Minimum Tax

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Advice / FAQs: Contents

-How to not get sucked into investment fraud - steps to survival.

-Tips for climbing the corporate ladder.

-Full-time motivation for Part-time employees.

-The Big Give (creating a foundation).

-A Lasting Gift (Structuring an endowment).

-Writing off an affair.

-Four simple steps to organizational excellence

-10 strategies for business owners, that want to be rich & stay rich.

-Hiring without a net: 5 steps

-5 things that may help you get multiple offers: Job hunting for traders

-Protect yourself from Cybercrime

-Rules for reinventors

-The Perils of Self-Promotion

-Initial Offering: Build a partnership agreement to protect your assets.

- Never buy a condo or rent a condo that is operated/over seen by Vero Property Management Or Andrew Atrens (under investigation by the Canada Revenue Agency). They have wasted millions of dollars of condo owners' money and they are either CORRUPT OR THE MOST INCOMPETENT MORONS IN THE INDUSTRY OF PROPERTY MANAGERS. Don't trust them, as they will waste all your money and use it to pay their friends that are also too stupid to do their job without costing millions. In my professional opinion, they are crooks and most likely have paid off a judge or two (buying coffee counts a as bribe.

How to not get sucked into investment fraud - steps to survival

Follow these steps to ensure your investment money is safe.

1. Admit you don't know everything. You may know your business like the back of your hand, but don't assume you know how a completely different line of business works. So before investing, check whether the principals involved are registered with a regulatory body, and see if thy're ever been subject to any regulatory actions. To check for registration, go to your provincial securities commission's website.


2. Work with money managers who understand private investments. Fraud rarely happens in public offering, but it can happen and does more often in private investments. Private offerings are very intricately structured, so make sure the person handling your financial affairs is familiar with them. Ensure that the person you are dealing with is registered to sell securities, & if he/she has the necessary licensing and experience to handle private investments. Insist he/she informs you about the performance of the investment. If you're really interested in exempt market investments, most brokerages and mutual fund dealerships have a subsidiary that deals with them. They sell off an approved lst of products deemed appropriate for clients. If a product has been offered to you that's not on the list, that is a sign the rep you are dealing with is not on the up and up.


3. Beware of appearences. There are warning signs. Never make out a cheque directly to an investment rep. It should always be made out to his firm, which holds the money in trust. Don't be afraid to call that firm to see if he/she is authorized to sell the investment you're considering buying.


4. Don't be dazzled by reputation. Sometimes a whole firm is a fraud. Bernie Madoff's Ponzi scheme is one example of a reputation that was used to defraud investors. Don't avoid doing necessary research because the firm or players seem reputable. Look at the company structure, who is managing your trades, and if they are a real business.


5. Beware when key service providers are located far away. Make sure the providers are qualified, who their auditors are, as well as who serves as custodian of the stocks purportedly being traded. All stock trades generate paper trails and provide checks and balances - except when they are subverted or compromised, or bought off.


6. Beware the oath of silence. If the requirements of the investment is secrecy, be wary. This usually means someone has something to hide.


7. Look at the firm's internal controls. Dig down into an investment company's structure to find out who's pricing the portfolio. Ask questions such as, is the pricing being done daily, weekly, or at some other interval? Where are the trades taking place? Are the tradining people separated from the accounting people inside the firm? They're supposed to be. If something looks old, ask.


8. Don't rely on the regulators. Do your own due diligence on an "extraordinary investment opportunity" - or hire someone to do it for you - before laying money down. Sometimes regulators can pull off successful litigation, but the process is lengthly and you can be out of pocket a long time before getting reimbursed. Worse, if a firm goes bankrupt and the principals are broke, there is no cash to put back in your pocket.


Tips for Climbing the Corporate Ladder

1. Stand up for yourself. Challenge demeaning actions, but do it factually and professionally.

2. Project your voice. When you're making a presentation in front of a full room, a soft voice does not put forth an aura of importance or authority. Learn how to better project and develop a lower pitch that worked effectively when speaking to large groups.

3. Don't fight the system. It's better to work with the system from the inside. Help write internal policies and procedures, you can have more impact by working within the system than by confronting it when it doesn't work the way you want it to.

