My Focus is Shaken
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| Thu, 09-17-2009 - 4:15pm |
I'm just having one of those days where some thing has come up(sort of) and it has thrown everything off track. Or at least has my brain zinging in a million different directions.
Last year my store showed a small loss and I got some money back from my corporate taxes. This year I think it will show a profit(above the salary I pay myself) which to me is good and bad. It is good because I am looking forward to that pat on the back for managing things so well. Believe me I have come a long way in that department. It helps me believe this a viable business and worth doing, plus in the future I can pay myself more or do renovations or just have extra money(and get operating in the black!!) and security for the business. At this stage of the game, the profits are hard to see because they just go into paying off my land and building loan every month and it doesn't feel like extra income. This is why I am trying to pay extra on it as the loan draws from my business line of credit. I want my line of credit to recover eventually(and it will when the loan is gone) and I was trying to speed that up by snow flaking on it. Every fall my sales go down at some point and stay down through the winter except Christmas. Then in the spring things pick up again. But during the winter my credit line gets stressed and kinda full it seems trying to deal with lagging sales and paying higher bills from before and Christmas. So back to the topic. September is my year end and I don't have the final figures yet so I am just guessing but I have pretty good idea it will be on the positive side. That will mean I will have to pay corporate tax, I am also guessing it will amount to 1800-2600. I know, ouch! not only that but I will have to make installments for next year monthly after that in case I turn another profit. I guess I knew this but I didn't know how much it would be until I talked to my accountant this morning. I have not planned for this. I am feeling a little stupid at the moment. I wanted to pay my property taxes in full this year, ON time! I just don't know if I will be able to do either on time to tell you the truth. I would have the credit but don't want to stress my credit line (or me for that matter with the bank calling me telling me I'm over) when sales are lagging. If this was next year when the loan was paid off and I didn't have that huge draw I would not be as concerned.
I suppose I will have to tough it out one more year with things being so tight. I could take my snow flake money and hang onto it instead of flaking to my loan but my flakes would be slowing down now anyway and those won't amount to much in the next couple of months(maybe 500-1000 total) I will see how it goes. I do have my store efund but was secretly hoping to kick off the kids secondary school savings with this money. And if something happens that is unforeseen I would not have the cash to help myself.
Any thoughts or suggestions? I will have that as a line on my store budget going forward but it does not help me currently. I hope I can afford those monthly installments next year too(which would eilliminate the large chunk I will have to pay for this year, which I prefer). I do have to wait for the final numbers but my guess is listed above for the number.
I'm never going to sleep tonight..........



(((HUGS)))
First of all, you are NOT stupid. You are a smart, competent business woman who is on a massive learning curve. Corporate taxes in Canada would be enough to drive anyone batty.
So if we assume that you will have to pay ~ 1800-2600 this year, would that mean you have to make the same number of installments for next (meaning installments to equal 1800-2600?) If so, could you write this in as a line item (~ 100 biweekly?) How will this stress the line of credit? How much do you have in your store efund?
My personal thoughts are as follows: You need to take care of yourself first. If you are in a position when the kids go to uni to help pay for it, great. But DON'T dig a whole doing it. Your kids will benefit more from having a stress-free mom! If they have to take loans so be it. By the time they graduate your store will likely be turning a nice little profit and you can help them pay back any loans they need to take. Plus, living in a rural area opens the door for a billion scholarships (I used to get miffed cause I came from the GTA and was never eligible!!)
As for what to do I don't know that I have an answer. I would suggest trying to pay off the taxes asap because the CRA is not friendly. The line of credit may be stressed a little in the winter, but you have the efund there to cover yourself if you need it.
Try not to worry to much about it. It sucks now, but you are correct in that this really just means you are turning profits! Way to go!!
Bex -
"Yesterday is history, tomorrow is a mystery, today is a gift -thats why its called the present."
Bex -
I don't know about taxes and all that stuff in Canada and I will not pretend that I do but I have a high school Class mate that owns
Thank you ladies for responding. It means so much to me.
Bex I think I will pay the taxes out right. I won't want to see penalties or interest incur from taxes or damage my credit rating in any way. The property taxes I will try to pay half and then pay off the rest through out the year like I did last year. I didn't end up paying too much in interest as I recall maybe $75. Hopefully my credit line can handle everything. As a last resort I have my efund.
Mary Ann my store is a convenience store. I did mention it once before but that was awhile ago. I am the only store in my little town and I sell, beer, liquor, wine, gas, snacks, dvd rentals, coffee shop, small grocery, dairy, bread, cards etc. I also sell my Avon here and and a friend of mine sells her pottery here. My efund is $5000 but as I said before I would rather not use it if I don't have to.
I will make it through some how I suppose. I was thinking if I could flake even just a few dollars a month towards my ticker I would feel better. We will see what happens as I don't have the final figures and will have to go from there. It could be a rough winter..........
It sounds like a good plan to me. I think the problem is that you (and me, so I'm not singling you out, lol) now have it in our heads that NOT flaking = failure of some kind. In your case its just not true. You have a business that is seasonal. So at some points of the year, snowflaking may just not be possible. Look at all you've achieved so far this year! Its great!!! Just make sure to keep an eye on things!
As an aside, have you looked into the tax ramifications of taking a higher salary for yourself and thus deducting more from the business? I suspect this wouldn't be worth it because I have it in my head that business taxes are much lower then personal income tax, but it may be something to check into.
Bex -
"Yesterday is history, tomorrow is a mystery, today is a gift -thats why its called the present."
Bex -
Oh yes, I have looked at this option and many others. With paying myself more, I would have to pay more% in federal tax, source deductions, and CPP. It won't work. I have to pay the corp tax. But thanks for thinking of me. The only thing that would work is to do a renovation or buy equipment I think. And that would be more than I could afford in the first place right now.
Give yourself an "at a girl" for what you have accompolished.
Norma
"Patience is the best remedy for every trouble"- Plautus
I would pay the taxes with your store eFund and just start putting at least $250 aside each month in anticipation of 2010 taxes.