GET LEGAL ADVICE BEFORE YOU JUMP!    

It amazes us how often clients make important decisions without consulting their lawyer.   Clients think they are saving money by not seeing a lawyer.  The opposite is often true and the expense can be many times the cost of advice. You do not need to see a lawyer about everything that happens (or could happen) to you.  You need a basic understanding of your legal rights and obligations so you can seek out advice when needed.

Once you detect a problem, call your lawyer and get some advice before you proceed.  Lawyers are experts in law and they can advise you on how to proceed.  If you do not have a lawyer, get a referral from someone you trust or call the Ontario Law Society referral service.

Here are a few more tips when dealing with a lawyer:  

1.  Ask if they specialize.  If they do not handle your type of problem they should tell you.  Look for another lawyer if they can't handle your case.

2.  Larger firms may have difficulty handling small dollar value cases because of large overheads.  A smaller, local firm may be a better option to handle small cases.

3. Larger firms generally have a broader range of legal experience. They will frequently have a lawyer on staff to deal with your problem.

4.  Ask what the cost is going to be for their advice.  Most lawyers provide a reduced initial consultation fee - sometimes free.

5.  Get the lawyer's opinion (generally verbal is acceptable) on the expected time frame to resolve the issue and the chance of success.  It makes no financial sense to spend more in legal costs that you are likely to win.  There may be other reasons to take legal action but carefully consider these against the cost.  Look for a realistic legal assessment of your problem and not a mirror reflection of your views.

6.  Some minor cases can be taken to Small Claims Court without a lawyer.  The maximum claim is $25,000.  If you are uncomfortable going to court yourself,  find a lawyer who will represent you.  Paralegals are another option. They are governed by the Law Society (the same one governing lawyers) and usually handle Small Claims Court matters.

7.  Document everything about your case.   A complete and clear understanding of the facts is important for your lawyer.  The longer they spend getting the facts, the bigger the bill.  Most legal cases deal with only two things - the facts and the law.  Let your lawyer do what they do best - practice law.

8.  Keep on track once you start a legal action.  It can take many months, sometimes years, to resolve a case.   Get periodic updates from your lawyer and satisfy yourself the process is working.

9.  Your lawyer may ask for a retainer.  This is not an unusual practice and does not reflect on their perception of your honesty.  It is a sound business practice, designed to weed out the "tire kickers" by testing your resolve, secure the lawyer's fee in advance and eliminate the financially insecure.  Be prepared to pay a reasonable retainer if asked.

10.  Know what you are buying.  Do not let your lawyer get off track with providing services you can get elsewhere more effectively or at lower cost.  Expect a big bill if you let your lawyer loose on all aspects of your business or personal life.   

If you need help, or clarification of any of these points contact our office.   

MAKE 7% - 55%  

ON SECURE, NO RISK INVESTMENTS  

Heard that pitch before?   You should be questioning this statement because if it is too good to be true it usually is. Surprisingly, these returns are available to everyone and are 100% guaranteed.  We think investing does not have to be limited to stocks, bonds and real estate.  There are many

day to day uses of your money that will produce returns in excess of most investments.   When offered an investment, make sure you have exhausted the ones on this list.  If not, say no to the investment and work on clearing the list.

The alternatives listed do not produce an investment return - they make money by reducing your costs.  If the rate of cost reduction exceeds your expected investment returns, then it is a better investment.   Even if the advisor claims a high rate of return they have to go a long way to satisfy the absolute safety of these options.  This table shows the rates of return assuming an income tax rate of 47%.  

Notes:

++ the penalties increase for each additional month filed late

All amounts are considered non- deductible except for interest on HST.   If your credit cards are used for business purposes the after tax rate applies.

BUY OR LEASE A CAR?  

Leasing is a simple and easy way to get a new car but is it the best option?  The convenience, and the perceived low cost of leasing, makes it tempting.

But is it really better to lease?  We see the lease/buy decision as an objective decision based on facts.  Your choice is to lease (which is very similar to a bank loan) from the dealer or borrow from the bank and buy the car.

 There are two types of costs in owning a car -  the day to day operating costs (fuel, repairs, insurance, etc.) and the cost of ownership (interest, depreciation, leasing).  Costs are reduced by income tax refunds if you are able to deduct automobile expenses.   Since day to day costs are the same whether you lease or buy, the decision boils down to the cost of ownership. The option that provides the least cost of ownership over the life of the car is the right one.

So how do you figure out which one is the least cost?  The method to use is called net present value of future cash flows.  You take all of the known cash flows (both in and out) and discount them to today's dollars.  This produces a single number which is the lifetime cost of ownership in today's dollars.  The best one is the lowest one.  The savings are usually in the range of $300 to $900, but can range into the thousands.

Net present value calculations are difficult for most people. It takes time and effort for accountants as well.  We found that the fee for us to do this service often exceeded the benefit to the client.  The decision often came down to judgment based on the facts provided.

To solve this we now have a financial tool that allows us to determine which option is best.  Our fee is equal to 50% of the net benefits obtained or $250 - whichever is less.  If we don't produce a saving, you pay us nothing.  Call us before you buy your next car.  

Corporate tax installments due                  July 31, 2011

Watch for CRA's personal tax installment reminders which are sent out in August.