Einstein defined insanity as doing the same thing over and over but expecting a different result. In business, repetition of processes with the purpose of achieving the same result is the desired outcome. Standard results are valued as a predictor of success over random results achieved through inconsistent practices. Properly thought out and executed processes are the tools by which business operations can best position themselves for success. As an owner or an operator seeking a potential buyer, processes and procedures are integral and here’s why:
Consistent results. A properly prepared set of processes and procedures will lead to consistent business operation results. Consistency adds value since the company will continue to operate whether you, as the owner are there or not.
Error reduction. Adherence to processes and procedures minimizes the possibility of error. Recognizing that errors warrant expense to rectify the situation, profitability is then enhanced.
Reduced training costs. Documented processes facilitate an easier training process for new hires when they can follow prepared collateral on how to perform their tasks.
Reduced reliance on employees. Defined processes and procedures reduces the risk of over reliance on any given employee. Following established frameworks minimizes upheaval during staff changes or vacation occurrences.
Fraud protection. A properly designed set of processes and procedures ensures specific checks and balances to reduce the company’s exposure to fraudulent activity.
Review your business practices for consistent application of processes and examine how they flow together. Assume a staged, logical approach that takes into consideration the different functions and operational streams within your company but remember that you do not have to do everything at once.
For example, start with invoicing. Document how the invoicing system is currently being done and then look at it from a critical standpoint to identify how it can be done better. Consider what controls can be included to reduce the risk of errors or fraud. Conduct the same evaluation and documentation on your other systems, and continue to refine the procedures until everything has been reviewed. This approach will provide a valuable foundation for your business operations and a solid approach for continual improvement updates as the company evolves.
Einstein would be proud!
The Halton HiVE (Burlington HiVE's new name) has recently moved to an expanded location to 901 Guelph Line, Burlington – on the South-East corner of Guelph Line and Harvester, one block south of the QEW. The move was made possible as local entrepreneur and founder of the HiVE, Shaun Pennell, collaborating with leading property development and management company, Emshih Developments Inc.
The new space offers members free parking, reduced membership rates, more meeting rooms, large separate presentation room (suitable for 40 attendees), much larger games room with pool table, including significantly larger kitchen and lounge.. The new space also provides potential growth by 30% with the property’s 18,000 sq. footage (up from 6,000sqft) and a possibility to expand to 100,000 sq. feet. This is a creative office that already has a unique energy, and is bringing the community even more vibrancy and growth.
HiVE members often collaborate with one another, making the HiVE the home base where new and established businesses alike can grow and thrive. It is not unlikely to see two people who were once strangers, now working alongside each other as business partners, clients or mentors. With the rapidly growing community membership, there are far greater opportunities for successful businesses and the happy humans that run them.
Join the community with memberships starting at $29/month. The drop in rate is $30/day.
About the HiVE
Halton HiVE is a shared co-working space, giving a working home to a community of entrepreneurs, freelancers, professionals and start-ups! The idea of the HiVE grew out of noticing the need to avoid the commute to Toronto and provide a creative place to work in the Halton Region. Halton HiVE is the connecting space that brings both talented people and ideas together.
Founded in 2013, is a growing and thriving community of tech professionals, startups, freelancers and entrepreneurs. We offer a shared office space that encourages professional growth and collaboration while learning from other creative professionals in a fun and light co-working atmosphere.
Tax Court of Canada's perspective on SR&ED eligibility criteria
The Tax Court of Canada recently ruled in favour of Les Abeilles with respect to a SR&ED claim denied by CRA. We thought the decision was worth highlighting, and expect that this ruling will impact how CRA will test SR&ED eligibility going forward.
The case came to trial in July 2013 after CRA rejected the claim on grounds that none of the claimed work met the definition of SR&ED eligibility: the work undertaken was standard practice and/or routine engineering with no technological uncertainty, no technological advancement nor any systematic investigation. CRA also cited a lack of contemporaneous documentation to corroborate the claimed work.
On October 23, 2014, Justice Gaston Jorré allowed an appeal to the Tax Court of Canada (TCC) made by Abeilles Service de Conditionnement Inc. Abeilles is located in the east end of Montreal and is 49% owned by General Electric. The company manufactures electric motors and other component subassemblies such as heating elements, control panels etc. used in household appliances.
The following three rulings by the judge are contrary to the usual stance taken by CRA to reject a claim.
