To succeed as an entrepreneur, you have to properly master certain basics of your business accounting. Whether or not this is one of your strengths, accounting cannot be put on the back burner. Simon Lapointe, Senior Advisor, Business Strategy and Transformation at National Bank and a chartered professional account (CPA), shares some tips for success.
“As soon as you launch your business, it’s essential that you set aside time—and possibly money—for accounting, cash management, and potentially financing your business,” says Simon Lapointe.
“Of course, it’s not always easy to find the time when starting a business and, quite often, you have to wear many hats. That’s why you have to block out time in your schedule to do your business accounting. This could be 30 minutes every morning when you arrive at the office, one night a week, etc.
“Keeping your accounting up to date is a never-ending job, and ensuring your invoices and receipts also stay updated is essential. There’s no need to keep everything stuffed in a shoebox—you can instead, for example, take photos of your invoices and receipts with your phone and efficiently manage them with IT support.”
2. Surround yourself with the right people
“If, in the beginning, you’re unable to take the time to do your accounting, you can hire an outside bookkeeper for a few hours a week,” explains Simon Lapointe. “Sub-contractor accounting services can be a good option when you are just starting out and don’t need a full-time employee.
“After that, as the business grows, you will probably need to hire someone who will take care of your accounting on a daily basis. You will also have to find a chartered professional accountant to do the company’s income tax returns, prepare financial statements, etc. This accountant should also be able to offer you sound advice and guide you as your business grows.
“It’s very important that you find trustworthy people to build business relationships with. Ask the person in charge of your accounting how much they are willing to invest in your business. Ask your professional accountant the same question. To find the best candidate, ask for recommendations from your contacts, banker, or other trusted partners. Larger accounting firms may be more expensive, but they have the proper expertise that is often much more extensive and complete. That being said, many small firms can do an excellent job and may be better suited for this kind of task. It all depends on your needs and the size of your business.”
3. Make a budget
“In your accounting, making a budget allows you to properly manage your cash flow,” adds Simon Lapointe. “You have to structure your cash flow, which is to say, the company’s inflow (money coming in) and outflow (money going out). You need to accelerate and ensure you receive your cash inflow (i.e. operating and capital revenues), decrease or delay your outflow as needed (i.e. salaries, suppliers, equipment, etc.), and constantly keep an eye on your finances to see where you are in relation to your projections.
“There are many ways to reduce or delay your outflow: use your credit card to pay for your liabilities (which can delay payment by one month, but you’ll still need to pay off your card), keep only the inventory necessary to serve your customers, or structure your employee compensation so that it is linked to cash inflow (bonuses, commissions, etc.). To accelerate your inflow, you can improve the collection rate of your debtors by offering discounts for fast payment, have product pre-sales or, as needed, speak with your financial institution for access to short-term funds.”
4. Use a bank account for businesses
“It’s better to use a professional bank account and not your personal account,” states Simon Lapointe. “This ensures that you don’t mix your private life with your business. When one account is used to manage both, it can get very complicated and cause problems for both your personal and professional accounts.
“Again, it all depends on the volume and size of the company. You have to plan what types of financial operations you will perform, such as international transfers, remittances, payroll deposits, etc. There are a number of banking packages that can meet the needs of businesses and help limit banking fees as a result. Some cost the same as a personal account.”
”With a business account, you can, among other things, make your government remittances (e.g. deductions at source, GST/QST payments, etc.). What’s more, entrepreneurs can export their data to integrate it into their accounting software.”
5. Use the right tools
In this digital age, where apps and software are abundant, there are now computer tools that allow you to do your accounting in a relatively simple way.
National Bank has partnered with Operiō to offer its entrepreneur clients a cloud-based accounting-consulting solution. The Operiō platform offers several tools to facilitate daily operations and monitor the company’s performance in real time.
National Bank has also partnered with Budgeto, an online budgeting tool that allows you to manage the business’s cash flow and identify your financing needs, among other things.
“There is other software out there, such as Sage 50cloud, Xero or Quickbooks,” suggests Lapointe. “With these types of tools, you can, for example, invoice your clients, enter your cash inflow, manage your assets, track your expenses, and learn the status of your inventory. You can even prepare your GST and QST returns.
“Of course, before using this type of software, take the time to fully understand it so you can get the most out of it. There are tutorials for this as well as online training websites (free and paid), such as edX, Coursera or Udemy, which can provide basic training in accounting. Universities also offer distance training, as do certain incubators and accelerators. Consider this an investment, not a chore.”
In short, whether you excel at accounting or not, the important thing is to remain involved by gaining the knowledge you lack or working with experts who know how to best advise you.
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