Three tips for setting up your Business Finances correctly
There is just so much to consider when starting a business!
You’ll find lots of information on identifying your ideal client, perfecting your sales offering, pitching, social media marketing and more. We are here to make a case for focusing on the number side of your business too.
Your business finances and taxes matter to the success of your business. They matter a LOT. Being tax and financially savvy will save you money in the long run, by preventing you from missing filings and being hit with penalty and interest charges (which by the way, are not a business write off). It will help you make better decisions, reduce your tax liabilities and grow your business in a profit focused way.
Here are our top tips for setting up your business correctly from the start:
Always separate business and personal transactions
If you aren’t already separating these, please make a plan to transition this asap. We recommend having a dedicated business bank account. Business bank accounts are easy to get and come with favourable rates. They give you access to online options to file and pay your GST/HST sales tax and other tax obligations such as payroll remittances. They generally come with options for higher daily banking limits and integrations with business apps are more readily available as well. These are perks, but the biggest reason we recommend this is for traceability purposes. When all debits and credits going through the account are business in nature, record keeping is simplified.
System for receipt savings
In Canada keeping your receipts is mandatory. If you have read otherwise, your source was likely US based.
It feels like a daunting task to keep all your receipts, but there are much better solutions than stuffing them in a big box or a file folder. The requirements of the CRA allow for digital receipt storage as an acceptable means to savings receipts. There are some specific requirements so we recommend doing a little research and selecting a digital receipt storage solution app like Hubdoc, Quickbooks Online or Receipt Bank.
We suggest you make a habit of converting all your receipts to digital format either on the go as you receive them or setting a recurring monthly calendar reminder to and spend 30 mins a month working on this. Receipts you receive via email can also be set up to forward right to your chosen digital receipt application.
Having a bookkeeping system in place from the beginning is a recipe for success. You can use your bookkeeping system to produce invoices, and slowly learn the functionality to start DIY’ing your books, or find an outsourced bookkeeper or CPA firm like Grow CPA to take care of this for you. We are Quickbooks Online fans, it’s the only software we use for our business, but there are other options as well so look around and find a solution that meets your price point and needs.
We can’t express enough the importance of getting these systems in place. Pick one of the three things we mentioned above and set yourself some deadlines! You’’ll be glad you did.