Tag Archives: Small Business Owners

Do You Know Your Accounting Policies and Procedures?

Do you know your businesses’ accounting policies and procedures?  Are they optimized for your specific type of business, and your operations individual needs?

If you were audited tomorrow, would your books stand up to Federal scrutiny?

Did you just break out in a cold sweat at the thought of a bunch of  “Revenooers” poring over your records, looking for inconsistencies?  If you did, it’s because you’re too busy running your business to spend your every waking moment fussing over your books.  Small businesses are the engine that drives the economy, but they are also the operations that are exposed to the greatest amount of risk.  As an entrepreneur, you are to be commended for your courage.  At Five Star Accounting, we completely understand the needs of small businesses in Winnipeg and Calgary.  We represent numerous small businesses in Winnipeg and Calgary.  We ourselves are a small business, with offices in (you guessed it) Winnipeg and Calgary.

Let our experience work for you.  We have the knowledge (kept current because we endeavor to be the best-educated accountants and bookkeepers you’ve ever met) and the experience to put your business finances in order.  We will help you set up a record keeping method that is easy to maintain, and that follows the best practices that we’ve established for all of our clients.  Once we’ve got you up and running, we’ll help you keep your accounting records up to date, so you can sleep comfortably at night knowing that your business’ books are completely in order.

We offer all the advantages of an in-house bookkeeper, without the added cost of another full-time employee.  For support with your accounting and bookkeeping needs, both in strategic planning and day-to-day support, contact Five Star Accounting, and experience our professional service and our personal touch.

What Revenue Level Dictates Outsourcing?

When will your business be making enough money to justify outsourcing some of the things you don’t want to do, or don’t do as well as someone more qualified could?

Our answer, when it comes to accounting and bookkeeping, is right from the get-go.  And we don’t say that just because we’re accountants and want to get paid.  We have years of experience in the small business marketplace.  We’ve seen firsthand the advantages that a small business that’s financially informed has, and we’ve also had to do some serious clean up work when we’ve gotten that call too late in the game.

Professional accountants have knowledge and tools that can make every stage of business growth easier.  We can do financial projections that can be instrumental in creating the initial business plan, and we can help when it comes to convincing lenders that your plan is solid.

Accountants know how to deal with the government.  In the start-up phase, you’ll be providing all kinds of compliance documents, which can be confusing and time-consuming for the uninitiated.  We spend a great deal of time learning how to navigate the legal landscape surrounding small businesses, and can put this knowledge to work for you.

Once your business is up and running, accounting and bookkeeping services will keep your cash flow flowing, your payroll paid, and your finger on the financial pulse of your business.  And, since you’ve outsourced the work, your hands will be free to do the thing you set out to do in the first place – build your business.

At Five Star Accounting, we know what it’s like being a small business in Winnipeg.  Besides fitting into that category ourselves, we have many years of experience in the field.  We know that the economy needs small businesses. Wherever you are in your business trajectory, from initial concept to full-blown operation, you can count on Five Star Accounting to provide professional accounting and bookkeeping support.  It’s never too early to get the help of a professional accountant, but it can be too late.

The Importance of a Budget

It is very surprising when speaking with business owners how few actually spend the time and effort developing a budget.  Preparing a budget could be a daunting task.  However, one can be convinced that the benefits of using a budget as a tool to steer your company and to monitor your progress far outweigh the” head in the sand” approach.  Having a budget can help you realize controlled growth rather than ad hoc growth and operating expenses.

A budget is essentially a financial plan for your business.  Using past data and current knowledge about your business, growth potential, competition and changes in your expenses, one can estimate how their business should perform in the future using a best estimate approach.    But let’s not kid ourselves.  There are quite a bit of guesses and assumptions brought into a budget.  However, one of the most important aspects of developing a budget is that an owner must think about the future of their business at a very detailed level.  In a sense then, they are mapping out a plan as to where their business should be in the next year or two and what needs to happen in order to make it happen.  This then gets them thinking about what steps are required to meet their budget estimates.  For example if one estimates a growth in sales of 20% next year, they have to ask themselves how do they think they can meet this goal?   A 20% increase in sales will not mean a 20% increase in profits.  Why?  Because more sales can mean more costs.  Will they have the space, the employees, the supplies, etc. to meet the increase in sales?  Are they planning to promote their company and if so, in what way and at what costs?   It is at this point of detail that some business owners start to squirm.  They are not comfortable thinking about so many details.