Full-Time Motivation for Part-time Employees

1. Provide your own training. Consider it professional development and an opportunity to grow.

2. Get to know yur employees. Include in your to-do list finding and celebrating successes. When you promote someone, send flowers, champagne, or chocolates. It's so simple, and it goes so far with people.

3. Top performers tarde tips. Let successful employees tell you what works. For example, if they had an amazing month, what were the challenges they had to overcome to get there? When you recognize people don't do it in a way that's not preachy or demoralizing to others.

The Big Give: 7 Questions to answer before starting a foundation

1. Do you know the difference between a foundation and direct donation?

Setting up a foundation - a separate legal entity - gives the organization's board of directors control over where to direct charitable funds. It can also establish a legacy and unite family members, through board service, across generations. And it offers a significant tax shield. But with autonomy and tax benefits comes fiduciary obligations. A foundation may cost $5,000 to $15,000 in legal and other fees and take six months to set up. It must set up a separate board, have regular meetings, file an annual report to Revenue Canada, and be audited yearly. All information about the foundation's activity is public record.

On the other hand, direct-to-charity donations don't require ongoing administration, and provide immediate funding to the donor's charity. Depending on the size of the donation, a charity may direct the funds to a specified purpose that meets the goals of the donor and the charity.

2. What's your motivation?

Sometimes, the motivation for starting a foundation can be more pragmatic. It can make business sense. The tax sheltar alone can be a significant impetus, particularly if an entrepreneur is looking to sell a business and is expecting a major influx of cash.

3. How much are you investing?

Many wealth managers say setting up a foundation is only a fiscally sound option if the donor can make at least a $5 million initial contribution to cover the annual legal and accounting fees, as well as the 3.5% rolling two-year average of the foundation's investments Revenue Canada requires be granted to beneficiaries each year. It is, though, perfectly possible to fund a foundation for much less.

4. What's your mission?

Most people know the causes they want to support. But without clear guidelines, as leadership changes over the years, the mission can go astray.

5. Will the mandate stand the test of time?

A foundation's mission must be concise enough to define a continuing area of support, but flexible enough to change with the generations.

6. How are you going to engage future generations?

Many founders intend for children or grandchildren to eventually take over the reins, but sometimes define a mission too narrowly to be of interest.

Founders would be wise, where possible, to include all generations in the development of the foundation. This helps prepare them for their roles as future philanthropists. Making decisions in isolation and without some level of intergenerational agreement could lead to family tension down the road.

Moreover, leading a foundation can be a demanding role, too, requiring time, commitment, and passion. If future generations aren't invested in its goals, leadership could become burdensome, and the foundation could become ineffective.

7. How much control do you want to have?

This idea of having direct control over giving is another reason business owners often choose to set up a foundation.

Last Facts:

A donor-advised fund involves a donor making a tax-deductible contribution to a public foundation and recommending grant distributions to qualified charities. A donor-advised fund doesn't have legal rights of its own, as a private foundation does, nor does the giver have as much control over where the money id directed.

But that fund is free and quick to set up, has no ongoing operational costs, apart from the administration fee levied by the public foundation, and doesn't require yearly audits. The account's activities can be anonymous if the donor wishes, and the amount donated can be as little as $10,000.

There is no real maximum on the amount one could use to set up a donor advised fund. Many very large donations have been made through donor-advised funds because they remove the hassle factor of governance and administration.

Donation vs Foundation

Donating to a registered charity means the donor gets a tax credit that can be used when computing income. If you're in the highest marginal tax bracket in Ontario, a $5 million donation could lead to approximately a $2.3 million reduction in taxes. (individuals can't use charitable tax credits that exceed 75% of their annual income, but the benefit of the donations may be carried forward for a five-year period and be used to offset income in subsequent years).

Generally, a foundation is required to disburse a minimum of 3.5% of the value of its assets to other registered charities each year and the balance of the funds can be invested within the foundation and disbursed over time.

A Lasting Gift: Structuring an endowment

An endowment can be in the form of a gift where the capital is held either for a specific time period, or in perpetuity. The income can either be expended each year, or a portion can be reinvested to keep the capital base up with inflation.

