Financial Statements

Corporate fraud is unfortunately too common these days because companies want to look good so that people will want to invest with them. Financial statements can be "cooked" or falsified especially if the CEO is in on it. It has to be falsified very thoroughly but it is possible to fool everyone. An auditing company may be in on falsifying financial statements. Accounting firms want to keep their largest clients happy so that they will stick with them and pay their huge fees. An audit of a large public company brings in very hefty fees to the CPA firm. If the accounting firm provides other services to this client as well then there is even more of an incentive to cover up wrong doing on the part of the client so as not to lose the client.

President George W. Bush signed the Sarbanes- Oxley (Sox) law on July 30, 2002 to fight corruption at big public companies. According to Wikipedia it is also known as the " Public Company Reform and Investor Protection Act". It set new standards for public companies which of course can help prevent financial statements from being falsified without anyone picking up on it. The Sarbanes- Oxley law was named after Senator Paul Sarbanes and Representative Michael G. Oxley, the ones who introduced it. One of the things that SOX suggests is that the huge bonuses that were paid to the CEO's and CFO's of companies which have engaged in misconduct should be required to be returned. I'd definitely vote for that one. Wouldn't you?

The Sox law also says that any "insiders" in a company or officers or directors cannot sell their shares of stock in the co. during a blackout period. This refers to the time just before a company goes bankrupt, when no one but the insiders know what is about to happen. If they do sell their shares during this blackout period then they can be sued by the shareholders to get the money back that they made selling their shares. Hopefully laws such as these will help to prevent the common problem of bogus financial statements and corporate fraud in general.

Health Insurance - How to Get the Benefits You Need

Insurance companies are one of the top 3 richest businesses in North America. There is a reason for that. All you need to do is ask somebody who's paid hundreds of dollars a month for a health care plan what their experience was like and you'll understand why it is that insurance companies make so much money. They'll tell you how so many of their prescription costs were not covered, only certain brand medications were claimable and others were not. Or how they're only allowed 60 or 70% of the cost for some paramedical service and 80% of the user fee for others. Or, Sorry you have reached your limit. Are you confused yet? How about the common phrase, "Sorry, that's not covered." Yes that is the story of trying to claim medical and dental costs through an insurance provider.

So what's the alternative? Business owners do have an alternative in Canada. Under our income tax act a Private Health Insurance Plan is an option for Canadian business owners. This is an opportunity for a company to own and administer their own health plan. Home Based Businesses in Canada can really leverage this option.

How does this create an affordable health plan?

When you own and administer your own health plan you get to set the limits. Through the plan contract you decide the level of healthcare benefits for yourself and for your employees. Because there is no middleman there are no premiums to pay. In a Corporation you can set tears or levels of benefits. Upper management has a much higher pay level and much more responsibility, which allows you to also give them higher benefit levels. Proprietorship can create a plan and have it administered through a company like Gumboot Business Services. They also get to set their limits.

How does a private health insurance plan work?

Your medical and dental expenses become a business expense. You bring in your receipts and reimburse yourself through your company. When your employees bring in a medical expense receipts you simply reimburse them. If there are no expense receipts submitted, there are no costs. And because you set the limit in the health care plan you set exactly what each employee can expense and what your budget is going to be for the year.

A simple tracking system will allow you to keep track of exactly what each member of your family and employee has spent. This ensures that nobody goes over their limit, and keeps your numbers accurate for your year and income tax filing.

The other wonderful bonus with a private health insurance plan is medical and dental expenses paid for by a company to its employees are tax-free to the employee. No CPP, no EI for either of you and no income tax for the employee.