The Key to Canada’s Prosperity – Small Business
If one studies failed societies around the world, the key common
factor for their collapse would be a failed economy. If one then
studies the failed economy, the key common factor would, in turn,
be the absence of a robust entrepreneurial small business sector.
It is high time that our society recognize the critical importance
that small business (a company employing up to 50 people) and
the families that own and operate them play in our economy. We
need to help this sector help us. To do so, we must first recognize
that there are far too many archaic and painfully foolish policies
hindering this key economic engine of our society.
We need to initiate a new thought process regarding how
families who run small businesses are viewed and treated by
society and all levels of government. We all know that general
business and tax policies are used to motivate economic sectors
as well as ensure the government generates enough revenues
to carry out its socio-economic mandates. As an experienced
Chartered Accountant helping small businesses for over 25 years,
I have gained insights into what the small business sector really
needs and thus what Canada needs. I do not simply accept
typical regulation and laws without first asking “why” and then
challenging the status quo. In my view, many of these policies are
misguided when applied to families who run small businesses.
There is a very serious disconnect in the Government’s
understanding and appreciation of the small business sector.
This disconnect manifests itself in the way certain laws and tax
policies are set at the same level for all businesses, irrespective of
size and substance. With respect to my “disconnection premise”
first let me explain who the small independent businesses are.
In the vast majority of cases, small businesses are made up of
Entrepreneurial Families (EFs) that have taken on the opportunities,
threats, and obligations that come with running a small business.
These EFs create the bulk of employment in our economy – some
statistics suggest up to 80%! These are the people that Canada
must nurture and embrace to assist their courage and fortitude as
oppose to hinder it with poorly thought out policies. It is my belief
that we need to educate the various government bureaucracies,
who when dealing with EFs must understand they are dealing
with people and not just a business, and that their policies need
to recognize the difference between the two. It is irrelevant that
EFs run a business through an incorporated entity. These people
and their families deserve the same protection under the Charter
of Rights as any individual and should not be expected to share the
same legal burdens as large corporations.
Our governments have been fixated on worker rights over the last
50 years, so now is the time to focus on the rights of entrepreneurial
families.
CEOs and the presidents of big companies do not have anywhere
near the number of personal obligations facing EFs, because almost
all laws, be they labor laws or taxation policy do not differentiate
between a business like General Motors and a small family owned
retailer or manufacturer. What are the effects of these laws? CEOs
of big businesses do not have their personal homes as collateral on
the business operating line. They (and by default, their families) do
not have the direct and personal liability to labor costs like unpaid
vacation, payroll, or the payroll taxes that EFs have. Corporate HST is
also a personal responsibility to EFs but not big business CEOs since
their companies are large enough to indemnify them from personal
liability. These same CEOs also have more flexibility through much
greater resources and fluid capital to deal with challenges of the
business that may result in civil liability. They can afford Directors
& Officers, or Errors & Omissions insurance, whereas many EFs
cannot. Unlike big business CEOs, the numerous challenges faced
by EFs directly affect their families.
Because size does not matter to the government, the legal and tax
obligations thrust upon the EFs effectively create a significant social
injustice. This injustice is the result of disproportionate burdens and
risks being placed upon EFs, which ultimately hinders Canada's
single largest economic engine.
Entrepreneurial Families are not only being taken for granted, but
are also being abused. This is evidenced by the irrationality of WSIB
policy toward EFs, the biased inequity in the way payroll taxes are
structured, the injustice and, quite frankly, the discrimination against
EFs that our labour laws propagate. Income taxation policy also
needs to change to effectively motivate EF small businesses to
create more wealth and employment.
Statistics suggest that small businesses may represent up to 80%
of all employment in Canada. Imagine the benefit to our society
if we could make entrepreneurialism so attractive that thousands
of people would be motivated to start and grow a new business,
while current EFs, feeling unshackled, would grow and hire more
people. Canada’s economy would explode towards new heights
of prosperity. I believe that taking away the unfair economic
policies that currently impact small business is the first key step to
unlocking the single greatest economic asset we have in Canada
– the Entrepreneurial Family. All it would take are a new clarity of
understanding and action by our government and the people.
