Faced with myriad difficulties, business owners need quality wealth-planning advice and tax guidance more than ever
With countless Canadian businesses still shuttered and whole economic sectors getting choked off by measures to contain the COVID-19 pandemic, federal and provincial governments have aggressively implemented financial relief programs to help entrepreneurs.
But as helpful as these lifelines are, taking full advantage of them requires a special blend of expertise: an appreciation of businesses’ unique challenges, the ability to keep abreast of new announcements, and the knowhow to apply those to clients’ specific circumstances.
That’s what Jack Courtney, vice president for Advanced Financial Planning at IG Wealth Management, says his firm is striving for as it assists struggling business-owner clients.
A diversity of challenges
“Obviously, the crisis has affected firms differently, depending on the nature of their industry,” Courtney said. “The city I live in is a trucking centre, so we have quite a few that have seen increased business with more people ordering things online for delivery. But the vast majority have never seen their revenue decline so precipitously, if not get totally wiped out.”
Because of social distancing measures and other guidelines and regulations meant to contain the coronavirus’s spread, those in the hospitality, retail, and events industries have endured a particularly hard hit. Canada’s oil patch, which has gone through tough times in the past, is also going through fresh and arguably deeper hardship amid cratering demand for fossil fuels.
“A lot of business owners have been forced to lay off employees, and now they have to figure out how they can stay connected,” Courtney added. “If you’ve built up a good workforce, whether through quality recruitment or solid training, you don’t want to potentially lose them.”
Even physical businesses that are still open are facing challenges. Aside from significantly lower demand for their products and services, they have to worry about how to keeping their employees and customers safe. And due to the fractured operation and opening of companies across sectors, getting much-needed supplies can be problematic.
“COVID-19 could also have a longer-lasting impact on many industries,” Courtney continued, noting how the current shift to e-commerce and virtual life might permanently dilute consumers’ appetite for traditional retail and travel experiences.
The new KYP: Know Your Program
Only time will tell whether business owners can successfully pivot their operations and strategies to thrive in the new normal. But in the nearer term, they have fixed costs to grapple with. For the majority, that means navigating a shifting labyrinth of eligibility requirements to get government aid.
“There’s been a lot of different programs very rapidly implemented by the federal government as well as some of the provinces, and that’s been great,” Courtney said. “But given the pace of change and the enhancements that come after they’re announced and enacted, keeping up has literally become a full-time job.”
To keep advisors and their clients properly informed of developments and opportunities in wealth planning, IG Wealth’s financial-planning department employs a deep bench of specialists. That includes over 24 tax professionals — several of whom, according to Courtney, are now totally devoted to keeping abreast of the various programs extended to business owners, as well as the changes in rules that come out on what seems like a near-daily basis.
“It’s all about deciphering the language, making sense of the provisions, and explaining them to advisors so they can come up with actionable advice and materials to help their business-owner clients,” he said.
By nailing down the brass tacks of programs, advisors can help their clients avail of programs that they might not realize they qualify for. As an example, Courtney pointed to the Canada Emergency Wage Subsidy program, which covers 75% of employees’ salaries for businesses that have been affected by the pandemic.
“Some business owners might not appreciate that even if they’re not operational and their workers are unable to carry out their normal tasks, they can use the CEWS to pay their employees,” he said. “Depending on the circumstances, it can be what they were paid before or what the business owner can afford to pay them now. But in many cases, it would be more than what workers would get under the individual Canada Emergency Response Benefit.”
The Canada Emergency Commercial Rent Assistance program, meanwhile, is more challenging. Since the program compensates landlords who then grant rent relief to tenants, the impetus is on business owners to reach out and negotiate with their landlords, who hopefully are also receiving good advice on government aid eligibility requirements and provisions.
“I think there’s an incentive for landlords to work with tenants, particularly good tenants who’ll be hard to replace should they go under because of the current crisis,” Courtney said.