Posted on

What you Need to Know to Start a Business

What you Need to Know to Start a Business - Cook & Co - Accountants Calgary - Featured Image

Starting a business is exciting! It’s also scary! Approximately 95,000 new businesses are created each year in Canada while 85,000 businesses close annually. Less than 50% of  Canadian businesses last 10 or more years. If you’re thinking about starting a business, there are some important steps that you should know to help promote your chances of success.

 

  • Generate an idea: The hardest part of starting a business is coming up with a great business idea. Watch current business trends. Examine budget and profit potentials. Consider your skills, goals and passions. Do you desire to improve upon existing concepts or contribute something new to the market? Do you want to own your own business or purchase a franchise?
  • Do the research: Market research combines consumer behaviour and economic trends to confirm and/or improve your business idea. It helps determine if there is an opportunity to turn your idea into a successful business and helps you reduce risks. Have a look at the demographics of your potential customer base (age, wealth, family, interests, income). If possible, talk directly to potential customers (surveys, questionnaires, focus groups, in-depth interviews). Observe your potential competitors. Peruse their websites. Talk with similar businesses. Keep up with the latest small business trends.
  • Choose a business structure: Which of the three basic business ownership structures you choose influences your day-to-day operations, taxes, personal liability, risk, capacity to acquire finances, etc. A sole proprietorship is a business owned by a single individual, is easy to form and gives you complete control of your business. A partnership is a company jointly owned by two or more people whose shares, rights and responsibilities are spelled out in a partnership agreement. It’s the simplest structure for two or more people to own a business together. A corporation is a business owned by shareholders. This form of business ownership protects its owners with limited liability.
  • Develop a business plan that can be presented to investors and lenders. It’s a roadmap for how to structure, run and grow the business. It guides you through each stage of starting and managing your company. The plan should include an executive summary, a company description, market analysis, a description of the organizational and management structure, marketing and sales plan, details regarding products/services offered, financial projections and funding requirements.
  • Choose a name that communicates what your business does in a visually interesting, memorable, and positive way. Take into account legal considerations. Protect your name by registering it with the right agencies both federally and provincially.
  • Find funding: Your business plan will help you figure out how much money you’ll need to start your business. If you don’t have enough funds of your own, you’ll need to raise or borrow capital. Consider a line of credit, a business bank loan, venture capital, crowdfunding, angel investors, private lenders, a merchant cash advance, invoice factoring, business-to-business lending and/or government-sponsored small business grants, loans and/or subsidies.
  • Get a business license: You may need to get a business license before you can operate legally within your municipality. If your city or town doesn’t have a website, you can find contact information for government agencies online.
  • Pick a location: The location you choose (including an online store) affects your taxes, legal requirements, and revenue. Take into account the location of your target market, business partners, and your personal preferences.  Consider the costs, benefits, and restrictions depending upon location (salaries, minimum wage laws, property values, rental rates, insurance rates, utilities, licencing fees, zoning ordinances, etc.).
  • Register for GST/HST/provincial sales tax so you can take advantage of Input Tax Credits which assist your business in recouping GST/HST paid out on purchases for business use.
  • Open a business bank account to help handle legal, tax and day-to-day issues. Common business accounts include a checking account, savings account, credit card account, and a merchant services account. Rates, fees, and options vary, so shop around to make sure you find the lowest fees and the best benefits.

 

Embrace both the excitement and fear of starting a business! Put yourself on the path to successful entrepreneurship. Follow the key steps outlined here to help ensure the success of your endeavour.

 

Thinking of starting a business? Need help, guidance and advice? Contact Cook and Company Chartered Professional Accountants. Whether you wish to operate a sole proprietorship or a sizable corporation with multiple subsidiaries, Cook and Company uses their experience and expertise to help you. Contact us for a complimentary consultation.

 

 

Resources:

Posted on

5 Signs You Should Reconsider Your Company’s Accounting Practices

Accounting isn’t an aspect of your business that you can set and forget. It requires diligent, attentive, ongoing oversight and assessment. Working with a great external accountant is highly rewarding in many circumstances, but if you see any of these signs, it may be especially urgent.