Factors to consider:

1. Time. Is the endowment's capital to be held in perpetuity or only on a long-term basis (10-15yrs)? Many donors are choosing to have the capital of an endowment held for a fixed period of time, with the balance subsequently being disbursed at the charity's discretion.

2. Purpose. Will a restriction be imposed on the use of the income and/or capital, or is the endowment to be used for the general purposes of the charity? Some donros insist the endowment be used for a specific program, such as cancer research or to pay for a scholarship. Others give the organization the discretion to use the income and capital  for any of its charitable goals.

3. Long-term viability. Does the endowment agreement permit a future transfer of the funds to another charity? While this seems counterintuitive, an entity may not always be able to manage a gift over a long period of time. A subsequent recipient charity, however, would be expected to ensure the terms of the endowment continue to be compiled with.

4. Flexibility. Can the restricted charitable purpose of the endowment be changed? It is important to include a provision allowing the charity to vary - at its discretion-the purpose of the gift in the event the original intention becomes impossible or impractical - a disease could be cured, or a particular need could vanish through positive social change. The inclusion of such a provision would avoid having to make a costly court application at a later date.

5. Frequency. Are further contributions of capital permitted and, if so, under what circumstances? Did you intend this to be a one-time process or do you want to allow further infusions of funding either from yourself or others, provided the terms of the endowment continue to apply.

Writing off an affair: Step by Step

1. Trend analysis. Number-crunching sleuths conduct a running scan of client financials, called a trend analysis, which takes a multi-year look at your books, establishes what a baseline of normal business activity looks like, and then scours for changes to the pattern.

2. Red flags. A business-owner begins an affair with his assistant, showers he with expensive gifts and keeps her chequing account topped up to the tune of $5,000 a month.

If he draws the money from his personal account his wife will get suspicious, so he runs it through the company by inventing a new supplier using vague invoices. And sometimes he just cuts her a cheque and doesn't even bother with supporting documents. To an untrained eye, the expenditures can appear legitmate. But to a good accountant, the trend analysis reveals the pattern established by the new expenditures.

3. Evasion. The accountant suspects something is up and calls the owner in for a meeting. She asks about the "new supplier", and probes into the lack of detail on the invoices. The owner's answers are uncharacteristically evasive. Her follow-up calls go unanswered but she continues digging.

4. Escalculation. The owner gets his assistant pregnant, and the company's monthly gross margins drop further. Nine months later they drop even more. At the same time, the accountants receive a request to prepare a record of employment for the assistant's maternity leave. The jig is up. But sometimes finding the evidence isn't always so easy. If more digging is required the accounting firm may hire a priivate investigator.

5. Confrontation. It's time to sit the client down and let him know that his secret has been discovered. Two things can happen: he can fess up or resist.


A. The client co-operates and goes through with the un-mingling process.        OR

B. The client stubbornly refuses to co-operate and continues with the concealment

If you take Path A

6. Un-mingling. The client drops his evasive posture and fesses up. He agrees to take the necessary steps to pull the hidden expenses out into the open, where Revenue Canada wants them. The un-mingling process will involve taking one of two measures. Both trigger personal tax consequences that will almost certainly flag the affair to the owner's wife-assuming she's still in the dark.

7a. Bonus it out. The accountant reclassifies the phony expenses as income earned by the owner -"bonused out"-and appear on the owner's T4 slip as regular income. If the owner isn't already paying tax at the top rate, he will be now.

7b. Shareholder dividend. Reallocate the money paid to the mistress as shareholder dividends, which will be taxed in the owner's hands at the normal rate, minus the dividend tax credit.

(Most often the expenses will be bonused out, but each case is unique and only an accountant will have the technical ability to make the appropriate call.)

8. Affair on a tax return. Once the un-mingling process is complete, the client is out of the woods with Revenue Canada. But if the owner had any hope of keeping his wife in the dark about the affair, the spousal tax return will do him in because it will show the significantly higher income he's now reporting as a result of the un-mingling process. The owner's wife will probably ask about the increase in income and where the money went.

If you take Path B.

6. Stepping away. The owner remains evasive. The accountants present him with a client representation letter, which makes him take responsibility for the information he is reporting and forces him to co-operate. The client has to sign the letter, and if he refuses, the firm usually resigns.

