Entrepreneurs and start-up owners invest a tremendous amount of
effort and time in their companies in order to strive for success.
Detailed financial records are key to ensuring that you achieve the
greatest possible return on your investment.
Solid financial records can provide substantial information
about your business. They provide a snapshot of how well a business
is performing at any given time; how monthly sales are doing, how
much cash is have on hand, how many expenses will need to be paid
in the upcoming month and whether it is affordable to purchase new
inventory, tools or equipment next week.
Detailed records will help you manage company assets and
determine whether business resources are being used efficiently and
The timing for collections of receivables and payables is
different from industry to industry. Some businesses may normally
collect within 30 days while others frequently extend to 60 days.
Knowing this information will help manage your business'
working capital throughout the year and can help identify whether
operational changes need to be made.
For those who provide products to customers, inventory
management is critical. Up-to-date inventory numbers and historical
financial data on company sale trends can help you monitor and plan
your inventory. This will allow you to satisfy the demands of your
customers but also ensure that your company's working capital
isn't tied up in excess inventory when it could be better used
to grow your business.
The phrase "Cash is King" is particularly appropriate
when referring to managing a small business. By maintaining proper
financial records, start-up owners can monitor their daily expenses
and identify vital operational costs (and those which aren't).
This will provide insight to the individual expense requirements at
any given time and help a business manage its cash flow.
Building accurate Financial Statements, Budgets and Variance
Preparing accurate financial statements requires detailed
accounting records. These financials will shed light on your
business operation's performance: the volume of business
generated, the profit margins, which product lines are most
profitable and what the operation's bottom line is at any time.
They can be used to measure performance, efficiency, assist with
cost/benefit analysis and can provide insight into how your
business compares to your competitors using industry averages.
Financial statements will also help with budgeting and
forecasting by estimating incoming revenues and expenses. This can
help accommodate any seasonality in business that your company may
face and help plan expenses and purchases around it. These budgets
are another tool that help manage company assets and liabilities
from season to season. Budgets will reveal if your business is
meeting expectations, and identify reasons for variances.
Armed with this information, the opportunities and benefits are
endless. Potential challenges will be identified early enough to
provide time for devising strategies to overcome them. Financials
can pinpoint company strengths while also identifying weak areas
that can improve. Your financials are the basis of all well
informed strategic decisions on the direction and success you want
for your company. However, as an entrepreneur, your focus should be
on the growth of your business.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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