By Dan Monk D id 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 renova- tion business would contribute annually to the Canadian economy in taxes alone. Assume the business, after owner compensation, makes a profit of $250K, which would typ- ically require sales of around $2.5M or more. Their direct contribution to the economy would be through tax col- lection amounting to approximately $375K in HST and the small business corporate income tax of $25K approximate- ly. 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 risks associated with self employment such as personal- ly 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 Govern- ment 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 demon- strate we are paying well more than their share. Govern- ments need to make it easier for small businesses to start and remain profitable, not squeeze them 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
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SPOTLIGHT ON BUSINESS MAGAZINE • JANUARY 2019
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