7. A matter of time. The owner, still thinking he can get away with it, refuses to co-operate. The firm resigns and the owner looks for a new acountant who will actively help him conceal the phony expenses. But it's only a matter of time before he gets busted by Revenue Canada. They have industry benchmarks for specific expenses, and if his company wanders too far off the benchmark, they flag it and initiate an audit.

Revenue Canada knows it's losing out on a lot of tax revenue, so they're getting more aggressive these days. With their ever-increasing team of auditors, the odds of slipping a year's worth of phony expenses by them are slim to none.

Four simple steps to organizational excellence

How to exploit the link between quality and engagement, in four moves - Checkmate.

1. Make teamwork part of the job. In the best firms, teamwork is more than a buzzword - it's a core part of the culture. Many use activities, including group orientation, training and skill-building programs, to improve the competencies of their teams as a whole. Others host town-hall meetings or informal social gatherings to get everyone working together. Still others get staff to work in cross-functional groups to stem departmental isolation. A cooperative, collaborative workplace inspires them to do their best work every day, exceed customer needs and develop positive relationships.

2. Use your influence as a leader. Employees deem senior leadership to be honest, accessible and accountable. These workers say their leaders provide clear direction, make staff feel positive about the future and communicate what's needed for success. And such leaders actively reinforce the effect of staff performance on company success.

3. Measure staff by company goals. The best employers manage performance in a way that both motivates employees and inspires them to imporve Q&E. Some firms establish performance-management criteria that stress an employer's role in meeting the organization's goals, such as measuring employee achievement in part on whether client expectations are met. With such a framework, the worker is left with no doubt of her agency in the company's success. In the best firms, the workers are evaluated regularly and, often, informally via two-way chats about the quality of their work.

4. Get creative with development. In most cases, budgets are tight, so managers have to be creative. For instance, some incorporate mentoring and informal on-the-job training so workers can learn from their peers while gaining a better understanding of how the organization as a whole works. The best also promote the idea of lateral moves between departments or job functions-not just hard-to-come-by vertical promotions-as career advancement.

10 Strategies for business owners, that want to be rich & stay rich.

1. Establish a holding company. Although incorporating your firm provides a degree of separation between your personal assets and liabilities and those of your business, putting your operating company (opco) under the ownership of a holding company (holdco) provides an extra layer of protection from creditors. That's because creditors can't make claims against assts held by the holdco. You can transfer 'extra cash' to the holdco in the form of a dividend, which will be tax-free to the holdco. However, the opco does need to have enough operating cash & its agreement with any banks may require a certain level in the debt/equity ratio. Note that Board of Directors can be held liable for any unpaid company debts, that those same members of the Board may have secured.  

2. Always know what your firm is worth. The true value of your company is crucial information to have if someone offers to buy your business. A valuation also reveals how much of your overall wealth your company represents so you can determine how much you should hold outside the firm in order to be properly diversified. It gives you a key number used in retirement and estate planning. A successful entrepreneur who hasn't had his business valued in 10 years is probably underinsured. That's why wealth-conscious entrepreneurs obtain a business valuation every three years from a chartered business valuator.

3. Don't bet your life on the business. As much as you love your company, you shouldn't let it monopolize your personal investment portfolio. Unfortunately, many business owners do just that, taking on an enormous risk by leaving all - or almost all - of their net worth tied up in their firm. The rule of thumb is use between 60%-70% of your net worth for your business, leaving between 30%-40% for outside investments in your portfolio. It is essential to not keep all your eggs in one basket.

4. Make your kids capital gainers. Don't let the taxman put a damper on that big payday party you'll enjoy when you sell your company. And don't wait until you're planning to sell to analyze the tax implications of a sale. More than half of all businesses sold come from unsolicited offers, so you have to be prepared.

Configure your company's ownership structure to take maximum advantage of the %750,000 lifetime capital gains (LCG) exemption to which each of your family members is entitled. In other words, don't be the sole shareholder of an opco; instead ensure that everyone gets in the game. At a cost of $5,000 to $8,000, you can create a family trust as well as a holdco, allowing a tax-free capital gains to accrue to other family members - your spouse, children or even grandchildren. It's common practice to list a spouse as a shareholder in the holdco and other family members as beneficiaries of the family trust. With a family trust, you can remove people from the list of beneficiaries, whereas with a holdco, shareholders are listed for life.

