Congratulations! You have either started up a new business or are planning to start a business.
Many people feel that the need for accounting and bookkeeping services is not required until you been operating long enough to require a GST Remittance or a Corporate Tax Return filing. Please think again! Bookkeepers and accountants who have been at the trade for a few years come with a wealth of knowledge, networks and a lot of money saving advice about many things that would not cross your mind when you are first starting out.
Hopefully you are feeling confident with your new endeavor. You have done your research, you feel like you have a product or service that you can bring to the market. And you expect to be able to earn money to take home with you as well as cover the costs of the business.
Canada Revenue Agency (CRA) requires you to have the expectation of making a profit. If your business cannot get off the ground within 2 years and turn a profit that can be taxed, CRA can shut you down. There are a lot of things to consider when looking at the profitability of a company and evaluating the success, and rest assured, there are other measurements that they take into consideration before determining a shut down. Maybe you are spending money to expand, or you have a lot of capital assets that will benefit your company over the long term.
I have seen companies that started with great expectation, only to be smothered by the inability to tap into the market that is expected to be there. I’ve also seen companies that have been nurtured from nothing and grown up to be parent companies in franchises. It can be quite the exciting roller coaster ride. I can assure you that most business owners are surprised to find themselves where they are. Many people have expectations of where they will be in 2 years, 5 years, 10 years…. Where the market takes you is often a different destination than the one you pictured.
My best advice to the new business owner is try to operate on the frugal side. Expenses are write offs… but you still have to part with the money in the first place. And, of course, at least consult with your bookkeeper or accountant. We have a wealth of information to share and can often get you to where you want to be faster and at a lesser cost.