How To Start A Business - The Essentials
To set up a business, you don’t really need a college degree, tons of money, or even experience in the industry you want to venture into. However, there are a few essentials you require to ensure you start off smoothly. Besides supporting your operations, these requirements will also keep you out of trouble with the government and help you grow steadily towards your goals.
To show you what these essentials are and how they impact the way you do business, Brunning & Company Chartered Professional Accountant has explained how to start a business along with the basic, but crucial requirements to keep your business running.
1. Open up a separate bank account for your business, even if you are a sole proprietor
A separate bank account will help you keep track of all your business transactions and keep them separate from your personal. Your company bank account should be used only for business transactions and not to buy personal items. If you are a corporation, any money you spend out of the company account for personal reasons will be taxed personally. If you need cash out of the company, the easiest way to track it is to write yourself a cheque or transfer the funds to your personal account.
2. Keep all your receipts
Yes, saving all of your receipts is important because the Canada Revenue Agency can deny the expense you file if you have no proof of the same. You can keep the original paper copy or an electronic version as long as it is accessible and readable. These days, you can simply scan or take a picture of your receipt and save it to your computer or in an online storage system.
It is crucial to keep all of your documents in order when it comes to tax season. That way, you are prepared and have everything you need. I have seen The Canada Revenue Agency flat out deny expenses simply because the business owner didn’t have a receipt to back it up. This can occur even though you can see the payments coming right out of the company bank account with dates and names on it. It is also essential to keep track of all of your invoices and when they get paid. This is going to help ensure you are getting paid in a reasonable amount of time. Just sending out invoices and not tracking the payments could mean there is money you are owed, and your business is not going to grow.
3. Choose an accounting software if you decide to do your own bookkeeping.
There are a lot of excellent accounting software packages out there available at different prices. As an online accountant, I have a bias towards online products, especially Quickbooks online, but here is a small list of different software I have personally used and think are worth considering.
a. Quickbooks - I recommend this to all my clients
c. Wave (this is free)
b. Sage (not my favorite, but I know some people who like using it)
Several small business owners try to do their bookkeeping in excel, but I don’t recommend it. Excel is a great program for projecting and budgeting; nevertheless, when it comes to doing your bookkeeping, stay away. The amount of time I spend fixing client excel spreadsheet is not worth it, especially when there are so many great products out there that are free and do a much better job.
4. Find an accountant
It is okay to do your own bookkeeping, but I recommend hiring a professional to handle your taxes, especially if you are a corporation. When taxes are done correctly, it means fewer errors and less likely that the government will come in and review your records. Also, a professional accountant will help you with tax planning, payroll, and GST/HST.
When you are just starting out, there is no need to hire an in-house accountant as their fees are much higher than your local or online accounting firm, which provides the same services. A good way to find an accountant is to ask friends and family for a referral. And, if you aren’t happy with their services, remember that you aren’t stuck. Another accountant can easily pick up where things were left off.
5. Schedule time to do your bookkeeping and review the numbers
Knowledge is power, and having your bookkeeping done every month is going to show you your performance and where you can improve. Don’t forget if you hate doing it or don’t have the time, just hire someone to do it for you. Your accounting is something that HAS to get done every year, so don’t wait until the last minute. Being proactive will reduce stress and keep you informed about your business. For this reason, remember to schedule the time to do it regularly.
6. Set up a cash management strategy
Cash is vital when running a business, and if you want your business to survive for a long period, then you need to have the best cash management practices in place. Starting right from the beginning is essential, so you have a head start on the game. I recommend reading Profit First by Mike Michalowicz, to learn how to manage your money efficiently. This book will teach you how to control your cash flow to help ensure you earn a profit, pay yourself a reasonable wage, and even have money set aside for taxes.
For more startup related assistance, reach out to Brunning & Company Chartered Professional Accountant. I offer accounting, tax, and bookkeeping services to female entrepreneurs in Lethbridge, Coaldale, Fort Macleod, Calgary, Edmonton, Red Deer, Medicine Hat, Alberta, and across Canada. Besides offering you accounting solutions that prepare accurate accounts, I also aim to help you make better business decisions. My efforts are aimed at reducing your stress for a financial aspect and directing you towards opportunities for growth.