Timing is key. The capital gains must have accrued over time in order for each of your family members to be eligible for the full $750,000 exemption. To ensure that these capital gains start accruing to family members as early as possible, you should perform an estate freeze. This locks in the value of your shares in your company as of the date of the freeze. Any post-freeze increase in your company's value will go to your spouse and children. Each of them will then be able to apply his or her lifetime capital gains exemption to the taxes owing when the business is sold. A nice bonus is that you'll know, and be able to plan for, how much in taxes you'll owe when you sell your company.

To execute an estate freeze, you'll need to have your firm valuated. Then your company will issue you fixed-value shares equal to your current equity in the business, and issue growth shares to family members named in your holdco and/or family trust. The tax savings can be huge. Each lifetime exemption gives a family member (up to) $170,000 in tax savings. If a company is structured properly, a family of four could save $680,000 in taxes - not just the $170,000 it would save if only the entrepreneur held all the company shares.

5. Adjust your compensation mix annually. For most people, how much they make is the ultimate variable in their wealth accumulation. However, quality is as important as quantity for business owners, because different forms of compensation have different tax implications. The wealthy entrepreneur continually considers what his ratio of salary to dividends should be. One basic consideration within this balancing act is paying yourself enough salary to max your RRSP & CPP contributions. The RRSP contribution limit for 2011 is $22,450, which you'll reach if you pay yourself a salary of $124,722.

More complicated is determining how much compensation to take in the form of dividends. Tax rates on dividends vary widely from province to province - from 15.8% in Alberta to 30% in Quebec- and are slated to rise in some provinces and to fall in others. Of course, your firm also pays taxs on the income from which a dividend would be paid. Only once your accountant has calculated the combined % from these two rounds of taxation - and taken into account other variables beyond the scope of this story - will you know how the total tax hit would compare with receiving the same amount as salary.

 Another thing to consider: if you don't need the money as income or salary, have your operating company pay dividends t the holding company, as there will be no tax on that dividend until you take the money out. As well, don't forget to put family members on the payroll. Presuming that your spouse or kids are in the lower tax bracket than you, this approach will generate more after-tax income for your household. You can also have a family trust pay dividends to any f your children aged 18 or older - or a holdco pay dividends to any child who's a shareholder in it. Depending on the tax bracket and other tax credits your kids may be eligible for, they may end up paying little or no taxes.

Even if you haven't set up a holdco or a family trust, hiring your kids for summer jobs at your company will give them an income they can use to help fund post-secondary education, reducing the amount you have to provide. And, provided you don't pay them more than about $20,000 - which is very unlikely if they work there only for the summer - they'll still be eligible for the tax credits that will keep their taxes minimal or non-existent.

6. Find the silver lining in every expense. Make sure that you annually review all the expenses you incur in providing services to your firm, then ensure that the company coffers pay for any that are deductible as a business expense. If your company is incorporated then run as many expenses as possible through the company in order to minimize the taxes paid. The expenses may only be partially deductible, but it is still more cost-effective to pay for these through your company's earnings and not your personal income.

7. Assume you'll be disabled this year. According to Statistics Canada, one in eight working Canadians will become disabled for more than three months, and half of these people will be disabled for more than three years. So put disability insurance at the top of your list of insurance needs.

Protect yourself and your family from disability-related income loss by making sure your policy has a benefit period extending to age 65 and will replace all of your monthly after-tax income in the event of a claim. The latter depends not only on the premiums paid but also on whether tax deductions were claimed against them. The rule is: if you pay the premium with after-tax dollars, the monthly benefit is tax-free. In most instances, people don't deduct the premiums.

You should also have a good term-to-100 life insurance policy that will cover all your family's annual expenses and personal debt if you die unexpectedly. As well, your company should buy life, disability and other forms of incurance for you and other key people in the business. The firm will be the policy's beneficiary; in the event of death or disability, the policy will make a payment to the company to compensate for the setback of losing a key exectuive.

The standard rule of thumb is to buy 5 to 10 times the key person's salary. For a 45 yr old male non-smoker making $200,000/yr, the premiums will cost about $2,000 to $4,000 annually.

