Small Business Survival Statistics and 9 Steps to Improve Your Chances of Sticking Around
The temptation to start a small business or venture into self employment can be strong particularly for those who are unhappy with their existing employment situation. The freedom and flexibility that being your own boss seems to offer can be seductive, as is the potential for growth which you, as the business owner, can have full control over. You may have an idea or a particular skill that you believe is desirable to a specific target market and you are confident that once this target market is aware of your existence they will all be banging down your door. Consequently, you start your business by offering an amazing product or services, only to realize that building up a customer base is more challenging than you thought. Additionally, there are a number of other obstacles for which you do not have the expertise (done by another department when you were an employee) whether it is marketing, website development, legal research and accounting. Finally, you realize that you actually need a fairly sizable source of cash to maintain the business, deal with growth opportunities, whilst ensuring that you are able to support yourself.
CJAD Finance Segment with Tommy Schnurmacher – Everything You Want to Know about Small Business
3 Invoicing Options for Small Businesses and Freelancers
If you are running a business of any size, it is essential that you have a system in place that allows you to get paid. A system can range in sophistication from a handwritten receipt to a software generated invoice which is part of an entity wide CRM system. To meet this need there are countless invoicing solutions available and many billions of dollars are spent annually on setting up systems to meet each business’ unique needs.
Almost all accounting software geared to small business owners and freelancers have built-in invoicing modules that integrate with your accounting. This is very useful when doing your books as you don’t have to worry about entering your invoicing manually and it allows you to track your accounts receivable and deposits into your bank account. There are also invoicing solutions that are not full-fledged accounting systems; however they usually integrate with the more popular software.
What Happens When You Contribute Excess Amounts to your RRSP
What is the Hiring Credit for Small Business?
Recently, a client received a notice from the CRA indicating that he had received a credit of $265. The explanation was simply that it was a hiring credit. Upon further research, we determined that the credit was a result of the provision in the 2011 budget that gave a credit to small business for hiring additional employees.
To be eligible for the credit, small businesses are not required to prepare any additional reporting. The small business hiring credit is simply calculated based on the increase in employment insurance (EI) premiums paid in 2011 over 2010. The maximum amount that any business is eligible to receive is $1,000.
Since the calculation is based on amounts reported on your T4 slips for 2010 and 2011, you are only eligible if the slips have been filed for these calendar years.
It appears that the amount of the credit is 100% of the excess of 2011 EI premiums over the 2010 EI premiums, up to aforementioned limit of $1,000.
The credit will not actually be paid out immediately, but applied to your payroll account.
New businesses (like my client) will receive the credit. Their 2010 EI premiums will be calculated at $0.
Note that since the EI credit should reduce your payroll expense, it will reduce your business expense and by extension, increase profits. The journal entry is as follows:
Dr. Payroll (EI) Liability
Cr. Payroll Expense
Once you receive your payroll statement from Revenue Canada indicating the amount of the credit, you may reduce the payroll liability owing to them by the same amount. You cannot, however, estimate the amount of the credit before you have received notification from Revenue Canada.
10 Corporate Income Tax Facts for Small Businesses
Is Facebook’s Valuation Justified? A Comparison of Key Financial Metrics to Apple and Google
The recent release of Facebook's S-1, the financial filings that are required to be publicly available prior to filing an IPO, has created a media frenzy. The report has been dissected and analyzed extensively, financial news networks can’t seem to stop talking about it and it seems that people who have never heard of an IPO are discussing it, fittingly, on their Facebook pages. The most controversial issue, of course, is whether Facebook is actually worth $100 Billion.
Although Facebook is unique in its global reach and ubiquity, the starting point for any valuation is to compare it with similar businesses. I have chosen Apple and Google, given the similarity of their business models and their respective global dominance, to compare certain key metrics:
Preparing your Small Business and Self Employed Tax Return with UFile Tax Software
How to Update Wave Accounting for the 2012 QST Rate Increase
As of January 1st, 2012 the Quebec Sales Tax (QST Rate) which had gone up from 7.5% to 8.5% on January 1, 2011 will now increase to 9.5%. The effective sales tax in Quebec will go up from 13.925% to 14.975%. Since QST is calculated on the net amount + GST, the rate is not 14.5% but 14.975% . In other words the effective QST rate is 9.75%. Business owners will need to update their invoicing and accounting systems accordingly to ensure that the rate is properly reflected.
If you are using Wave Accounting, the update to the rates is fairly straightforward, with one little quirk. Since Wave, unlike Quickbooks, does not allow for the QST to be calculated on the GST, the effective rate has to entered manually. This is done as follows:
To update Quickbooks for the tax rate increase, please see “Updating Quickbooks for the 2011 QST Increase”. The procedure is essentially identical except for rates.
Deferred Revenue and its Impact on your Small Business
Most small business owners are familiar with the concept of revenues, which is essentially the total sales of their product or service, to customers and clients, prior to deducting any costs. Revenues are a crucial component of business’ profit and loss statement and it is essential that they are accurate so that the business owners may effectively analyze the profitability of their businesses. Additionally there are third parties for which the accuracy of the revenues, and corresponding financial statements, is essential for effective decision making. Third parties include tax authorities, banks, partners and key employees (on which remuneration/bonuses might be based).
At first glance the calculation of total sales/revenues seems fairly straightforward. Add up your total sales (or ideally have your accounting software do it for you) and voila – you have your gross sales. There are, however, several types of adjustments that need to be made depending on the nature of the sale, including any amounts that might be construed as deferred revenues. Essentially (and quite simply) deferred revenues represent sales that are invoiced their customers now for goods or services to be provided at a later date. Revenue recognition principles dictate that, unless the sale has actually occurred, the revenue cannot be recognized. In other words these amounts must be reflected as deferred revenues. Once the product or service has been delivered or performed, the deferred revenue is then considered to be an actual sale/revenue. To a non-accountant, this can sound like a lot of mumbo jumbo. The examples of deferred revenue below should help illustrate the concept more clearly:
Tax Tips: Medical Expenses Tax Credit
8 Top Notch Information Resources for Small Businesses
As a small business owner, business blogger and service provider to other small business, I’m always looking for resources that will help me improve my own business, and provide insight into the latest developments, innovations, tools and guidance on financial and tax matters. Over time, I have bookmarked a list of the resources that I visit frequently:
The Importance of Staying on Top of Your Tax Obligations
Revenue Canada recently put out a press release about a Sarnia businesswoman who pleaded guilty for failing to file 23 individual, corporate and sales tax returns from 2003 to 2009. She ended up being fined $1,000 per count for a total of 15 counts (Penalties were not applied to the 8 outstanding GST returns). She has 12 months to pay the total $15,000 fines and was ordered to file the outstanding tax returns before November 6th, 2011. In addition to this fine, she is also responsible for any taxes payable and related interest and penalties that would be imposed by the CRA for late filing and payment.