Author Archives: Kaitlin Kirk

(In)efficient Apartment Hunting

Last week I went apartment hunting. Like full-on camo, survival gear, deep in the jungle hunting. I got a little obsessive about it. Looking back on that stressful week, I learned something about efficiency.

From the day we decided to move, I was neck deep in it. Our first apartment search after arriving in Ottawa was a frantic rush to get the first okay place. This time I was going to find our Goldilocks apartment. Just right in every way.

My home is also my office, where I spend a good part of every day, so it needs to be a good fit. Enough space, natural light, parking, and (surprisingly challenging) no creaky floors! On top of that I’m looking for the right place, in the right location, at the right price.

It is a big game of balancing trade-offs and I began searching day and night, looking through listings, hoping the next one would be the ideal apartment. 

Of course I never found the perfect listing, but I spent seven days trying.

Animals in the window

Surely there is a perfect home for me!

Monday: This Is Great

Apartment hunting? I got this! I’m good at this! This is my jam! It’s a game of listing criteria, sifting through data from multiple sources, and shortlisting the ideal candidates. It’s well suited to my accountant skill set.

I hop online, check out hundreds of listings, and send off a handful of requests for viewings. I’m feeling really good about taking action on this process, and feeling confident that one of those places will be our next home.

Done deal. Right?

Tuesday: Just To Be Safe

I wake up the next day and think I better check to see if there are any new apartment listings I haven’t seen. Just to be safe.

There isn’t anything new, so instead I take a second look at some I passed by yesterday. Just to be safe.

I end up spending the entire day doing this. Considering different areas in the city, widening the net, and submitting a few more viewing requests. You know… just to be safe.

Wednesday to Friday: This Is War

I wake up, I check on my phone for any new listings. I get to my desk and search deeper for apartment options. I’m questioning my search filters, what am I missing?

My partner and I begin going to showings. This one is a 30 minute walk to the nearest anything, that one has old wooden floors which makes our every step scream with the anguished souls of a thousand demons.

I feel like each day means the good places are getting stolen away, snatched up off the market. I respond by trying harder, looking at ever more listings.

On Friday we finally see an apartment that feels right. We like it, it feels like it could be our home. We submit our application, and we are told they will get back to us Monday or Tuesday. *crossed fingers*

One more showing late Friday only reinforces that the other place is the right fit for us.

Saturday and Sunday: Everything is Terrible

What if we don’t get approved for the place? I better keep looking.

At this point in the game, more than ever, it’s about compromises. What am I willing to give up to widen my search? Less walkable neighbourhoods? Fewer bedrooms?

I’m feeling ever more desperate, feeling like the next place I find will surely be the obvious solution, and that compels me to continue the hunt morning to night.

Monday Morning: Put Me Out Of My Misery

I wake up knowing I have three apartment viewings scheduled today. I reach for my phone to continue the daily ritual and… hold up… what’s this?

APPROVED!

In a rush of relief, I see we have been approved for that great place we saw on Friday.

With gleeful speed, I cancel the showings scheduled for the rest of the week, remove apartment apps from my phone, and close a whole lot of browser tabs.

It is over.

Testing the width of the room.

The Calm Without The Storm

The place we signed with was one of the very first picks, from day one. I had a brief feeling of peace thinking one of those would be our next home. I was right, in hindsight, but still spent the rest of the week trying to bury the anxiety with the busywork of digging through listings and scheduling more appointments.

As an accountant I’m always keeping an eye on efficiency, and this turned out to be a big fail in that department. A full week of my effort accomplished no extra benefit or result. I felt like I was racing against time, but without any feedback or results. How was I to know when I had done enough?

It turned out I spent 10% of my time on doing the thing, and 90% of my time on an unnecessary back-up plan. By that math I could have tried and failed nine times over and been equally well off.

All that wasted effort was responding to the worry that I was feeling, not on actual feedback. I could have booked those first few viewings, and then just waited to see them. I could have submitted the application, and just waited to hear the result.

I was driven by a fear of missing out, from a sense of scarcity that was mostly generated internally. Even if some apartments were getting “snatched up” there were an equal amount just becoming available.

Pareto Principle and Efficient Action

The Pareto principle tells us that 80% of the result comes from 20% of the cause, and it is certainly true of this story.

