In this week's podcast, Paul shares practical tips on how to manage the numbers side of your business, from the time your company launches until it’s established and beyond.
Take advantage of free services
Many consulting companies will give you a free hour of consulting or they can at least offer advice to let you know if your business has what it needs to get started.
Know your tax rules
First you need to know if your business should collect GST, and then you need to determine at what point you should register for a GST number.
The general rule is that you need to collect GST once you hit $30,000 in sales within four consecutive quarters, Paul explains. But, if you register before you get to that threshold, you can claim the GST you spend on purchases for your business on your tax return.
PST, HST and payroll tax are other taxes to look out for. Depending on where you live, these may be applicable to your company.
Figure out a system that works for you
That might be an Excel spreadsheet where you track your income and expenses, or it might be accounting software, like Quickbooks, Sage or Xero. Many of these options come with sharing capabilities, so you can loop in your accountant if you need help.
Produce regular statements—and look at what they’re telling you
Whether quarterly or monthly, producing regular statements lets you know how your business is really doing.
“If it’s making better top-line sales but not adding something to the bottom line and your income overall, maybe you have to revisit your pricing structure or maybe you’re spending too much on advertising and it’s not translating into sales dollars,” says Paul.
Get a bookkeeper
Not everyone has time to organize their financial paperwork or money to cover frequent visits with their accountant. A bookkeeper can help round out your team, Paul says, while keeping you organized for everyone's favourite, year-end tax time.
Keep a paper trail
You never know if you’ll need it for audit purposes. If you’re asked for receipts from two years ago, you’ll want to have them easily accessible and organized.
Keep your records up to date
Pick a day that you update your records every single week, Paul suggests. Whether you’re using Excel or another type of software, you should enter your sales, invoices and any other sort of business data to keep track of it all.
“Once you start falling behind, it gets hard to catch up,” Paul says.
Pay your vendors and bills on time
Aside from maintaining a solid business relationship, paying on time contributes to a good credit score and the trust of your lender.
It’s the difference between keeping or losing your supplier, or having a $500 or $1,000 limit, Paul says.
“It can have a big effect on your business,” he adds.
Set a budget
Come up with a budget and review it annually. It’s one of the best things a business can do, especially in the early days, Paul suggests.
A budget gives you goals to work towards, but it also lets you forecast when you might encounter a cash flow crunch. Having that information on hand can be useful, in the event you need to ask your lender for some extra support.
For more on preparing a budget, you can check out Paul’s article on Modern Money.
When you enlist help to keep track of your financial situation, it frees you up to do what you do best.
“It allows you to work on the business and not in the business,” Paul says.