The Harper Government recently announced that it would be implementing an Economic Action Plan (EAP) that would be beneficial for Canadians due to its focus on judicious fiscal management and low-tax plan for jobs, growth and security. But how will this directly affect you? How will this impact your small business and how can you take advantage to ensure that your small business reaps the benefits?
There are several key elements in the EAP which should allow your small business to make the most of today's economic climate. Firstly, taxes will be reduced for your business. Secondly, red tape will be cut, employment insurance premiums will be lowered and finally financial planning opportunities will be improved for your company. Read on to find out more about the impact of each of these aspects of the 2015 EAP for your small business.
The most important measure in the 2015 EAP is that taxes will be cut significantly over the next four years for small businesses. This will lead to more net income for you, therefore providing fertile ground for your small business to grow over the long term so that you can plan more effectively for your company's future. The small business tax rate will be reduced by 9 per cent by 2019. Lower taxes means more profits for you. As a small business owner, the impact of less taxes is more capital which you can use to invest wisely in new aspects of your small business or simply to better balance your budget.
Small businesses will no longer be required to report as often to the Canada Revenue Agency. Reduced red tape means your small business will have more energy and time to focus on what matters: developing your company. This measure is part of a larger project that also promises employment insurance premium freezes for the next three years. The Small Business Job Credit will lower small businesses’ Employment Insurance (EI) premiums from the current legislated rate of $1.88 to $1.60 per $100 of insurable earnings in 2015 and 2016. Any company that pays employer EI premiums equal to or less than $15,000 in those years will be eligible. You may well be qualified to reduce your EI payroll taxes by 15%. The Canada Revenue Agency will automatically calculate the credit, so your small business won't need to do additional paperwork.
The 2015 EAP also proposes to amend the Canada Small Business Financing Act (CSBFA) so that more small businesses can apply for financing plus larger loans will be available. The CSBFA scheme helps new businesses get started whilst allowing established companies to expand and develop. As of 2015 you can take advantage of more resources. The EAP 2015 promises an increase in the maximum loan amount for real property from $500,000 to $1 million, plus a raise in the small business eligibility criteria from firms with gross annual revenues of $5 million or less to firms with gross annual revenues of $10 million or less. The impact of this for small businesses will be financially palpable as you will have a much greater chance of securing capital to grow your small business. New tools, resources and mentoring support through the Action Plan for Women Entrepreneurs and funding to Futurpreneur Canada will also be accessible under the 2015 EAP.
