What are the signs you need a new Accountant?

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Accountants like other professionals are subject to regulations and ethical behaviour when practicing. But what separates “average accountants” from “Great Accountants”? Surprisingly it’s not the level of their education or which firm they work for, but it’s how they relate to you, their client.

A Great Accountant will bring the following elements to the table:

  1. Trust (without it there is nothing else!)
  2. Establish Goals and Timelines
  3. Straightforward advice
  4. Timely and on-going communication
  5. Progress reviews and client feedback
  6. Updates on pending changes to the Tax Act or Legislation
  7. Market trends
  8. Competitive research
  9. Proactive opportunities for growth or expansion
  10. Estate or Succession planning

If your not getting what you bargained for then it maybe time to start looking for another firm or person that can offer you more than just “doing the books”.

 

‘Till Next Time

Rick Barbosa

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Small Business Excellence: Profits over Sales

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Growing a business can be difficult, especially if your business is price sensitive. Many a competitor will try to undercut prices and take a loss in the hopes of winning customers. This “loss leader” strategy works against them in the future as they try to re-coup losses by raising prices anyway. Consumers and clients who play this never ending game are not ones that you want to attract and do business with.

Focusing your attention on maximizing profits based on sustainable relationships is key to enabling moderate and realistic growth well into the future. Top line sales numbers grab attention, but it is profitability that pays the bills and provides cash flow to sustain your operation. I often ask owners and managers what would they rather have, 5 clients and good profitability or 500 clients and breaking even?

We must remember why we got into business in the first place, to make money. If you are working like a dog just to turn a small profit, then your time would be better spent on investing the capital you have in your business.  A good rule of thumb is 7-10% profit before tax. The rate of inflation is roughly 2% and the market historically returns 5-7% per year. If you are not making more than the market + inflation then you need to consider changing your focus or staying in business altogether.

The Discipline of Profit needs to be engrained in every relationship and in every process that is present in your operation. Without that discipline, that focus, you are just turning money over and not improving your life and the lives of those that depend on you and your company.

Till next time

 

Rick Barbosa

 

 

 

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Thank Goodness I’m Canadian…when it comes to taxes

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With tax season winding down for 2015, it’s time for a little reflection. This year I had an increase in the number of new clients that required both Canadian and American returns prepared. If you reference my site, you’ll notice I don’t actively post prices for my U.S returns. This is because many times I need to explain that because of the various individual circumstances it may be impossible to quote how much work is needed. Many states require filing of annual state taxes as well as federal. Also there is a variety of avenues to take to obtain the taxable income. There is a choice of AMT (alternative minimum tax) or Tax based on where you fall in the IRS Tax Tables. There is also a choice between itemized deductions and taking the standard deduction. And finally, lets not even talk about how many different forms and ways there are to calculate depreciation that are available.

The bottom line is that the U.S system has more tax advantages on many deductible items that cannot be claimed in Canada. This has the impact of lowering the individual tax rate. The trick is spending time and money to research, apply and weigh your outcomes. On a pro rata basis fewer U.S citizens prepare their own taxes than do Canadians. This is because of the complexity involved.  This is also why Warren Buffet and other High Income earners wind up paying lower taxes on a % basis than someone earning 40k.

Taking a balanced approach, I am biased towards our tax system. Our simple and straightforward Tax Code along with our tax credit system provides a more even approach to taxation and shares the public burden more broadly. This means a slightly higher personal income tax but lower aggravation when it comes to tax time. Our Corporate rates are now lower than many combined Federal/State rates in the US, and with the advent of a higher TFSA limit, we are closing the gap on personal rates.

Rick Barbosa

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Why kicking the can down the road is never a solution.

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If you’ve ever owned a dog, or even raised a child, you know the best way to teach someone is through consequences. If someone is allowed to keep doing something harmful but never has to answer for their actions, what incentive is there to change behavior? None. So why are we still hearing about a sluggish economy or Greece, Portugal, Spain etc… It’s because know one has made them answer for their actions. We keep trying to avoid the inevitable by only making the inevitable worse. We need to take cues from nature. The strong must be allowed to survive. Keeping the week dangling only hurts the herd as a whole. The “Herd” in this case is our economy. We need to recognize that it’s the well managed companies who have always had to fend for themselves that lead us out of recessions. Instead of allowing them to reap the rewards for doing the right things, in comes the government and big labour to save the day. They artificially prop up losers for their own personal benefit, not societies. By allowing companies, governments and people to fail we are doing them a better service. By making them face the consequences of bad decisions we ensure they will never make them again.

Those who do not know history are doomed to repeat it.

Rick Barbosa

 

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Really Smart People “Buy” when the “Smart” money is selling

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If you’ve ever gone to my “Rick’s Picks” tab you probably have noticed that my picks rarely change. That’s not laziness on my part. That’s just me doing my homework. I like to lump myself into the “Investor” group rather than be labelled a “trader”.  Investors know that market volatility is part of the landscape, especially these days. What gets people into trouble is following the crowd and panicking when numbers start to move. Those who sold their investments after 9/11 , Black Monday and as recently as last week are those that will miss the inevitable rebound once the “Smart Money” moves back in.

