27 Dec Being a self employed owner of a renovation company
Did you know that the residential construction industry is one of Canada’s largest employers? Our industry directly or indirectly employs over 1.23 Million people. This industry contributes a payroll of over $70 Billion per year and invests over $150 Billion per year in Canadian homes. On top of that, this leading industry is comprised predominately of small businesses. These numbers are staggering to say the least.
Let’s use a simplified example of what a small renovation business would contribute annually to the Canadian economy in taxes alone. Assume the business, after owner compensation, makes a profit of $250K, which would typically require sales of around $2.5M or more. Their direct contribution to the economy would be through tax collection amounting to approximately $375K in HST and the small business corporate income tax of $25K approximately. From an employment perspective, the owner, when taking profit from the company as salary or dividends would pay income tax amounting to $70-100K. Additionally, the company likely employs 10 or more workers and they each pay income tax Canadian Pension Plan and Employment Insurance. Therefore, a small business, as described above, contributes $600K or more annually. Wow, I bet you did not know how much a successful small business contributes to the economy of Canada.
On top of their contribution, small business owners take all the risk associated with self employment such as personally guaranteeing all credit, financing their personal home to capitalize their business, and working day in and day out to ensure their business survives. They are also responsible for the livelihood of their employees, which most owners take very personally.
Small business is the economic backbone of the Canadian economy, as we all now know, however the Federal Government needs money to pay for promises, expanding social programs and general expenses of running a government. With recent small business tax changes, they will raise these funds at the expense of small businesses. We do not mind paying their fair share, but the calculations above demonstrate we are paying well more than their share. Governments need to make it easier for small businesses to start and remain profitable, not squeeze then for extra tax revenue. Now, small business owners are not complaining, we are simply upset by the recent injustice. We are the ones building the economy of the country and our government officials are portraying us as tax cheats, which we certainly are not!
This is not an article looking for sympathy; as small business owners, we are hard working, risk taking, workaholics who enjoy self employment and thrive because we see every challenge as another opportunity to grow. Everyone should understand what it takes to maintain and grow the vibrant and profitable Canadian economy, it simply takes one small business at a time. Often we work 10 to 16 hours per day, many weekends, and rarely will ignore a business call regardless of the event! You all know who you are! We call home while on vacation to check on the projects and production. The same character traits apply to all business owners regardless of sex, religion, ethnicity, or language. I see small business owners as our own sub species; we are very protective of what we have created and will work continually to ensure it grows and stays safe.
For most small business owners our company is our baby and we want to see it grow strong and healthy so one day it can stand alone without our help. This is the time when the owner becomes the advisor or the consultant or director of the board and has given operational control to others. Maybe, just maybe, we can retire at the young age of 80 because we loved our work so much we just couldn’t stop. When your business is your passion, you never want to stop and you could be hooked for life.
Dan Monk, P.Eng. / Red Seal Carpenter
Owner – MONK Renovations