The tricky part is that you don’t really know which is the magical 20% that will yield the big return until after it’s all done. However, in most cases you don’t need to know.

What if you always did just enough to get by? Does that sound to you like a lazy attitude? Like it will lead to a sub-standard result?

Here’s the thing. If you do just enough to get by, and it turns out to be not enough to actually get by, then you can give it a second round of effort. Very few things have a hard deadline, or are stuck in their “finished” state. You can almost always fix it, or improve it, as needed.

The alternative is over-planning, over-thinking, and trying to fix things before they are broken – they likely don’t need fixing in the first place!

I’m super excited about moving into my new home, and I’m sure it won’t be perfect. However, I’ll be able to adjust what I can, and if all else fails I can hunt for a new apartment next year. It’s certainly good enough for now!

For The Love of Taxes

This morning I went to drop off some tax papers to a client. She had some great questions, so I spent 40 minutes explaining how her tax return worked, and going over some of her previous year’s returns. She was trying to get an idea of how the various pieces of a year of her life could be summed up in a bunch of numbers grouped together on far too much paper.

She’s a very smart person, but was never taught how all this works, and that seems to be the case with most people.

That’s really sad. Partly because it’s a life skill we should all learn as teenagers, and partly because I love it and I want other people to experience the same joy when they do their taxes. Ok, maybe joy is pushing it, but if we strive for joy and land on something a little more positive than dread, that’s a win.

I like to think of taxes as that scary kid in class with the mohawk. The one that most kids were a little afraid of, but once you got to know them they weren’t so bad.

Love of Taxes: The Origin Story

When I was 15 my Dad showed me how to do my taxes. At the time we were doing them by hand, so I had my pencil and my calculator out, and we would go through every line. My return was very simple at that point because I only had one T4, but it was so fun. How could get as much back as possible? How can I play the government’s game and win? (without cheating though, ’cause I’m not in to that).

Then one day I was hanging out with my group of friends and I noticed one of them had “T4” written on his hand. I asked him “hey, are you doing your taxes?” He said I was the only person who knew what that meant. I jumped on the chance. “You want help?!”

By the time I was 16 I was doing all my friend’s taxes… by hand.

I don’t do them by hand anymore, but I’m still doing my friend’s taxes. Every now and again they’ll get a Notice of Assessment from the CRA (Canada Revenue Agency) asking for proof of expenses, like child care receipts for example, and it’s presumed the tax return was filed incorrectly until they see and approve those receipts. (The CRA doesn’t believe in innocent until proven guilty, you’re wrong until you can prove otherwise).

Surprise bills are never fun, but it seems to be so much worse when they come from the CRA. It feels like those bills are written in some kind of code, and you have no idea what they’re asking for. So frustrating.

These stress-inducing letters are exactly why I think we should starting learning about taxes as teenagers. Guess what though, it’s not too late to learn!

As adults we can learn how our taxes work, and remove the uncertainty and stress that comes with them. Even if we never want to actually prepare our own taxes, we can still have a better understanding of how it all works, and be able to have more informed discussions with our tax professionals.

This is especially true for sole proprietors. Our business taxes and our personal taxes are one and the same, so having an understanding of the system is part of doing business. How much should I set aside from every sale? What expenses can I deduct? Do I need to charge sales tax? How does that work?

As your business becomes more complex, so do your taxes.

The first step to reducing tax stress is to be organized with your paperwork, Don’t think of taxes as a once a year event, think of them as something you maintain. It’s like oral hygiene. If you only brush your teeth once a year, things are going to get gross.

The best results come from healthy tax habits like regular receipt management and bookkeeping.

Kaitlin

P.S. If you’re a small business owner and you’d like to know more about your taxes, I’m teaching a course, which starts May 20, 2019, on all the things a small business owner needs to know about finance and accounting, including taxes. Get more info and sign-up for early registration here: https://www.captainsclub.ca/mind-your-money

The Burden of Incorporation

You have this amazing idea, you know you can help people, and you’re sick of your 9-5 job – so you make the choice to start your own business. It’s scary, but SO liberating.

Great! You’ve decided! You’re doing it! Yay!

Now what?

Should you incorporate? It would feel so official to incorporate. You’d have a real piece of paper saying you owned a company! You could take a selfie with it to keep as a record of this exciting new chapter in your life!

