9 Tips from Warren Buffett

One of my most favorite business icons is Warren Buffet. Many like him because he’s so successful, but he’s my favorite because he’s so willing to share and help others achieve their goals. Here’s a recent post that does a great job summarizing his advice into 9 tips. They are:

  1. Invest in yourself before anything else
  2. Change bad habits as soon as you can
  3. Know your own strengths and weaknesses
  4. Never risk something you need to get something you don’t
  5. Find work you love
  6. Surround yourself with people you admire
  7. Face down your fears
  8. Your time is a precious resource. Use it accordingly.
  9. Never ignore a great opportunity

Read the full article here.

Top 5 costs to budget for when starting up your small business

The adage that you need to spend money to make money is entirely accurate, especially for entrepreneurs that endeavor to start up a new small business. Depending on your risk profile, it’s possible to spend a few million dollars to establish a new company, particularly for certain industries like restaurants.

However, most new business owners need to prove their concept with the smallest amount of capital as a first step. So, what is the minimum amount an owner should budget for? Here’s a breakdown of the top 5 cost areas related to starting up a small business.

 

Business setup costs = $700

Once you’ve settled on your product or service concept, it’s time to legitimizing the business. This includes name searches, registering your corporation and getting licenses and permits. If you live in Calgary, then you can go to any Alberta Registry to take care of these requirements. We recommend Registries Plus.

 

Operating costs = $2800

This area can vary significantly depending on the type of business. Some need to lease a vehicle, while others need to lease a retail or kiosk space. In any case, all businesses require a location from which to operate. Most new businesses should budget for a 6 month proof-of-concept period. Based on our experience, it’s prudent to assume $250/month.

The other operating costs will be a computer, a phone and possibly insurance. For the same 6-month period, you can assume these costs to be approximately $1300.

 

Website costs = $120

There was a time when creating a website was a significant cost and undertaking for a new business. Much has changed in the last five years with the introduction of so many user-friendly website building tools. We recommend WordPress; which will give you a website template, a custom URL, web hosting and support for less than $11/month.

 

Marketing collateral costs = $500

At this point, you need to give your business an image. This will require a logo and some basic pieces of marketing collateral. At a minimum you’ll want business cards and brochures, but we also suggesting signage for your vehicle or your storefront. You’ll need to find someone to design your collateral and someone to print the material. The design work can cost about $350 and the printing is about $150.

 

A launch event or advertising costs = $3500

Now that your business is setup, it’s time to start acquiring customers. A small investment is necessary to generate awareness and demand for your business. This can be a radio campaign, a launch event or an online pay-per-click campaign. A standard radio campaign will cost approximately $3000, a launch event with radio support and signage is about $4000 and a standard pay-per-click web campaign is about $3500.

Certainly there are many business that find success with smaller startup costs, like tradespeople who often need little more than a network of friends and a cell phone. However, one of the biggest mistakes we see new business make is to short-change the startup capital. If you budget for $8000 to $10,000 and find success for less, then that’s great. But if you budget for a few thousand only to find customers aren’t knocking on your door, then you might find yourself in a position of not having the resources needed to succeed.

Social Media for Small Business

As any small business owner will tell you, one of the hardest things we face is generating awareness about our companies. The internet is extremely cluttered and advertising seems less and less effective. As a result, I’m always looking out for new services and opportunities for small businesses to spread the word about what they can do.

I recently came across oGoing. It’s a small internet company that’s been making a fair bit of buzz lately. It’s two things:

  1. A social media platform for small business owners to share tips, news, products and services specifically for small business owners. It’s like Twitter, but just for us.
  2. A directory to help expand our reach across the internet and generate effective back-links to our site, which helps our SEO rankings.

Here’s a good little article highlighting it’s services.

To sign up for an account, go here.

What is an Input Tax Credit?

If you’re a business owner in Alberta, then you’re collecting GST from your customers and remitting it to the Canada Revenue Agency (CRA). However, you’re also paying GST to your vendors on legitimate business expenses. The amount your remit to the CRA can be offset by the amount you pay to vendors. This offset is the input tax credit (ITC).

Without input tax credits, many products that we buy every day would be taxed over and over. Think, for example, of a sandwich you buy at our local Calgary corner store – the shop that sells it charges GST, as does the catering company that made the sandwich, the bakery that baked the bread, the cheesemaker who made the cheese, the dairy farm that produced the milk to make the cheese… and so on and so on.

What input tax credits mean for businesses is that while you may collect a large amount of GST, you only actually have to give the government the difference between what you collected and what you paid out. For this reason, solid bookkeeping is very important. This is why our bookkeepers work closely with our clients to keep meticulous records of both the GST that is collected and the GST that is pay out.

