8 Accounting Tips You Need to Know if You're a Small Business Owner

1..jpg

You’ve taken the plunge and are chasing your dream of becoming a full-fledged entrepreneur. It’s been rewarding, and exciting, and…. confusing to figure out your finances amidst all the growth madness!

Fear not, here are 8 accounting tips to get you in top-notch financial shape!

1.     Review financial reports on a regular basis

You need to have visibility at all times into the financial health of your business. It’s important to consistently be reviewing your income statements, balance sheets, gross margins, inventory listing, cash flow statements, budgets, and financial statements by department.

Knowing where you stand financially will help you manage cash inflows and outflows, and most importantly, will help you plan for the future.

2.     Track your expenses

Get rigorous about keeping track of where your money is going. Set up an organizing system that works best for you, and get into the habit of saving and recording everything you spend. The last thing you need along with the stress of running a business is scrambling last minute, trying to find misplaced receipts.

Business credit cards are a helpful way to ensure that your professional expenses are separated from your personal one, and tracked appropriately.

3.     Research tax credits and deductions available to you

Put more money into your business’ pocket by exploring the tax credits and deductions that you’re eligible for, and making sure that you take advantage of them during tax season.

Want more information about what can and can’t be deducted? Check out Canada Revenue Agency’s full list here: https://www.canada.ca/en/services/taxes/income-tax/business-or-professional-income.html

4.     Be on time

Know the deadlines, and don’t be late! File on time to avoid paying a hefty penalty. For example, missing a corporate tax filing carries a penalty of a minimum “five percent of the balance owing on your return, plus another penalty of one percent of the unpaid tax, multiplied by the number of months the return is not filed.” Ouch!

5.     Get strategic and be prepared

Sure, it’s important to track what is already happening in your business, but it’s just as important to look ahead and plan accordingly. Are there major expenses ahead? Seasonal highs and lows? Get familiar with the patterns in your business and forecast properly for everything within your visibility.

6.     Set and forget it

There are some things that are unpredictable in business, but one thing is certain. You will have to pay taxes, and you know when that will happen.

Make sure that you’re ahead of the curve by systematically putting aside money each month. Not only will being proactive help your anxiety about tax season, but it will also help make paying up less painful when it comes time.

7.     Watch those invoices

Late payments can severely hurt your cash flow. Make sure that you’re not only tracking your billing, but you have an efficient process in place to deal with unpaid bills. There are plenty of software options available that will automate this collection process for you, so if you need some automated assistance, check out some of the options online.

8.     Get by with a little help from your friends (at Hendry Warren LLP)

Starting and managing a small business can be incredibly overwhelming, and sometimes, the best option is to know when it’s time to ask for help. Here at Hendry Warren LLP, we offer everything a small business owner needs, from start-up business advisory services to business succession planning, and we’re always here to help you chase your dreams, headache-free.