Often, budgets are only brought to the forefront when financing is needed.  Banks or investors start asking probing questions and also require a budget for a few years down the line.   They want to know your assumptions and a budget helps to give them some assurance of how their investment or loan will generate enough revenue for their payoff.   If you are one of those business owners who just don’t want to go there, the staff at Five Star Accounting can meet with you to ask some of these questions and work with you to develop your budget.  We would be happy to assist you in mapping out a plan for you to follow in taking your business where it potentially could and should be.   We hope you can agree that following a budget and knowing if you’re on track throughout the year is far better than operating with your head in the sand.  A budget really helps to lower anxiety and gives an owner a much better feeling of control.

Types of Corporations in Canada Influences the Tax Paid

In Canada, there are two types of corporations. The first type is the corporation created under federal law, and the second type is the corporation formed under the provincial laws of the provinces and territories. Typically the federal form is preferred because it allows business operations across the country and the statutes controlling the corporation are consistent. The province and territory statutes vary quite a bit concerning issues like the rights of minority shareholders, internal governance, financial recourses and soon.

When you start a business, there are basically three business structures to choose from: sole proprietorship, partnership or incorporation. There is a fourth form called a cooperative, but it’s a very specialized and uncommon business form. The choice of business form influences the types of deductions you are allowed to take. Incorporation is often chosen because it can allow you to maximize the benefits of expense deductions while limiting personal liability.

There are several corporation types in Canada as summarized below:

• Canadian-Controlled Private Corporation (CCPC) – resident in Canada and is not controlled by corporation(s) or person(s) outside of Canada.

• Private Corporation – resident in Canada, not a public corporation, and not controlled by one or more public corporations

• Public Corporation – resident in Canada and meets requirements for listing of shares on the stock exchange or elects to be designated as public under Regulation 4800(1)

• Other Corporation – corporation form that doesn’t fall within the other 3 types of corporations

The advantages of incorporating include limited liability, ongoing operations with transferable ownership, easier to raise capital, possible tax deferral and lower tax rates. For any of these reasons, sole proprietors may choose to incorporate. For example, the Canadian-Controlled Private Corporation eligible for a small business deduction will currently pay a net federal tax rate of 11 percent which may be much lower than a personal income rate.

Corporations are also able to deduct all operating expenses while sole proprietorships face limitations. This gives you much leeway in terms of controlling the tax you will owe. For example, corporations can pay out profits to its management and staff turning what would be taxable profit into a deductible expense. A sole proprietor would have to pay all the tax due on business profit and personal income. In addition, any legitimate and legal expense incurred to operate the corporation is deductible, while it may be more difficult to separate personal from business expenses in a sole proprietorship.

It’s important to make sure you are getting all possible tax deductions on a business. The business structure you choose makes the difference on the type and amount of those deductions in addition to the tax rate paid.

Tips for Small Business Owners

Small business owners face a myriad of challenges. But small businesses also make up a huge portion of Canada’s workforce. According to Industry Canada, 98 per cent of companies here are considered small, and those businesses comprise 48 per cent of the country’s work force. To help survive in today’s challenging economy, below are a few tips for small business owners.

Help your accountant help you
Hire an accounting service such as Five Star Accounting to manage your finances. An accountant files tax returns, tracks a company’s finances and keeps up with all the current and latest regulations. But a good accountant can do far more than just balance your company’s budget. Accountants can also help expand your company and grow your finances. Get organized before meeting with your accountant so that you’re not wasting time getting caught up.

Paperwork & meetings are time consuming
Your time is valuable. If you’re a small business owner, chances are you have very little time in the day to get everything done. Therefore, you should make the most of your time. Prioritize your tasks. Limit your meetings. Another valuable tip: Never let a piece of paper touch your desk more than once. If it’s important enough, file it or record it somewhere. Otherwise, shred it or throw it away. Clutter is a time waster, too.

How much do you really need?
Look for ways to save money by evaluating your overhead. Are you leasing a space that’s too big (and therefore more expensive)? Can you cut back on supplies and travel? Can some positions be eliminated? Is expansion necessary right now? Some of these are hard choices to make, but the goal is to have enough reserves on hand to survive difficult economic times. Set weekly, monthly and yearly goals, and work with your accountant and other top managers to stay on track.

