Tips and Updates
Visionary Tips for Business
|Posted on 2 June, 2015 at 17:30||comments (3)|
Working in the cloud has been a part of our lives for a long time but Cloud Computing is the "new thing" in bookkeeping especially for small business.
So I decided to check it out. I have now certified in SageOne, QuickBooks Online and Freshbooks. I also took a look at Wave and Xero.
Which do i recommend? It really depends on what information you need, your budget and how you plan to use the service. Some of my new clients only access their service from their smart phone. If you think that is how you will use cloud computing be sure to look at the different programs through your phone first, then on your desktop if you want to see how that looks.
You might like the look on your computer, make a decision and then be disappointed with the phone app that you will will work with daily.
I only look at my clients data on my laptop so it wasn't until I downloaded the apps onto my Android that I really saw what my clients see and interact with.
So here's a few tips to help you decide which cloud computing solution is for you:
- How many invoices will you send out each month and/or how many customers will you keep info on? Some services are priced by the numbers of customers you have.
- How many expenses will you be recording each month? Do you have receipts emailed to you? Some solutions allow you to attach that image to your entry of the expense .
- Do you already have software that use to store info about your business, such as customer or supplier names and contact info? How easy is it to import that info or link that software to the accounting solution you are looking at?
- Does your bank or credit card company link to the accounting solution?
- Do you care if your data is stored in Canada or the US? Can you download a backup onto your computer?
|Posted on 8 January, 2015 at 17:20||comments (0)|
Here is an interesting article by Dave Kerpen based on the idea of paying yourself FIRST from your business by setting profit targets.
Many entrepreneurs don't understand GAAP and author Mike Michalowicz makes the point that changing the formula to
Sales - Profit = Expenses encourages business owners to focus more effectively on their goal of making money and to eliminate
unnecessary expenses. What do you think?
Dave: How has putting profit first and expenses last benefited your own business?
Mike: I always thought that I could run my business on the idea that I should sell as much as I could and spend as little as I could and that profit would "just happen." It never did. I realized that I run my business by looking at my deposits (sales) and then paying my bills from what I deposit (expenses)... and always could justify spending/investing every penny I had. Profit was always put off to a future date, and that date never happened.
By taking my profit first, from every deposit, profit is now a habit not a hopeful "one day" event.
Dave: Why can the GAAP accounting method be so problematic?
Mike: GAAP ( Sales--Expenses = Profit ) is logical. And that, ironically, is the trap. Logically it works, but people aren't logical. We are driven by emotion and habits. GAAP puts us in the habit of selling as much as we can and they paying expenses first. Expenses become a focus and for most businesses grow just as quickly as sales. Profit is a "left over" in the GAAP formula. It's an after thought.
As the experts say, we get what we focus on and GAAP has us focus on expenses. That's the problem. We need to focus on profit and that is what Profit First does.
Dave : You mention the concept of TAPs in your book. What are TAPs and why are they important?
Mike: TAPs stands for Target Allocation Percentages. It is the percentage of money that is allocated to the different banks accounts from the deposits generated by sales. The core accounts that every business should have is a Profit Account, a Tax Account, an Owner's Pay Account and an Operating Expenses Account. Then on a periodic basis the money that has been deposited into the business gets distributed to these different accounts based upon the TAPs. I have found that, as a generalization, the ideal TAPs vary based on the size of the business. I have also found that a business should not necessarily start allocating the full TAP amounts right away. It can be too much of a shift for the company. A business just starting out with Profit First, should define their TAPs but also realize that it is a target and not the starting point. Start smaller and build your way up over time.
Here is the link to the full article:
|Posted on 20 June, 2014 at 17:15||comments (0)|
Well moving to Victoria has been a wonderful, time-consuming experience filled with new things to learn.
I have bought a home in the Oaklands area which means I will have a 250 number by the first week of August which should make it easier to do business in this beautiful City of Victoria.
|Posted on 24 March, 2014 at 22:50||comments (0)|
Did you know that the CRA has a whole series of videos to explain requirements for the new and small business owner?
There are videos about GST, payroll, record keeping and even one called “Starting Your Business”.
Each series has a number of short videos about specific topics. The videos are about 2 – 12 minutes long so you can choose to watch just one on a specific topic or the whole series.
There is also a transcript of each video if you prefer to read the info and related links are also included.
|Posted on 13 March, 2014 at 13:50||comments (0)|
Infographics are a great way to present facts and figures in an easy to understand way. They can be used in a business plan or in making a presentation to a potential investor.
An infographic can make a set of figures in a spreadsheet easy to comprehend.
You could use an infograhic in a business meeting to show partners and/or employees your business goals and how close you are to reaching them.
I used the free version of infogr.am to create the graphic below. The actual interactive infographic.
Do you need help creating an infographic for your business? Contact me for a quote... or I can teach you how to import figures from a spreadsheet to do it yourself.
|Posted on 10 March, 2014 at 10:00||comments (0)|
Starting a new business is exciting, exhausting, frustrating and fulfilling.
You have goals and plans.. but what you don’t have is historical information.
You can’t compare if your direct costs are less or more than last year or if your net profit is going up or down. In fact, you may not know what is a reasonable net profit to shoot for.
You know more is better but how much can you really expect to make?
Let’s say you have just opened a wonderful bakery, sales are going well and you are getting into a flow with your daily production.
You know you can make money but how much? The owner of the bakery around the corner probably won’t tell you and even if you have some mentors in the industry they may not be able to give you accurate data about their gross and net profit percentages.