Your bookkeeping records have to be extremely clear and detailed because when you make an input tax credit claim to the CRA, you will be required to provide proof that these expenses were incurred legitimately and paid out as reported. The clearer this is, the easier time you’ll have working with CRA in the event you have to undertake a GST audit. While these audits are never any fun, they are also nothing to fear if your records are in good order and you have kept track of receipts.

Here’s a tip: when you receive a receipt from a supplier or service provider, make sure that the amount of GST is itemized on the receipt and that the vendor’s GST number is recorded on the receipt. You can save time and money by breaking out the GST and making a note of it on your cheque stubs so your bookkeeper doesn’t have to rifle through receipts or back it out.

Nobody likes paying tax, so it’s really important to keep on top of those receipts and see your bookkeeper regularly to be sure that you are claiming as many input tax credits as you can and offsetting your GST remittance. Your bookkeeper can also help you to keep on top of your GST remittance schedule, whether it be monthly, quarterly or annual.

If you are thinking about using the services of a professional bookkeeper, give us a call at 403 272-5513 ext 616 ore email bookkeeping@registriesplus.ca  for a free consultation. We are currently offering a Spring Special startup package for $150 and monthly bookkeeping from $99. You may be surprised at how affordable professional bookkeeping can be.

Canada helps small business exports with new $50-million program

podium-freeland-Phil.Froklage@communitech.ca_Chrystia Freeland, our new Minister of International Trade, just unveiled a $50-million program to help small businesses increase sales abroad. The program is called CanExport (read more here). This five-year program is designed to match export and development expenses with grants from $10,000 to $100,000.

“Something I want to say to all the small businesses here is, I am your Chief Marketing Officer,” Freeland said. “My job is to help every company in Canada export its services and its goods.”

There is a lot of really great news with this announcement. It show’s Canada is committed to increasing its economic standing from its 11th-place global ranking. It also shows there’s support for our startup communities. What’s not clear is the extent to which this program will actually create jobs.

Many technology and manufacturing companies have depended on labor from markets other than Canada to produce its goods. Will this program simply fund development in these other markets to the tune of $50M, or will it encourage more home-grown jobs. Time will tell.

To be eligible for this program, companies must have fewer than 250 employees and generate between $200,000 and $50 million in revenue. Unlike many other development programs, like the Scientific Research and Experimental Development (SRED) incentive, this one doesn’t target any specific industry like tech, though tech was referenced a number of times in her speech.

“The companies who we really want to help are exactly the kind of companies who are incubating here at Communitech; who are just getting started,” she said, adding “. . . we have to go global really, really fast in order to succeed.”

Many Albertans have been uncertain about having left-wing parties at both the provincial and federal level. Particularly in light of issues like Energy East. Regardless of where you fall on the political spectrum, one thing we can likely agree on is that an 11th-place ranking is a terrible economic position for our country. Programs like this are an encouraging sign that we’re prepared to take action to build a stronger economic future.

Bookkeepers vs Accountants; which do you need?

When most small business owners look for help managing their finances, they assume their only option is to work with an accountant. It’s true that they will likely need one to finalize financial statements, provide tax-saving advice and to complete tax returns. However, many small and even medium sized business owners are pleasantly surprised to learn that bookkeeping services are lower cost alternative to managing the month-to-month finances of their companies.

Using bookkeeping services can save companies thousands of dollars each year, so let’s take a look at the differences between the two functions to help you feel confident that combining bookkeeping services with your accountant is the way to go.

The main difference between the two functions is that they are used at different stages of the financial cycle.

Bookkeeping is the function of recording daily transactions

How well your daily transactions are recorded is one of the keys to building a strong business foundation. This is why bookkeeping is so important. It’s comprised of

  • Recording financial transactions
  • Posting debits and credits
  • Generating invoices
  • Maintaining and balancing general ledgers and accounts
  • Managing payroll
  • Preparing interim financial statements

Maintaining a general ledger is one of the main components of bookkeeping. The general ledger tracks the amounts from sales and expenses. The complexity of this task depends on the size of the business and the number of transactions that are completed daily, weekly, and monthly.

Accounting is the function of optimizing business decisions through data

Accounting is a high-level process that makes sense of information from the financial statements to support sound decision making for the business owner. This is much more subjective than bookkeeping, hence why it requires a highly trained professional. The process of accounting includes:

  • Preparing adjusting entries
  • Finalizing financial statements (i.e. Notice To Reader)
  • Suggesting ways to optimize the business based on the financials
  • Completing and filing income tax returns
  • Aiding the business owner in understanding the impact of financial decisions

The accountant will help business owners better understand profitability and cash flow implications. This is why business owners will often look to accountants for help with strategic tax planning, financial forecasting, and tax filing.