8. Get your spouse in the game. Once a yr, consider making a contribution to your lower-earning spouse's RRSP instead of your own. The benefits are twofold. First, creditors won't be able to access the assets of the spousal RRSP - provided that the spouse isn't a director or guarantor of either the business or the personal debt of the person who makes the spousal contribution. Second, the tax savings can be hefty. A business owner in the 46% tax bracket who makes the max RRSP contribution in 2011 to a spousal plan instead of his own can save about $10,000 / yr in taxes, depending on his other tax credits and deductions.

As well, consider a spousal loan, in which the higher income spouse makes loan to the lower-income spouse, who then uses the money to buy investments. The resulting investment income is taxed in the hands of the lower-earning spouse, at the lower rate.

Each quarter, the federal government sets the interest rate that the borrowing spouse is required to pay. Rates have been at historic lows for quite sometime. What's more the spouse can deduct the interest. So, as long as your spouse can earn more than 1% on his or her investments - plus taxes you pay on the interest you receive on the loan - this is a good tactic.

9. Launch an individual pension plan. If you own the business and the plan is for you, use a defined-benefit pension. Individual pension plan (IPP), a type of defined-benefit plan best suited to owners of incorporated businesses who are at least 45 yrs old and make more than $100,000 per year. Your company will make the contributions to this plan, which can exceed the allowable limits for an RRSP. Your firms can fully deduct these contributions, which are considered a non-taxable benefit for the plan's beneficaries - most likely, your family. Best of all, creditors of an incorporated business can't seize assets held inside an IPP.

The annual contribution limit on your IPP will depend on a variety of factors, including your age, salary and the number of years until normal retirement age. You'll need to have an actuary crunch the numbers, then review your IPP annually to ensure that it still suits your circumstances. The calculations involved are by no means simple ones, and IPP specialists say individual situations vary so greatly there's no such thing as typical plan.

There are downsides to an IPP. Tax rules require a plan's value to grow by 7.5% per yr, meaning your company must cover any shortfall. If the IPP grows by more than 7.5%, your firm's contrbution will drop the following year. And, other than in special situations, such as a critical illness, once you've put money into an IPP, you can't get it ot until retirement.

Still, an IPP makes it possible to set aside significant amounts of tax-deferred income for your retirement. They are a no-brainer and you can contribute for past service back to 1991.

The best time to contribute is when you sell the business. You can shelter hundreds of thousands of dollars at that time - far more than you could within an RRSP.

10. Make your advisors wrk as a team. Don't do it yourself. You'll want an accountant, estate lawyer and certified financial planner, all with experience of working with business owners, to work together to advance your financial interests. have them meet together with you at least once a year.This way, all of your advisors know what the other advisors know - and why. Focus the annual meeting on updating your personal financial plan (review goals/confirm you are using the right strategies/be specific). If you think you need to change, remove, one of the advisors, then do so.

Hiring without a net: 5 steps

1. Mine employees for referrals.

2. Speed is key.

3. Be objective - at first. Amass as much data as you can, then acknowledge that the hiring decisions will still be subjective.

4. Learn to improvise.

5. Focus on fit. What makes a good hire? 2 main things - relevance and character.

5 things that may help you get multiple offers: Job hunting for traders.

1. Be resourceful: You're a solution in search of a problem.

2. Show your track record. Demonstrate revenue or market share gains, changed circumstances.

3. Go from wide to narrow. Show how you toggle between strategic vision and implementing plans.

4. Be a self-motivator. Professionals who can work on complex problems on their own and lead teams will have more opportunities.

5. Know the details. Show your specific knowledge about all aspects of your current company.

Protect yourself from Cybercrime

Point of attack: Social Media. Networking sites like Facebook have become killer apps for launching social-enineering attacks in which impostors, made credible through detailed knowledge about a firm, dupe employees into surrendering password or triggering the installation of malware. Hackers don't have to go dumpster diving anymore if you're advertising it on Facebook. Best Defence: Employees' behaviour is key (you can't put technical controls on people). You should write policies that mandate the separation of business and personal social media pages, restrict authorization to disclose any details about the company or its employees to outsiders and prohibit clicking on unknown links. Then have employees read and sign copies of these policies.

