New Entrepreneur Check List:
- Brilliant idea? Check.
- Endless passion? Check.
- Supernatural ambition? Check.
- Nerves of steel? Check.
- A clear vision of success? Check.
- An accountant? …. WHAT? WHY? …I haven’t made any money yet. Why do I need to worry about accounting?
That is a fantastic question.
You don’t know what you don’t know. When you don’t know what you don’t know, it’s easy to overthink the unknown.
Does it make sense to incorporate? How do I incorporate? Do I need to register for GST? Payroll vs Dividends? What can I deduct? How do I track my information? When do corporate taxes need to be filed? Paid? How much to save for tax and GST? Who should own shares in the corporation?
At this point, new entrepreneurs will generally do one of the following:
- Spend countless hours online trying to find information.
There are endless sources of information online. Is it true? Is it understandable? Is it relevant? How much time was spent researching stuff that you really don’t care about?
It’s easy to become overwhelmed at the thought of all those questions and vow to deal with it soon… very soon… next month for sure. Ignoring Canada Revenue Agency and it’s various filing requirements rarely ends well. Consequences can range from penalties and interest to CRA seizing your bank accounts. It’s difficult to run a business when CRA strips your bank account of every penny each time you make a deposit.
- Ask friends and relatives. I can’t tell you how many times I’ve heard my clients say, “But my neighbour said I could claim all of my personal grooming expense in my business because I have to look presentable and presentable”.Or “My brother in law says he claims______________ ***insert ridiculous personal expenses here***_______” All is well and good until there is an audit. At this point, you’re dead in the water.
Bringing an accountant from day 1 can:
Save you time.
- More time to focus on your business—and less time is taken away from your family and loved ones.
- Procrastination can be extremely expensive in late penalties
- Also, save by coming up with a tax plan custom to YOUR business and personal situation
- Perhaps there are certain elections you’d qualify for… or grants
- An accountant can offer a bird’s eye view on your business idea. What haven’t you thought about? Insurance? Financing? Are you partnering up with someone without a unanimous shareholder agreement? What sorts of things can you deduct as it pertains to YOUR industry?
Assist in creating a strategic plan.
- Should you incorporate? If incorporation is a logical choice, when should you incorporate? Perhaps you’d be better off operating as a proprietor for a year or two first. What would be an appropriate corporate fiscal year end date? People assume that December 31 is the obvious choice for a fiscal year-end. The reality is, you can choose any date for a year-end and a non-December year end allows for so much more flexibility in tax planning.
- When are the various government filings due? Avoid surprises and prepare in advance.
- How are you going to maintain your records? Can you manage the documents yourself? What tools/software and applications are available? Do you need to hire a bookkeeper? What documents should be kept and for how long? What are your options for the organization?
- How are you going to pay yourself? How much do you need to set aside for tax?
- How are you going to manage your cash flow? An accountant can assist with some strategies to make sure there is money in the bank.
Gain Peace of Mind: – carry on your first year KNOWING that you’ve got a plan of action.
If you have questions about getting started, comment below or contact us.
Angela Richardson is a Chartered Professional Accountant (CPA, CGA) with more than 17 years experience working in public practice with small to medium sized businesses. While financial statements and tax returns are part of the occupation, consulting and assisting clients to achieve their entrepreneurial dreams is her true passion.