Posted On September 29, 2017 By In Top Stories With 196 Views

Going for Business Gold: 5 Essentials You Need to Know

by Jo Barnes – 

While the Olympic motto of “faster, higher, stronger” might seem more appropriate to a pentathlon, it can also apply to running a small business successfully. In a pentathlon, an athlete must do five different sporting activities involving a diversity of physical and mental abilities. We’re presenting five areas of expertise where a small business owner will have to flex their entrepreneurial muscles.

Seaside chatted with James Haley-Browning, Branch Manager, TD Canada Trust (at left) about the critical pieces of information a small business owner should know. Our panel of professionals (clockwise from right), James McCrodan, Senior Advisor Scotia Wealth; Darren Proulx, CPA; and Dominique Alford, Lawyer with Henley & Walden LLP give us their insights.

  1. Business Basics: What Are the Key Areas to Cover?

You developed a great product, chose a great location, and hired some amazing employees. All of these are critical, but achieving and sustaining business success calls for a broad knowledge of topics.

Darren: Some key areas to cover are cash flow management, time management, time deadlines, sales tax, organizing receipts and how to structure the business. A business owner should ask lots of questions and prepare a plan of operation before talking with an accountant; being proactive is key.

Dominique: Having a business plan is essential. It doesn’t have to be overly complicated but having a written record setting out your projected expenses, client development and anticipated revenue is important, so that you can check back from time to time, see how you are doing and adjust your actions and goals accordingly.

James: Create a conservative plan with enough financial runway to get your new business properly airborne. Use your banker, accountant, lawyer and financial advisor to assist with your planning. Keep the team in the loop.

2. Company Structure: To Incorporate or Not?

It’s important to look at corporate structure; there are many factors to consider.

Darren: This can be a very lengthy topic depending on the client’s situation, and each client is different. Often people start as a sole proprietor and then progress as they grow into a partnership or a corporation. It depends on personal circumstances.

Dominique:

• Setting up a business in the form of a proprietorship is relatively simple and the costs are low;

• The biggest disadvantage of a sole proprietorship is unlimited liability;

• One of the biggest advantages of incorporating a business is limited liability;

• Generally, the higher the net income of your small business, the more advantageous it is to incorporate instead of operating as a proprietorship;

• Each type of business entity has its advantages and disadvantages;

• It is wise to seek professional advice to assist in your decision-making, and in the setting up of your business structure.

James: Follow your accountant’s and lawyer’s advice on tax and liability management. A financial advisor can modify investment and retirement plans to suit if need be.

3. Accounting Knowledge: Payables, Receivables & Taxes – Oh My!

Efficient accounting is an elementary part of any successful business.

James: Actively manage your receivables and understand your cash flow timing as well as receipts versus disbursements. Follow disbursements online (credit cards and bank accounts and loan facilities) and review monthly by category. Budget in advance and track variances.

Dominique: If you can afford it, hire a bookkeeper to handle the accounting. If not, you need to have a working knowledge of accounts payable, invoicing, accounts receivable, payroll, statutory remittances (such as GST, PST, CRA source deductions etc.) and bank reconciliations.

Darren: Organization is key for any system and getting it entered or tabulated in a short timeframe. Determine if you have the time to do your own bookkeeping or if you will need help early before it gets away from you. Pick a system you can use and understand.

4. Tax Requirements: What Should You Know?

Take the time to know your tax obligations and procedures.

Darren: Know your deadlines and what taxes apply to your business before you begin. Send Canada Revenue and Minister of Finance e-mails to request a ruling on your sales tax situation so that you get something in writing back. Do not make assumptions on these taxes; be sure to gather facts. Many allow online remittances and this is very convenient. The key is compiling and invoicing them correctly.

James: Get advice from your accountant and stick to it.

Dominique:

• At the very least you should be familiar with GST, PST, CRA source deductions and basic income tax;

• You also need to determine which products and services of your business are taxable and exempt for GST purposes;

• PST registration is mandatory for all businesses that operate in commercial spaces and also sell taxable goods or provide taxable services.

5. Basic Knowledge of Employment Standards: What, Who & When?

You need to be familiar with your legal obligations as an employer.

Dominique: The first thing to know is whether or not the type of business you are planning on operating and/or your employees are governed by Employment Standards. If Employment Standards apply, you should be familiar with hours of work and overtime rules, vacation and vacation pay rules, payday rules and statutory holiday rules, to name just a few.

James: You should know what constitutes employee status vs. contractor, as per CRA definitions. To avoid pitfalls, leverage the knowledge and expertise of an accountant, lawyer, banker and financial advisor.

Darren: Get your basic info from your employees and know the applicable rates for CPP and EI and when to deduct it. You must also realize what your CPP and EI costs are as a business owner so you know what the monthly payroll remittance to CRA will cost you. Do not be late paying remittances. Have a company payroll policy manual that all employees read when they are hired.

Pursuing your business dream; it’s a lot like that of a pentathlete. Be prepared, develop your skills, access expert counsel, aim high and work hard. The prizes may differ, but get it right and you’ll be at the top of the podium.

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seaside

Your West Coast Culture. A magazine about the people and places that make the Saanich Peninsula the little piece of paradise we call home.

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