Coach the coaches
In sports, the head coach often spends time coaching the assistant coaches so that he or she can focus on the big picture while letting the assistant coaches work with the players. The same holds for business owners. Thoroughly training your managers will allow you to delegate while also instilling trust that the job can still get done when you’re not there.

CPP Changes for Retired Small Business Owners – What You Need to Know

Changes to the Canada Pension Plan could affect your or your employees’ early retirement plans. The government-run Canada Pension Plan, or CPP, allows working Canadians to receive a retirement benefit after paying into a pension plan. CPP also has a disability benefit and a death and survivor benefit.

Below are a few things you need to know about new CPP changes:

You May Have to Deduct Contributions
CPP has undergone some notable changes in recent years, including new regulations for those who want to start collecting early. The most recent change took effect Jan. 1, 2012. Employers were notified that companies must deduct CPP on pensionable earnings from employees 60 to 65 even if they are collecting CPP.

How it Affects Employees 65 to 70
Employers also must deduct contributions for all employees between the ages of 65 to 70 – unless the employee decides not to contribute to the plan and has filed the election to stop paying CPP Employees cannot contribute the month after turning 70.

Under the Microscope
The Canada Pension Plan has come under scrutiny in recent years as employees and employers alike try to make sure they receive adequate retirement incomes. Employees – especially those nearing retirement age – should check with their employers to see how the changes impact them, and small business accountants should work with their employer to review how the changes could impact both the work force and the company’s finances.

For more information, click here to be redirected to the Canadian Revenue Agency.

Value of Time: Making Good Use of Your Time as a Small Business Owner

Small businesses make up the backbone of the Canadian economy. Ninety-eight percent of all businesses in Canada are considered small, and those businesses account for almost half of the country’s labour force, according to Industry Canada. To keep up with the growing demand, small business owners need to be able to make the most of their time. Below are a few tips for small business owners.

Stay focused on what’s important
Pay attention to what drives sales. If 20 percent of your product accounts for 80 percent of your sales, then focus your energy on those products or services.  Similarly, spend time on activities that require your expertise.  Outsource activities like your bookkeeping to people that can do it better for you.  At Five Star Accounting, bookkeeping is our expertise and we can take care of your accounting needs so you can concentrate on your company.

Prioritize and meet deadlines
Work on the projects and activities in order of importance, then give yourself deadlines to complete each one. This helps keep you on track rather than getting slowed down by less important, time-killing activities.

Don’t wing it
Don’t start your day without a “to-do” list. Running a small business can be overwhelming, and it’s easy to get lost in interruptions and distractions. A “to-do” list will make sure you stick to your schedule, and it will help you prioritize.

Stick to your schedule
Once you’ve come up with a prioritized schedule, it’s important that you stick to your deadlines. The same goes for your employees. Missed deadlines are time wasters, because they push everything else back.

Keep your eye on the prize
Whether you’re the CEO of a Fortune 500 company or run a mom-and-pop diner, don’t lose sight of your goals. Are you looking to expand? Or are you simply trying to increase your earnings? Revisiting your goals each month will help you tweak them as necessary – and it serves as a reminder of why you started your business.

We are a Better Solution for Small Businesses

At Five Star Accounting, we understand the importance of time to a small business owner. That’s why we want to work with you so that you can maximize the use of your time.  We take care of your accounting and bookkeeping so you can focus on your business.  We have a dedicated team of accounting specialists that work closely with you and learn the operations of your business.  The result is an accounting solution that is tailored to your needs.  Contact us today to find out whether you would benefit from Five Star services.

Welcome to Our New Site!

Since its founding, Hospitality Solutions Inc has gone through significant change and growth.  From our humble beginnings serving the hospitality industry, we have come a long way.  To keep up with the natural growth of our company, we are proud to announce that Hospitality Solutions Inc. has become Five Star Accounting Inc. to better represent our client’s businesses and their unique needs.

Five Star Accounting has become one of Winnipeg’s top outsourced accounting and bookkeeping services.  We have the tools and expertise to offer tailored accounting solutions for small businesses.  We understand the constraints and limitations of a small business, while at the same time recognizing the tremendous growth opportunity of each of our clients.  When your business grows and your needs change, we grow along with you.