Category Archives: Accounting

Should You Hire an Accountant or DIY?

For small businesses, it’s often a necessity to keep expenses low. So I’m willing to bet you’ve probably managed your own finances and accounting so far. But is that really what’s best for your company?

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Ask yourself: how much do you enjoy doing your own accounting? Does it stress you out or take longer than it should? It might be better to hire an accountant. On the other hand, if maintaining your accounts is easy, and you’re adept at it, DIY should work just fine.

Let’s look at both sides to find out what’s best for your company.

Managing Your Own Accounting

For a lot of us, accounting is as simple as having a QuickBooks account, tracking expenses and income, and sending out a few invoices. For the most part, this is easily manageable. Continue reading

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3 Things Small Biz Owners Skimp On, But Shouldn’t

Small business owners are notorious for keeping an eagle eye on their finances. After all, every penny counts when you’re trying to make enough money to pay both your business expenses and your personal expenses.

And for the most part, bootstrapping a business helps us diversify our skills. We become better at managing, sales, accounting, even coffee-making.

But sometimes we get it wrong. We think we can do everything for our business, and our business suffers as a result. Here are 3 areas you might be tempted to DIY, but do so at your own peril. Continue reading

Merchant Card Processing 101

If you sell products, you likely use a merchant card processing machine and software. If you don’t, you’re missing out on serious opportunity to capitalize on the tens of thousands of people who use credit or debit cards to pay for purchases.

Still, if you’re currently researching your options for merchant card processing, there are a few things you should know.

How You’ll Be Charged

When you first sign up with a merchant card processing service, you may be charged an initial fee for setup and equipment, totaling anywhere from $300 to $800. But the fees don’t end there!

This New York Times blog post put it succinctly:

“…there are four parties involved with every credit card transaction: the merchant receiving the payment (“merchant”), the bank that the merchant uses to provide processing services (“acquiring bank”), the bank that issued the card to the customer (“issuing bank”) and the customer (“customer”).” Continue reading

How to Deal with the Slow Paying Customer

As a small business, you probably don’t have the capital or the time to deal with slow paying customers. Whether it’s a business with an accounts payable department twice the size of your company or a fellow small business with somebody who doesn’t consider prompt payment a priority, the results are the same. You need consistent cash flow and you don’t have time to chase down the check.

Calling and making demands isn’t going to help your relationship moving forward so focusing on positive ways to give them a gentle nudge is a better practice. Here are some ideas.

Put it in Writing

You have heard it before, but from the smallest job to the largest, have a contract. The contract should outline the scope of the job, invoicing information, and payment terms. The old cliché is applicable here: “the shortest pencil is better than the longest memory.” The days of a handshake for a contract are gone.

Invoice with Delivery

If a company has a policy of paying within 30 days, they are likely talking about 30 days from receipt of the invoice. If you finish the work and wait until the end of the month to invoice, you might not see the payment for a total of 60 days. If the company has a history of taking their time, call to verify they received the invoice.

Although it was on your contract, restate the payment terms on your invoice. Place them at the top in larger type. (Not obnoxiously large but make them stand out)

Keep Invoices Small

Not all invoices are created equal. Small invoices that don’t require approval by numerous people may result in faster payment. If it is a large job or order, invoice as you reach certain milestones. Discuss this with the customer from the beginning.

Itemize!

Lack of detail results in waiting longer and returning phone calls and emails requesting more information. Take the extra time to provide detailed itemization. Avoid abbreviations if the meaning is unclear. It will save you time in the end. Accounting software packages make itemization fast and easy.

Get Yourself Set Up

Standardize your process for working with new customers. Do they require you to complete company forms, background checks, tax information, and non-disclosure agreements? Ask about that as soon as the customer approves the job. By submitting paperwork early on, you won’t be waiting even longer for payment.

Form a Bond

People will work harder for others who care about them as a person. For your regular customers, take the time get to know their accounting staff. If they are local, stop in with some cookies or buy them lunch from time to time. Taking a genuine interest in somebody may not only result in faster payment, it is the human thing to do. If you have to call to check on the invoice, try to speak to the same person each time to form a relationship. Start and end the conversation with something positive and uplifting. Only in the rarest of circumstances should you let the conversation become agitated or threatening.

Finally

Sometimes, there’s little you can do to speed up payment. In those cases, try to schedule work in a way that creates a constant income stream. If you do it correctly, after three months, you won’t notice the slow payers as long as they pay within a reasonable time frame.

Small Business Tax Tips

While we’re still a few months out from Tax Day, it’s never too early to take a look at our small business taxes. Many small business owners feel like filing taxes is overly complicated, but in fact they’re not. Here’s what you need to know to get the most out of your taxes for 2012.

1. Pay taxes on time. If you put aside money to pay your taxes throughout the year, you save yourself the headache and fees you’ll pay if you don’t pay on time. Putting the money into an interest-bearing account can help you even make a little extra on the money you save!

2. Don’t overlook tax credits. Canada has many research and development tax credits that your business may qualify for. Filing these credits on your taxes could cover up to 35% of your expenses in these categories, so it’s worth looking into.

3. Home-based businesses have deductions. You can deduct the expense you have to pay for your home office (based on its square footage), as well as office supplies (printer, paper, phone bill). Keep track of your expenses as well as your receipts so you can claim them come tax time.

4. Track your business travel. You may be eligible to claim your motor vehicle expenses on your business taxes, so keep a log of the kilometres you drive for business purposes. Continue reading