2, 2012 10:28
Hello and Welcome!
Blogging and social networking as a communication environment is one of those great mediums that we are very excited to be a part of.
Our clear objective in joining all of you at HorseOwnerToday is to post information on the web about risk management and insurance as it relates to horses and equine activity for everyone’s benefit.
That said, let me tell you about myself and how I got to where we are today.
Some of you may know me as, Mike King the “Insurance guy”. I am proud to say that my articles regarding insurance over several years in a variety of publications and public speaking Q and A sessions across Canada have been read and seen by a wide and large audience.
However, many of you may not know that I have been involved in the horse industry for more than 40 years – riding, training, managing a barn, competing, teaching, judging, horse show organizing. I seem to have seen just about all of it – and for the last 17 years I have been a dedicated insurance broker specializing in the development and delivery of insurance products and services across Canada – all related to horses.
Drawing on these years of interacting with horses and their people there is no doubt in my mind that the basic needs of the equine community are the same no matter where the horses are. We all thirst for information on ways to deal with life with horses and the best information comes from others who have been there, done that.
I am hopefully that over time, I can share solid, consistent and non-partisan information about many insurance related topics including:
a) What insurance is (and what it is not)
b) How you can use insurance to your advantage
c) How to avoid duplication in coverage
d) What type of insurance you ‘really need’ for you and your horse
This great thing about this site and blogging in general is that all of us get to have a conversation and with that all said, I really hope to hear from you with questions/comments – whatever!
Mike King is the horse industry specialist at Capri Insurance and is responsible for the risk management and insurance programs which benefit various regional, provincial and national equine associations.
June 9, 2011 11:03
"Save your pennies and the dollars will look after themselves" quote by N.R.