Why? Many, many business owners don’t even know what those figures are. They know if there is money in the bank account, they almost always know if sales are up or down but gross margin? Net profit before taxes??? Isn’t that what their accountant tells them at year end?
Profitable businesses have owners that keep a close eye on gross margin, they look at industry numbers and measure their business against those figures.
After all its hard to hit a target if you don’t know what that target is.
So, where do you get those numbers? Industry Canada! They have all sorts of info and it can be broken down by industry, area, sales volume and more.
They have a Benchmarking Tool Report that can give you loads of info and you can even include your information for comparison.
But let’s go back to our new bakery.
In BC in 2011 ( the most recent figures available) there were 234 bakeries with annual revenue between $30,000 and $5 million. 68.8% of those businesses were making a profit .
So let’s take a look at the smallest businesses. These businesses are 25% of the industry with annual revenues of $30,000 to $108,000 . They are selling $96 – $346 per day, assuming they are open 6 days a week.
Their average gross profit is 64.3%, the industry average is 44.9%. Their net profit is 10.1%, the industry average is 2.7%. Wow, smaller seems better. If I dig a little more I see that the wage costs are noticeably lower in this group so I suspect that many of the smallest bakeries are owner operated and the owners are taking a low wage or a combination of wages and profit.
The cost of purchases and materials ( in other words, ingredients) for the industry is 38.4 %, for the smallest businesses 30.3% .
The next group up of businesses have with annual revenues of $109,000 to $298,000 . They are selling $350 – $955 per day, assuming they are open 6 days a week.
Their average gross profit is 61.8% and their net profit is 10.1%, still better than the industry averages.
The cost of purchases and materials for this group is 32.6%.
You can compare rent, advertising and any number of other expenses. You can look at sole proprietorships only or incorporated businesses only. You can look at the biggest companies or the smallest companies.
This kind of information can help you set realistic goals, consider what areas of your business may not be running as efficiently as possible, even set an advertising budget.
If mining this type of data sounds like torture to you, ask your bookkeeper or accountant to help you or request a customized report from me.
|Posted on 26 February, 2014 at 11:50||comments (0)|
OK, OK, I won't make you wait a week for the answers to how to calmly survive an audit...
Do you need to be worried about being audited?
If your books are in order you probably have very little to
worry about but :
- Ask why you are being audited. If you don’t understand what you are told ask your bookkeeper or accountant to clarify. You want to know what has triggered the audit so you can be prepared to explain what is happening with your business.
- Supervise the audit. In other words don’t just hand over your files or a backup of your accounting database. That way you can answer any questions that arise. You can do this yourself or hire your bookkeeper or accountant to do this for you.
What can you do to get ready?
Make sure your books are in order. When CRA sees organized files with good backup for all information they will not look as hard as if they are faced with a box full of receipts and no clear system.
Follow the additional tips below and you should sail through
that audit when it comes.
- If you aren’t sure if an expense if legitimate ask your bookkeeper or accountant…and then listen to them.
- Make sure you are keeping all original receipts. Your credit card slip is not enough, you need the store or restaurant receipt if one is available.
- On meal and entertainment receipts write the name of the person you had the meal with, their business relationship to you and the purpose of the meeting. For example if you take a customer to lunch you would write on the restaurant slip: Jim Jones, ABC Co, customer, upcoming projects.
- If you use your vehicle for business as well as personal use, keep a mileage log. Everyone has trouble with this but CRA does not accept excuses. So use an app on your smart phone, a note book that you keep in your car or an odometer device.. I am going to try out an odometer device soon and I will let you know if I am happy with it. Sometimes convenience is worth paying a few bucks for.
|Posted on 24 February, 2014 at 16:55||comments (0)|
I have a small business, will I get audited sometime? What triggers an audit??
These are questions that can keep many business owners tossing and turning at night. But an audit doesn't have to be scary.
So let's explore the answers to these questions :
The short answer is Yes, you will probably get audited eventually.
CRA does many kinds of audits, some audit only GST or payroll remittances. WCB also does audits to check on payroll reported and premiums remitted.
You might have a “desk audit” where CRA is looking for additional information on 1 or 2 types of expenses such as meals and entertainment.
You may receive a letter from CRA asking you to “self-audit”. This can happen if CRA suspects you aren’t doing something correctly but the money involved is not worth them sending out an agent. This is an opportunity to refile without penalties.
The audit most people dread is a full corporate field audit just because it can take so much time.
What can trigger an audit?
Late filing of GST
Late filing of corporate tax returns or personal tax returns
Late filing of payroll remittances.
Late payment of any of the above, though it is better to still file on time and then pay late if you have no other option. In other words you have cash flow problem.
Large changes in sales, expenses, profits or losses.
Audits with in the industry. For example: CRA is targeting your industry because they are seeing a pattern of incorrect reporting or even fraud.
Audits from other companies. here is a possible scenario: one of your major suppliers has just been audited and found to be underreporting their revenue. CRA is going to check that the unreported sales to you have been properly recorded in your books. In other words, CRA is wondering if you bought goods, paid cash to avoid the GST/and or get a deal and then didn’t report the purchase?
Do I need to be worried about being audited? How do I get ready?
So here’s the cliff-hanger – I will address those two questions next week.:/
|Posted on 17 February, 2014 at 11:10||comments (0)|
I heard about Powtunes at the Fraser Valley Business Network lunch a couple of weeks ago and I had such fun making a little video with some simple but effective tips for keeping ALL your accounts receivable current.
Click the link below for 1 1/2 minutes of fun!