Main mistakes that may jeopardize your business:
Not incorporating your business:
If you are not incorporated yet, and your business is growing under sole
proprietary, this will increase your personal liability and the risk of creditors, also
if your business profitable, all the taxes will be paid personally at a higher tax
brackets that can be high as much as 46%, it is never too late to incorporate, but
the transaction can be complex depends on your business assets and sometimes
Ask yourself where is your business standing and what is the pros and cons from
Not knowing your bottom line or waiting for the year end to find your
profit or loss:
Business owner sometimes and to save some fees; they will delay the whole
record keeping procedures for their business for 12 months period and at the
yearend they will start look for a accountant or coming back to their accountant
to hand him/ her a show box full of receipts.
You need to keep track of your business records at least every three months,
acknowledging your profit or loss and how you can improve your business and
reduce your expenses.
Not keeping track of your receivables:
When you issue invoices for your clients, you are posting revenue and creating
accounts receivable, if you are collecting sales taxes, you will end up paying the
sales tax from your pocket until your clients pay their invoices. Or at the yearend
you will pay corporate taxes for revenue you didn’t actually gain.
If you don’t collect your receivable on time, you are losing money because time is
money, and you don’t want to end up with bad debt expenses.
Be efficient and collect your invoices on a timely manner to avoid all the hassles.
You need to keep all your receipts and source documents up to seven years
including the current year for tax purposes per the Canada Revenue Agency and
for accounting and cash flow.
Let’s make it a habit to save all the receipts in an envelope month by month and
attached to the bank or credit card statements, easy and more organized for you
and your accountant.
Doing the record keeping by yourself. Or Not hiring a professional tax
preparer or accountant:
To start with organized books, you need a book keeper to keep all the records
recorded and posted to an accounting system, also you need a professional
accountant and tax preparer to prepare your yearend financial statements and
filing your corporate tax return.
The success of your business depends on you and your professional team
members, my advice to you is not cut the cost for areas like accounting and tax
preparation fees, it is worth it to get the most accurate and efficient services.