It's here. The year we've all been waiting for as the turning point. Welcome 2022! If you're a business owner, now is the time to get all your ducks in a row.
Here's what is recommended at minimum to ensure your business is set up for success:
Hire a bookkeeper
Open separate savings accounts for sales tax, income tax and corporate tax
Come up with KPIs
Do monthly reviews
This is the best advice you can get. Work with an actual accounting software. There's an abundance of those in the market and if you're not sure which one to go for, just sign up for the free trial. They all usually offer that, and in fact, one of them is fully free to use - WaveApp. Once your business grows, Excel won't cut it, which is why it's recommended to use an actual accounting software where you can categorize expenses, track sales tax, do proper bank reconciliations and much more.
Hire a bookkeeper
Unless you have hands-on experience as a bookkeeper, it's probably better to leave this work to a professional. Why? because a lot of the times you would end up paying someone for cleaning up your books, which could be more expensive than having someone do this on a regular basis with no (or minimum) mistakes. This would also enable you to rely on the financial statements and be able to make solid business decisions that are based on real-time performance.
Open separate accounts
Cash is king - you've probably heard that before, right? so, you know how important it is to have it, especially when it's payable to the government. A great lesson learned from Profit First, is to have separate bank accounts for sales and income tax. The book goes deeper and suggests additional accounts (i.e.: payroll, personal and corporate taxes, savings, etc.). One of our recommendations is to have at least two additional accounts on top of the business chequing account, where you make monthly transfers for sales and income taxes based on actual results, so this cash is ready to be paid up when it's due and you're not scrambling and borrowing from different sources.
KPIs - aka - Key Performance Indicators, are highly important. These are measures that are set up by businesses, based on what it is they wish to track and measure throughout the year. For example: a product-based business might wish to track their inventory turnover or the number of returning customers. A service-based business would perhaps like to analyze which service sells the most and what is its profitability. Other KPIs could be - profit margin, percentage of market share, order fulfillment time, etc.
This is the time you will use all the above recommendations and combine them. Meaning: once your monthly bookkeeping is complete, you can review your accounts to ensure your business has enough cash-flow to support payments to the government, suppliers and payroll. You can also review the KPIs and compare them to previous months / quarters / years and have a better understanding of where your business's at, conclude on what needs to be changed and plan for the future.
If you wish to learn more about how MLHC can help your business succeed and set-up the right way for 2022, schedule a consultation today here.