As we get into the holiday season, many of us are in a giving mood. But one of the important seasonal questions for business owners is – “Who Can Receive Dividends from my company this year?

For some context, the reason that we care about this question is primarily that paying dividends to family members in lower tax brackets can lower the overall tax burden for a family. This is possible because we have marginal tax rates which means that the lower your income in a year, the lower the rate of tax.

A business owner may also want to pay dividends out of their operating company to a holding company to provide some creditor protection or to purify their company to qualify for the capital gains exemption, but this is a topic for another blog post.

Here are some tips for determining who can receive dividends:

1. Remember that dividends are a distribution of a share of PROFIT. If the company is not profitable in the year, there can be no dividends.
2. Dividends have to be paid to ...

No one wants to find out after they have totaled their SUV that it is not covered by their insurance policy.

This was the case highlighted in a recent CTV news article, sent to me by one of the participants in my Legal Essentials course.  The headline was “Business owner’s occasional deliveries voids her insurance policy for wrecked car” .

The scary question for small business owners after reading such a story is – Should I have commercial insurance for my vehicle that I use in my business?

Here are my tips below:

Tip #1 – This is a conversation that you need to have with your insurance broker or insurance company. Confirm and document all such conversations in writing including what details you provided and what they said.

Tip #2 – Vehicles that are owned and registered to a company need Commercial Automobile Insurance.

Vehicles that are personally owned but used in the business may or may not need commercial coverage, depending on...

I am often asked by friends, neighbours and fellow small business owners the above question – Do I NEED A Will (emphasis on NEED)?

We kind of know that part of “adulting” is getting a will and other estate planning documents drafted at some point.  But where should this rank in the list of priorities of a busy business owner’s legal needs?

Legal Risk Assessment

Assessing any risk is made up of two parts: (1) considering the probability of something going wrong and (2) the impact of the negative consequences if it does.

A will is a legal document that names our legal representative and deals with our assets and liabilities on our death.

In the case of our own death, we are 100% sure this event is going to occur (probability), but in most cases, do not know when.  You will be dead (and therefore may not care), but the negative consequences set out below will be felt by surviving family members and in the case of a business, potentially employees and...

As we surf around the Internet, we are often required to click “I AGREE” to use an application, game or to buy products or services.

Business owners have often asked me, should I just click “I Agree” or do I need to read all of the details?

There are likely not enough hours in the day to read every word of all of the Terms of Service or Terms of Use that you encounter. Here are some practical tips about what to think about and what to focus on:

1. Valid Contract – The law provides that you can enter into contracts electronically AND also allows the terms of such an agreement to be incorporated by hyperlinks to the more detailed terms of use. Therefore, by clicking “I AGREE”, you need to understand that you are entering into a valid legal contract. The terms do need to be “readable” to the user.

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2. Important Terms to Check – If you are downloading an application for use in your business, there are certain important terms of...

I have been asking my readers for suggestions about blog topics. The topic today was suggested by several people. It is a subject that I did not want to write about, but I know that although it may be uncomfortable, it is super important.

The starting place for any business owner is to know that they are responsible to create a business and a workplace that is FREE FROM SEXUAL HARASSMENT.

This blog post will provide some information on how sexual harassment is defined in law and provide some tools to deal with the issue.

WHAT IS SEXUAL HARASSMENT?

Human rights legislation exists in every province and territory as well as in the federal jurisdiction for federally regulated industries. For a complete listing of provincial and territorial human rights agencies click here.

The Human Rights Act (Nova Scotia) link defines “sexual harassment” as follows (my emphasis in bold):

1. vexatious sexual conduct or a course of comment that is known or ought reasonably to be known as...

Check out this recent video blog we created about registering trademarks:

https://youtu.be/snpN9ljpjy0

Having a good or a bad lease can contribute significantly to the success or failure of a business.

I was asked by blog reader Denise, who is currently looking for a new commercial premises, to address some things to think about when shopping for a commercial property.  Here are my top 5 tips.

1. NEGOTIATE – Only a few provinces and territories in Canada (BC, ON, NWT) have legislation which directly governs commercial leases. For Quebec see info here.  This means that unlike renting an apartment, there is a lot of room for negotiating the terms of your commercial lease.  On the downside, many large commercial landlords have long and complex leases which favour their interests, not those of the Tenants.  If you are not comfortable negotiating yourself, you should think about hiring a commercial leasing agent to represent you as a Tenant’s Agent. They will know the local market conditions and how to interpret lease provisions.

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2. UNDERSTAND HOW RENT IS...

Most business owners who are in the process of buying a business do not think about whether they are buying the assets of the business or the shares.  They tend to think about the price, terms of payment and closing date, all of which are important of course.

Here are some helpful tips below to help inform this choice:

You need to know the legal structure of the seller or vendor.  Ask this up front.  You can only buy SHARES of an incorporated company and not of a sole proprietorship or partnership.  If you are buying from a sole proprietorship or partnership, you are buying assets.

• The seller usually wants to sell the shares of an incorporated company to take advantage of the lifetime capital gains exemption.*

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• If the buyer buys the shares of an incorporated company, it takes on all past liabilities of the company, which may include liabilities of many types including tax, CPP, EI, WCB, judgements, bad credit with suppliers.  Careful due diligence is...

An e-mail list is one of the most important and valuable assets to an online or bricks and mortar business.

When Canada’s Anti-Spam Legislation came into effect in 2014, this had a chilling effect on the e-mail marketing efforts of many small businesses.  Many business became afraid to send e-mails for fear of breaking this law. This legislation is federal and applies across Canada.

The general rule is that if you are sending “commercial electronic messages” which include e-mails, you need the consent of the recipient of the message.  Whenever you can get this express written consent from a client or prospect, you should record it and store it.  This could include having them check a box electronically on a website, or on paper ballots or contest entries.

The good news for small businesses is that there are several useful exceptions where you have implied consent if you have not obtained express consent (permission in writing)....

This time of year teachers, coaches and parents are all busy laying down a new set of “ground rules” for the year.

According to Wikipedia, the original of the term “ground rules” comes from baseball. Different ballparks have different rules in addition to the more standard ones. At Wrigley Field in Chicago, for instance, if the ball is hit to the outfield and gets stuck in the ivy on the outfield fence, it is a ground rule double.

For your business, a contract is a great way to set ground rules with your clients. This works particularly well at the beginning of the relationship or at the beginning of a new piece of work. Below are some topics that are frequent areas of concern:

1. Payment Terms – When will the invoice be issued? How long does the client have to pay? Will there by interest and penalties for late payment.   What forms of payment will be accepted?
2. Returns and Refunds – Will these be allowed and under what circumstances?
3. ...