Point of attack: Physical devices. Criminals steal computers and the computers have data stored on them (hard drives, USB memory sticks, smartphones, Point-of-Sale equipment and laptops). Best defence: POS terminals carrying credit-card numbers are as good as cash for criminals, so lock them in vaults at the end of the day. Enforce a strict policy for controlling data carried on laptops, and encrypt any confidential data.

Point of attack: fake websites. In the web era, corporate identities are easy to duplicate. Retailer sites can be hijacked. Best defence: Continuously monitor their brands online using tools such as Google Alerts and Netvibes. Also, prevent staff from giving up sensitive information online, such as a corporate credit-card number, by having them turn on the phishing-site detector that most web browsers have. And warn staff to be wary of suspicious-looking URLs.

Point of attack: digital voice networks: The merging of voice and data networks has allowed cybercriminals to take advantage of the more lax security typical on the former. Thieves often simply steal a firm's VoIP bandwidth. It's all being routed through the internet, so you can reroute tens of thousands of dollars worth of calls through a victim's gateway. Criminals can also intercept conversations or gain control of a machine on the data network. Best defence: You should separate your VoIP traffic from your data IP traffic. Outside expertise might be called for here; otherwise, IT staff unfamiliar with voice systems could make some dangerous security decisions.

Point of attack: wireless networks. Criminals continue to find low-cost ways to hack into wireless networks. This would allow a hacker to install a keystroke logger on someone's laptop or smartphone, then use this to detect the password to the corporate network. Best defence: You should equip mobile devices used for company business, including smartphones, with security software. And you should change passwords monthly, following 'strong password' guidelines from firms such as Microsoft or Symantec.

Point of attack: email. Slyly crafted spam messages will continue to dupe employees into unwittingly compromising corporate networks. You can also expect an increase in customized messages that, thanks to social-engineering efforts, appear too well informed to be spam but actually link to phishing sites and malware. Best defence: As with social-media sites, employee response to email is pivotal. Warn staff against email threats disguised as greeting cards, charity pitches or free offers. And adopt policies tha mandate the separation of personal and business email and restrict the sharing of information about the firm.

Point fo attack: clud computing. The benefits of cloud computing are widely touted, but not the risks. When you access software online, you are sending data over the internet and storing it on the provider's computers - making your data only as secure as the supplier's cyberdefences make it. Although big providers of software as a service, such as, have done their homework, some of the smaller, less sophisticated providers have not, providing easy access to hackers. Best defence: Review the security protocols of cloud-computing sites, especially if sensities business information is involved. Before signing a contract, insist on getting satisfactory answers to questions about where the site hosts data (for example: is it outsourced to a country known for lax security?), how it segregates data among customers and how it handles security for backups.

Rules for reinventors

1. Get online, for real. Reinvention these days is digital. You're not too old to learn social media, and it's not too hard. In fact, technology has become more, not less, accessible.

2. Start from scratch. In the Age of Disruption, we're all starting from scratch. Don't get hung up over it - embrace it.

3. Learn by doing. Don't worry about being perfect before you post something or try out a new site. The beauty of the medium is that there's often no right answer - so you won't be wrong.

4. Share the wealth. Competitive advantage used to be about keeping a juicy nugget to yourself. But today knowledge is practically a commodity - information is the most valuable commodity. Sharing raises your personal brand and connects you to others on a higher level.

5.Cut back fast. To change your career, you need to be financially fit. So forget about status; the neighbors will be more impressed by your reinvention than your country club.

6. Prioritize your passions. The great thing about remaking yourself is that you can jettison all those things that you hate. Plot your passions and skill sets, and see if it gets you to a new place.

The Perils of Self-Promotion

With Twitter, Quora, Facebook: It's never been easier to build a personal brand. It's never been easier to mess it up either. Here is how to toot your horn - without becoming yesterday's news.

1. Honour Honesty. If you inflate your resume in anyway, be prepared for it to leave lasting damaging effects on your career. It's way too easy to check things these days. A little exaggeration can lead to serious consequences.

2. No Boosterism. When you leave a message or comment on a blog post, make sure you're focused on "adding to the conversation". When you sign it, don't list multiple websites or your slogan and a pile of digital identities. It turns people away.