Technological Advancement: The Court ruled that research does not have to lead to technological progress for it to be SR&ED. Work undertaken in the interest of technological progress, even if it fails, can still qualify. Additionally, increasing the productivity and flexibility of a process can constitute technological advancement. In determining whether there has been experimental development, the Court stated that one must consider the project as a whole rather than looking at each individual test or step separately. This ruling contrasts with the approach taken by CRA.
Technological Uncertainty: Criteria of technological uncertainty can be met by the taxpayer not knowing how to achieve some goal that is very specific to its situation. This is a clear distinction from the statement "Technological uncertainties may arise from shortcomings or limitations of the current state of technology that prevent a new or improved capability from being developed. It is the "no shortcomings or limitations of the current state of technology" reasoning that CRA auditors all too frequently cite in their assessments.
Other findings of note with respect to eligibility are as follows:
Increases in productivity rate and flexibility of the process are acknowledged to constitute a "technological advancement".
Projects should be assessed as a whole and across multiple years, not "de-constructed" until no eligibility remains.
A diligent search by the taxpayer that shows a lack of information public domain with respect to how to achieve the outcome sought in the project, is adequate evidence of "technical uncertainty".
The need to develop a commercially viable (i.e. cost effective solution) can be a factor of technological uncertainty with respect to SR&ED eligibility.
Adjusting a manufacturing process can constitute "systematic investigation".
Technological progress in the manufacturing process equates to "advancement".
The requirement to develop a cost effective solution was a practical factor with respect to the criteria of technological advancement and technological uncertainty.
While contemporaneous documents are needed to corroborate the occurrence of SR&ED, those documents need not have special content relating to SR&ED; it is sufficient to be able to cross link the work claimed to the timeframe of the claims.
The last part of the ruling would be interest to claimants familiar with the SR&ED audit process. CRA often uses internal staff as expert witnesses in court, including using the same staff members who denied the claim in question. In this case, the Court ruled that the CRA staff member appeared to be guided by CRA guidelines, including certain standards for proving facts which were not appropriate in his role as expert witness. The court found that the Crown's expert (a CRA employee) was not sufficiently impartial after the taxpayer objected that the he was not "independent". The court observed the expert's "confusion" between his duty to uphold the very CRA administrative policies that formed the basis of the original assessment and his role at court which is to "clarify" technical evidence so that the court can make its decision.
The Milton Education Village (MEV) Innovation Centre is just completing its first fiscal year. With a soft opening in April, we became fully functional in September with the completion of Phase 2 of our construction. Over the fall we have seen interest in the facility grow with companies using our coworking space and leasing small flexible offices geared toward technology intensive firms.
Our board rooms and meeting spaces are also proving to be quite popular and Wilfrid Laurier University has begun to hold lectures in its class room space.
Much of our early efforts have focused on communicating what the MEV Innovation Centre has to offer to the technology and small business community. We have not spent as much time talking about WHY we are doing this.
Simply put, Milton can’t rely on the type of economic growth we’ve seen during the last decade continuing. Given its location in the GTA, Milton has been very successful in attracting logistics operations and the large scale, and land consuming, facilities that they use. We are not complaining. This tax and assessment growth has allowed us to achieve a level of fiscal balance and the ability to provide the services needed to take care of the Town’s rapidly growing population.
However, the supply of land is not endless and we expect the majority of large sites to be used up over the next ten years. That’s why we are asking ourselves, “what next?”. Better to be thinking about this now than scrambling for an answer in 2024.
This takes us to what we are calling our hidden economy. It has two parts. First, Milton’s population is on average, the youngest in the GTA with an average age of 34 years. It is also highly educated and over 40 percent of the work force is employed in professional and technical occupations. This is a talent pool teaming with entrepreneurship. We estimate that there are already over 3,000 “home based” businesses in town.
Equally important, is the emergence of the Professional/Scientific/Technical sector as a driver of local economic growth. This sector created the most new companies, about 400, over the last five years.
A significant proportion of the companies in the sector are in the computer/systems design and engineering industries. Currently, there are about 1,200 small companies employing about 2,200 people.
We believe that building a more diverse economy will be driven to a large extent by entrepreneurship and the continuing growth of value-added service companies and jobs. The MEV Innovation Centre’s facilities, existing and future entrepreneurship programming is dedicated to achieving this objective.
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