Low Profitability

It’s not uncommon for businesses to fall short of their profitability goals even when sales seem healthy. Despite getting the revenue that you’re aiming for, you may not be seeing an adequate increase in profit. Bringing in an objective business accountant could give you critical insights into your overhead costs, employee productivity, gross and net profit margins, and more. With the right help, you can take home more at the end of the day.

Poor Management of Financial Records

If the management of your financial records is not adequately thorough, consistent, or organized, you won’t maximize the vitality of your business. This is essential for solving tricky fiscal issues or overcoming inevitable accounting challenges. From routine cash flow forecasts to monthly profit and loss statements, accounting paperwork isn’t always easy to stay on top of, and that’s OK. It’s exactly what a skilled external CPA is for.

Your Business Is Growing

Every business owner wants to achieve growth, but what happens when you get there? Expansion means changes in company structure, a larger team of employees, and other factors that add up to an increased and diversified array of accounting paperwork. A significant change in the size of your company is fantastic news, but it’s also the perfect time to bring in a business accountant to help you facilitate this growth as smoothly as possible.

Tax Burden Is Unexpectedly High

If you haven’t sought the right external assistance, tax bills could be draining more of your revenue than they should. You may not be up to speed on new tax rules and regulations affecting your business, there may be credits and deductions that you’re not taking advantage of, or you could even be getting hit with fines and penalties. Whatever the cause, if your tax burden feels to high, an entrepreneurial accountant can help relieve the strain.

Lack of Time or Manpower

Sometimes the business accounting challenges you face are as much a matter of losing time as they are a matter of losing money. Strengthening your company finances can be highly intensive work, and it’s best not to spread yourself or your internal staff too thin. If you really want to employ smart, airtight strategies that will add value to your business, the undivided attention of a dedicated chartered accountant will take the pressure off and get you real results.

What aspects of your company’s financial health need improvement? Whatever they may be, our entrepreneurial accounting team is eager to help you secure the stability and growth that you need. Send us a message to arrange a consultation with our accountants, free of charge!

Posted on

Key Performance Indicators in Your Company Finances

Operating a successful business requires that you keep a finger consistently on the pulse of your company finances. In order to do this properly, you’ll need to recognize key indicators that give you a concrete and actionable picture of how you’re doing. Let’s look at some examples.

Revenue & Expenses

First and foremost, it’s critical to know what performance indicators are illustrative of your revenue and its relationship with your expenses. Calculating gross profit margin, for instance, will guide you in pricing so that you can make enough to pay expenses and end up with the profit you’re looking for. You’ll also need to monitor your net profit margin — which determines what amount of your revenue is profit — and of course, your net profit itself. Meanwhile, what do you have immediately onhand to cover expenses and fund operations? By subtracting existing liabilities from existing assets, you can determine this, your working capital.

What You Owe

A business has an obligation to pay employees, vendors, the CRA, and other creditors on time and without straining the assets of the company. There are a few KPIs to keep an eye on in this department. Your current ratio, for example, is calculated by dividing your current assets by your current liabilities, revealing how comfortably you can pay who needs to be paid. Additionally, accounts payable turnover is a useful metric for observing how promptly and reliably you meet these obligations, particularly when examined over time. This is calculated by selecting a time period and dividing its total costs by its average accounts payable.

What You’re Owed

Not only does your business have creditors to pay, it is also a creditor itself. Several indicators are designed to monitor the rate and consistency at which you’re paid what you’re owed. Try carrying out an accounts receivable aging report in order to ascertain the amount of time that each debtor takes to make good on their account. You could use this to determine the interest you should charge for outstanding bills. Accounts receivable turnover, which is calculated much the same way as accounts payable turnover, can also give you a broader look at this aspect of your cash flow and guide any corrections you make in managing receivables.

There are many more financial performance indicators that every Calgary business owner should be aware of. At Cook & Company, it’s our job to provide the knowledge and resources your company needs to perform at its absolute best. Call us at (403) 398-2486 to learn more!