Let’s slow down. I totally understand this feeling. When I started my business, I wanted everyone to know. I was SO excited to go on an adventure and leave my old life behind.

An Incredible Journey

On your journey, you need the right tools. Think of your business form like a backpack. You want your pack to be the right size and weight for the adventure you’re on, so it doesn’t slow you down, but has everything you need in it.

If you’ve headed out for a day trip, maybe a small backpack that can hold your lunch and a couple water bottles is all you need. It would be nice and light, but would have everything you needed for the day.

What if you wanted to go on a multi-day trek up the side of a mountain? You’d want to have a big camping pack with a tent, a sleeping bag, a change of clothes, and a bunch of food and water.

Now think about having that big camping pack on your day trip. It would take far more energy to haul that pack around than the small backpack with just your lunch.

Business forms are the same. Think of the camping bag as a corporation. There are times when you absolutely want to have a big, heavy corporation for your business, but if the benefits of having all that structure is less than the weight of it, don’t incorporate.

There are a number of considerations when you’re deciding whether or not to incorporate your business, here are my top five:

Risk

A corporation is a distinct legal entity separated from you as a person. This arms-length distance can be especially important if you are working in an industry that is exposed to risk.

In the unfortunate event that your company is sued the assets of the company are at risk, but the lawsuit would not be able to touch your personal assets. At least in theory… in practice it is not uncommon for the business owner to also be personally named in a legal claim. (if you are concerned about your business liability, you should be consulting a lawyer to have this discussion)

Start-up Cash

If you need a bunch of money for start-up costs, a corporation will allow you to sell equity (shares) in the company or to take on debt to generate the funds you need. Except that a new corporation has the about same credit rating as a teenager who just moved out, so loans can be a challenge.

As a sole proprietor, you’re limited to your savings or the amount someone (like a bank or your Grandma) is willing to lend you.

Transferability

Are you in business for life, or planning to make fast money and a quick exit?

A sole proprietorship isn’t transferable. Somebody can buy your individual assets (like your equipment, website code, and rights to your trade name), but the business itself can’t be separated from the owner.

A corporation has shares, and shares can be transferred. It’s by selling shares that you’re able to sell a corporation
and everything that goes along with it. You can sell the assets of a company, but then you’re left with shares of a company with no assets, so that’s a whole other conversation.

Paying Yourself

As a sole-proprietor all your business income IS your personal income. Technically, there is no dividing line. (Though, for the sake of your sanity and success, I really recommend keeping very separate records for yourself and the business)

Your personal taxes and bookkeeping will become much more complicated than you may be used to as an employee.

When you incorporate, the tricky part is then actually paying yourself for your work. As an individual you’re taxed on any money you pull out of the corporation. That means for the corporation to be worth it, the total amount of taxes paid by yourself and the corporation needs to be less than if you paid tax on all of the income personally.

A corporation is a separate legal entity from yourself, which means you need to file a separate tax return. These are not easy returns, even if the company didn’t do much in the year. You’re going to need an accountant to prepare the taxes, and it won’t be cheap.

There are a few tax planning opportunities with a corporation, but if you’re not making a certain level of income, it doesn’t matter.

Flexibility

It’s a paperwork-intensive process to incorporate a company and it takes a little while. You have to file annual reports whether or not the corporation had any business activity. It also must be closed (which means still more paperwork) if you ever wanted to quit.

A sole proprietor on the other hand, can just start doing business (make sure you have the proper licenses) and can stop whenever they want to. There’s a lot more flexibility there, so if life gets in the way, no big deal!

My general recommendation is to start out as a sole proprietor and only incorporate when it becomes beneficial for you. This article is by no means an exhaustive list of reasons for or against incorporation. If you’d like to chat more about this, I’d be happy to help you out https://www.kirkcpa.ca/contact

When you start out on a business adventure, just grab the small backpack that’s already in your closet and head out the door. While you’re out, if you decide to take on a much longer and more complex adventure, you can always go by the camping store get yourself a bigger backpack with everything you need in it.

Kaitlin

P.S. If you’re on a business adventure come join us in the Captains Harbour community! We’re business captains that have come together to chat and get support on all things accounting and taxes!