If one studies failed societies around the world, the key common
factor for their collapse would be a failed economy. If one then
studies the failed economy, the key common factor would, in turn,
be the absence of a robust entrepreneurial small business sector.
It is high time that our society recognize the critical importance
that small business (a company employing up to 50 people) and
the families that own and operate them play in our economy. We
need to help this sector help us. To do so, we must first recognize
that there are far too many archaic and painfully foolish policies
hindering this key economic engine of our society.
We need to initiate a new thought process regarding how
families who run small businesses are viewed and treated by
society and all levels of government. We all know that general
business and tax policies are used to motivate economic sectors
as well as ensure the government generates enough revenues
to carry out its socio-economic mandates. As an experienced
Chartered Accountant helping small businesses for over 25 years,
I have gained insights into what the small business sector really
needs and thus what Canada needs. I do not simply accept
typical regulation and laws without first asking “why” and then
challenging the status quo. In my view, many of these policies are
misguided when applied to families who run small businesses.
There is a very serious disconnect in the Government’s
understanding and appreciation of the small business sector.
This disconnect manifests itself in the way certain laws and tax
policies are set at the same level for all businesses, irrespective of
size and substance. With respect to my “disconnection premise”
first let me explain who the small independent businesses are.
In the vast majority of cases, small businesses are made up of
Entrepreneurial Families (EFs) that have taken on the opportunities,
threats, and obligations that come with running a small business.
These EFs create the bulk of employment in our economy – some
statistics suggest up to 80%! These are the people that Canada
must nurture and embrace to assist their courage and fortitude as
oppose to hinder it with poorly thought out policies. It is my belief
that we need to educate the various government bureaucracies,
who when dealing with EFs must understand they are dealing
with people and not just a business, and that their policies need
to recognize the difference between the two. It is irrelevant that
EFs run a business through an incorporated entity. These people
and their families deserve the same protection under the Charter
of Rights as any individual and should not be expected to share the
same legal burdens as large corporations.
Our governments have been fixated on worker rights over the last
50 years, so now is the time to focus on the rights of entrepreneurial
families.
CEOs and the presidents of big companies do not have anywhere
near the number of personal obligations facing EFs, because almost
all laws, be they labor laws or taxation policy do not differentiate
between a business like General Motors and a small family owned
retailer or manufacturer. What are the effects of these laws? CEOs
of big businesses do not have their personal homes as collateral on
the business operating line. They (and by default, their families) do
not have the direct and personal liability to labor costs like unpaid
vacation, payroll, or the payroll taxes that EFs have. Corporate HST is
also a personal responsibility to EFs but not big business CEOs since
their companies are large enough to indemnify them from personal
liability. These same CEOs also have more flexibility through much
greater resources and fluid capital to deal with challenges of the
business that may result in civil liability. They can afford Directors
& Officers, or Errors & Omissions insurance, whereas many EFs
cannot. Unlike big business CEOs, the numerous challenges faced
by EFs directly affect their families.
Because size does not matter to the government, the legal and tax
obligations thrust upon the EFs effectively create a significant social
injustice. This injustice is the result of disproportionate burdens and
risks being placed upon EFs, which ultimately hinders Canada's
single largest economic engine.
Entrepreneurial Families are not only being taken for granted, but
are also being abused. This is evidenced by the irrationality of WSIB
policy toward EFs, the biased inequity in the way payroll taxes are
structured, the injustice and, quite frankly, the discrimination against
EFs that our labour laws propagate. Income taxation policy also
needs to change to effectively motivate EF small businesses to
create more wealth and employment.
Statistics suggest that small businesses may represent up to 80%
of all employment in Canada. Imagine the benefit to our society
if we could make entrepreneurialism so attractive that thousands
of people would be motivated to start and grow a new business,
while current EFs, feeling unshackled, would grow and hire more
people. Canada’s economy would explode towards new heights
of prosperity. I believe that taking away the unfair economic
policies that currently impact small business is the first key step to
unlocking the single greatest economic asset we have in Canada
– the Entrepreneurial Family. All it would take are a new clarity of
understanding and action by our government and the people.