In our last 2020 blog, we want to leave you with my top ten recommendations to close the year with confidence and start a plan of action for 2021.
Review your Accounts Receivable Report. If you need help collecting, let us know. We'd be happy to lend a hand with this process. Often, clients respond better to emails sent from a third party rather than you.
Speaking of which, Engagement Contracts, this is a perfect time to review your contracts. Are these protecting your business in the best way possible?
Know how much cash your business is holding in promises of services/ products. Deposits are liabilities and not revenue- Projects to be embarked on/ or to be completed in 2021. Look in your business Chart of Accounts for Deposits (from Clients) account.
Use bank accounts exclusively for business purposes: Your business may not have a business credit card yet, BUT you can assign a personal credit card to be used solely for business purposes. It's really that simple. This action will ensure you won't miss any expenses or input tax credit for GST/HST purposes.
The first step to building financials is a solid Bank Reconciliation. Ensure you have receipts for all your expenses while you are at it.
GST/HST balances: Do you know how much you owe for this current period and what's outstanding? My Business CRA account is a great place to start.
Examine the best way to compensate yourself. Keep in mind that this decision depends on your personal needs and the cash inflow of your business. Dividends and Bonuses are other options available to shareholders (If you are a shareholder in a corporation). Withdrawing funds from your business bank accounts - in an ATM fashion- is not a plan (unless you have a sole proprietorship, then you have no other option).
Consider opening another bank account to put aside money for CRA liabilities or savings. Most banks will be happy to open another chequing or a savings bank account linked to your current business bank account. Remember that under our tax laws, CRA can hold directors personally liable for corporate debts, including any interest and penalties. Plan ahead.
A budget is a great starting point for organizing your business or a much-desired project. It doesn't have to be uber complex and detailed. You just need to have a draft to start and build from thereon.
Projections - or cash management can be an eye-opening exercise to our behaviour as business owners. Consider this exercise as a first step to seeing patterns and finding room for improvement.
If you need help with setting up your business for 2021 success or any other business matter connect with us by filling out the Contact Us Form.