The new Tax-Free Savings Account (TFSA) is a flexible, registered general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs.

A Canadian residents age 18 or older can contribute up to $5,000 annually to a TFSA. The investment income earned in a TFSA and withdrawals from a TFSA account are tax-free. The unused TFSA contribution room can be carried forward and this accumulates in future years. The full amount of withdrawals can be put back into the TFSA in future years.

However, re-contributing in the same year may result in an over- contribution amount that would be subject to a penalty tax. A TFSA can be invested in mutual funds, bonds and Guaranteed Investment Certificates. It is important to note that contributions are not tax – deductible. Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit. Funds can be transferred to a spouse or common-law partner for them to invest in their TFSA.

Upon death, TFSA assets can generally be transferred to a spouse or common-law partner. If you live in a province that allows the assignment of a successor annuitant to your TFSA and you have signed the necessary documents, your TFSA will pass to your spouse.  The spouse who is a beneficiary will pay no tax. The total amount carries on as  tax-free TFSA.  Any withdrawals  will not incur any tax liability.

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 There are some important business strategies that can be used for a small business unit. These strategies can also be applied for a small business unit dealing with a single product.

A low cost leadership can be used in these circumstances-

  • There are few ways to differentiate a product that bring value to the user
  • There are many buyers and are influential in bargaining a lower price
  • The product is sold by many companies
  • Buyers can switch to another product easily as switching costs are low
  • Price competition is intense

A focus strategy can be successful when-

  • The organization focuses on a market segment that is large and profitable
  • The segment is realized as a decent growth potential
  • The organization has the ability to provide competent and excellent service and increase its goodwill in that segment
  • Competitors do not see this segment as worthwhile for their success

A differentiation strategy may be considered when-

  • It is easy to win over brand loyalty
  • The differentiation of a product commands a premium price
  • The cost of creating a differentiated product is less than the premium price
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There are many successful businesses that are directed by entrepreneurs who had the drive, initiative and enthusiasm in their products and services. They derived success because they focused in doing what they knew best –running their business. They followed their passion that is running a business successfully. They firmly believed that through financial outsourcing they will have more time to devote to their business operations.

Through financial outsourcing a business owner permits a professional accountant to take care of its accountancy and bookkeeping requirements. This ensures timely accounting information for a business owner to make the right business decision to achieve success. Some of the benefits in financial outsourcing are-

  • Cost savings are achieved as hiring and labor costs are reduced
  • Timely reports ensures better decision making
  • Business owners have peace of mind as a competent professional oversees to all the statutory and compliance requirements that are mandatory
  • Better internal controls and working capital enhances efficiency and effectiveness of the business

Financial outsourcing has benefited companies that are run as sole proprietors and large businesses. Companies that are just starting up could benefit immensely as they could avoid the high cost of a permanent controller or chief financial officer. In the same way professionals like doctors, lawyers, designers, architects and real – estate agencies could mitigate these costs.

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