Investing is simply putting your capital to work in a trusted company or institution, and letting them run their business. If they have done, are doing, or will do a good job, you will be rewarded with dividends, yield and capital appreciation. It’s that easy. The hard part is doing the homework to find out which companies have a good management team and a good business model that will stand the test of time. Once you or your advisor find those companies then invest and be patient. If you are not that type then consider yourself a trader.

So when you hear what the “Smart Money” is doing, think about what Steve Jobs once said.  “Everything around you that you call life was made up by people that were no smarter than you.”

Till Next time,

Rick Barbosa

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The Road to Prosperity : Step 5 Celebrate Success

You’ve done the hard work of taking responsibility for your own success, tracked everything, learned to pay yourself and finally started living below your means.  At this point you should have had some traction at paying off debt or accumulating some savings or both. It is equally as important to mark these wins as to achieve them. Celebrating milestones keeps you motivated and gives you something to look forward to. Enjoy a night out, nice meal or a weekend away with the family. You’ve earned it. Keep at it and you will start to celebrate more often and enjoy life rather than just living it.

Thanks for staying with me on the Road to Prosperity.

Rick Barbosa

 

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The Road to Prosperity: Step 4 Live Below your Means

Like my other posts, the 4th step on the “Road to Prosperity” is not new or a “Quick Fix” but instead is time-tested and wisdom from generations of prosperous families and individuals throughout the ages. All of us have heard stories of celebrities and lottery winners that have wound up broke and worse off from lack of proper money and lifestyle management. To a lessor extent, our neighbours that try to “keep up with the Jones” often find themselves up to their eyeballs in debt and stressed out.  A prime example here in Canada are those hoards of Hockey parents spending thousands of dollars each year on their children for fees, equipment and travel. Many say they are doing it for the kids, but if you’ve ever hung out with Hockey parents its more often than not about the social aspect of the group. Many parents don’t know what to do with themselves once the kids choose not to play sports anymore or simply outgrow or don’t make the cut any longer. Parents often come to me with stories of how they blew 50k or more on organized sports with nothing to show for it but a burnt out mini van and a large line of credit.

To truly build wealth we must look at not just what we are doing or making in our careers, but how we are living our lives. It’s easy for governments to print money because there is no individual accountability to pay it back. They just tack it on to future generations’ tax bill and carry on. You and I live in the real world where we have to balance what comes in with what goes out. If we’re spending more than we’re making trouble is not far behind. In these situations the main culprit is “Lifestyle”. Keeping up appearances and a façade can only go on so long. Better to have a smaller house, older car and better family cohesion than to worry about maintaining all of the above.

Learn to live well. Don’t worry about what everyone else has. Appreciate what you have.  Think about what you need versus what you want and watch your wealth grow.

Take care and till next Step,

Rick Barbosa

 

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The Road to Prosperity: Step 3 Pay Yourself

It’s not a secret, nor is it a new concept, but it is worth repeating, and it is extremely important if you ever want to build wealth and prosperity. After accepting responsibility for your future, tracking and budgeting your spending, the next logical step is to ensure that you treat yourself as an item on your budget. One of my clients asked me how do I pay myself??? Trying to keep things simple I said, treat yourself like a bill. You pay Hydro, Gas, Mortgage, so why not pay yourself. She immediately got the concept. She slotted “Savings” into her spreadsheet and began slowly putting away money each paycheque and was surprised how fast it started to add up.

Now there are different schools of thought on the order and importance savings plays in your budget so I will give you my view based on my own personal experience. During my crunch years (raising kids, paying the mortgage, high household debt) I made it a priority to pay my loans and mortgage off as quickly as I could. This meant that I put very little aside into savings, but still managed to save something each time. My reasoning was simple. I was going to get rid of the debt sooner and sacrifice now (social life, travel, entertainment) while the kids were young so I could enjoy life later. Some may opt to have a more balanced approach, while others are able to both save and pay off debt successfully at the same time. Whatever method you choose, so long as you remember to keep something aside for yourselves then things will work out. If you’re not saving, then ask yourself this question, “What do I have to show for all my hard work?”

Until next time.

Take Care.

Rick Barbosa

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Welcome to my Blog…Finally

It’s been a long but educational process in finally putting together this web page. I originally started by hiring another firm to design my static page and then started to use AdWords to draw attention to my site. I had mixed results, but fate pointed me in the right direction. I was working with a client who had introduced me to WordPress. I was amazed by how simple it was to set up a page, add features and monitor traffic. After learning some basic HTML and Photoshop skills I finally set out to create my own page and blog.

When you do things yourself and learn to rely on yourself the rewards are twofold. First you get the benefit of increased knowledge and confidence, second you get the sense of control and accomplishment. My Blog will attempt to help the average person understand and control their finances, with the two goals of avoiding debt and building wealth. Money whether we like it or not is the great facilitator in life. It is the means by which pretty much all things get done. Understanding how to manage your finances ranks just below Health and Family. Money does not bring happiness but does facilitate it.

I hope that by bringing a fresh and non-biased or solicited approach to discussing money that in some small way I can help those who need it the most.

 

Take care

Rick Barbosa

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