3. Stay in the Moment. If you're at a corporate event and all you do is edit your YouTube video or tweet, you're not projecting a positive image. Instead "drink it in". You might get a real live opportunity instead of an online one.

4. Nix Negativity. Don't criticize ideas and people very much. Skip the snark. You don't want to be labeled a negative person. An alternative: Be an expert. Find three or so online communities in your field or interest area and create bonds, share ideas or information, or write reviews.

5. Be Consistent. If your blog is seldom updated or your image swings from the 1% to the 99%, you're hurting yourself. Make sure you're clear on your core beliefs and target audience. Then be "systematic, patient, and intentional" about your brand for staying power. 

Initial Offering: Build a partnership agreement to protect your assets

You've decided to expand operations, develop a new product, or free-up some money for personal reasons, and determined taking on a business partner is your best option. Before you start your partner search, determine the legal and business arrangement you are prepared to offer.

1. Percentage participation. A starting point is the % of the business each partner has - the final number both parties negotiate often depends on how badly the initiating partner requires assisstance. The challenge is to determine how much you're prepared to give up.

2. Contributions. An agreement should clearly define what contribution each person is making. If the incoming partner is providing capital, then lay out how much and whether it will be contributed up front or in installments. Also determine if the funds represent "buy-in" and will not be repaid, or if it a loan.

Then spell out the duties each of you will perform and address decision-making. If the partners have equal participation, all decisions will be unanimous. If you retain a controlling interest, set out which types of decisions must be unanimous (keep the list short) and which can be made by you without his or her assent.

3. Administration. Determine who is entitled to write cheques (e.g. either of you can write cheques up to a certain amount, but both signatures are required for larger cheques), and who may sign contracts and other legal documents. You'll also need a policy regarding distribution of the profits.

4. Exit strategies. One of the most complex and important aspects of any agreement is what happens if a partner leaves the business because he dies, becomes permanently disabled, or quits.

4A: Death. The starting point is to determine the value of a apartnership interest, which will be based on the worth of the company - determined by a certified business valuator.

If both partners are active, a purchase of the decreased partner's interest is logical. It's different when one is active and the other is pasive. If a passive partner dies the active one will likely buy out his or her interest. If the active partner dies, continuing forward hinges on replacing the active partner with someone who can maintain the value of the business or determining whether a sale is more approrpriate.

Also critical is deciding what the terms of payment to the estate of the deceased partner will be (how much and over what period of time). If a portion of the purchase price remains outstanding, will interest be paid on the outstanding balance? Will the seller be entitled to secure the unpaid portion of the purchase price?

Also consider whether the business will generate sufficient cash to fund the purchase of the deceased partner's interest. If that's certain, buying life insurance on the life of each partner can ensure money is available.

4B. Permanent Disability. If an active partner becomes disabled, considerations are similar to those in the event of death but it's unlikely you'll be able to rely on insurance for funding as disability buy-out insurance tends to be expensive.

If a financial partner becomes disabled, it is still possible that the agreement will provide for the purchase of his interest, but the preference may be that he remains a partner to generate a return for his or her long-term care.

4C. Voluntary Resignation or Retirement. Be careful to ensure provisions for this eventuality don't give too much leverage to the departing party. If the business is suffering, it may become a case of who resigns first. You may decide if a partner wants to resign, the agreement will stipulate there will be a negotiation at that time.

4C. Third-Party Offers. Often an opportunity arises to cash in when an outside party wants to buy your business. To be prepared for this, your agreement should cover:

A. If a buyer wants only one partner's interest, does the other have a first right of refusal by matching the offer?

B. If one partner gets an offer for his interest, can the other insist on a right to "tag along", forcing the third party to buy the whole business or none at all?

C. If a buyer wants to purchase the company and you want to sell, but your partner doesn't, can you require your partner to participate in the sale?

D. If the partners aren't getting along, can one set a price for each partner's interest and offer the other the option of either electing to sell his interest of the initiating partner?

5. Non-Competition. If departing partner can continue to work, the agreement should contain a non-competition clause to ensure he or she does not receive proceeds of the sale and then compete, to the detriment of the company.