Why use both?

Some business owners get peace of mind by having both functions completed by their accountant. The fact is that that peace of mind comes at a fairly high price. Many accountants hire bookkeepers to take care of the monthly transactions and record keeping, yet charge rates that are reflective of an accountant’s time, which can be around $100/hour. The alternative is to hire a bookkeeping service provider who will charge around $50/hour for the same work. If an average small business requires 10 hours of bookkeeping a month, this is a savings of $500. Over the course of a year it’s a savings of $6000, which could go straight to the owner’s salary vs their accountant’s.

Calgary Bookkeeping by Registries Plus is offering a spring special to help small business owners transition to using bookkeeping services. Learn More

Steps to starting a small business

Starting up a new business is a dream for many people, but it can also be a daunting prospect. Here at Calgary Bookkeeping by
Registries Plus, we work with thousands of entrepreneurs every year and all of them have the same challenge; they are uncertain about how to get started.

One of the first things we do with our clients is to walk them through the startup process and provide them with a simple-to-follow checklist of activities to complete. Knowing this information removes the uncertainty and lets the entrepreneur’s excitement and passion bubble to the surface.

It’s true that each business is unique in some way, so start up activity will vary to an extent. For example, a retail business will have inventory to purchase and a point-of-sale systems to setup. A construction company will have tools and equipment to acquire. And a young oil and gas company will have staff to hire and agreements to complete. Regardless of these differences, the administration of setting up a company is basically the same.

Here are the basic steps you will have to complete to get your business started:

  1. Decide on the company type – the three most common options are a sole proprietorship, a partnership or a corporation. There are advantages and disadvantages for each type. Other less common company types are a co-operative and a not-for-profit structure.
  2. Register your company – without a registered business with your provincial and federal governments, you are operating unofficially and that can lead to fines and other legal problems.
  3. Get a business license permits – this is often done through your city hall.
  4. Acquire the necessary insurance – this could be Workers’ Compensation Board (WCB) insurance, property insurance or errors and omission insurance. They type of insurance you’ll need depends on the type of business you have, but it’s something you do not want to overlook.
  5. Acquire financing – whether your have your own capital or need a small business loan, it’s important to inject working cash into your business. This lets you separate your personal finances from your business finances and gives you the cash flow to undertake the startup tasks
  6. Decide on staff vs contractors – getting the resources and support you’ll need is one of the more difficult start up tasks, but it’s absolutely critical that you get it right. Some businesses will need to hire staff while others can contract the resources needed. This is an important decision because the people you have representing your company will make all the difference in how quickly you find success.
  7. Create systems and processes – almost every business requires some basic information technology to get started. Maybe it’s a simple as a cell phone and some scheduling software or it could be as complicated as a network with a point-of-sale system. There are a lot of decisions to make here, so choose carefully. Replacing systems is costly and takes time away from supporting customers.
  8. Acquiring customers – this is probably the most difficult part of your start up activity. There’s no regulatory process that defines this step, so it’s entirely up to you to determine how to reach customers. That said, there are some common elements every entrepreneur will need, like a marketing plan, a brand or company name, a websites, and some type of advertising or promotion, like an event.

Within each of these basic steps are a number of detailed and specific activities. At Calgary Bookkeeping by Registries Plus, we include a one hour consultation with our clients to cover the detailed steps. Whether you work with us or another firm, we strongly recommend engaging with a business advisory to help you wade through the range of activity.

If you’d like a copy of our startup checklist, please send us a request by filling out the form below or send an e-mail to bookkeeping@registriesplus.ca.

 

Small Business Deductions

The accounting and bookkeeping community in Calgary has been keeping abreast of information from the Canada Revenue Agency (CRA) regarding small business deductions.

Two changes that we’re aware of are:

One: if a business is determined to be a Personal Services Business (PSB) then the small business deduction may be denied, and additional taxes may be applied. This is because these types of businesses are viewed as incorporated employees. Meaning that an individual provides employee-like services through a closely held corporation, rather than providing them directly as an employee.

Two: if a business is determined to be a Specified Investment Business (SIB), then the small business deductions may also be denied. The CRA views corporations earning investment income (interest, real estate rental, royalties, capital gains and dividends) as having generating SIB income. This change will have a strong impact particularly on the real estate sector like real estate agents and those earning rental income.

How to Choose Accounting Software

If you are just starting up your business, then one of the bigger decisions you’ll make when it comes to administration is the choice of which accounting software to use. There are a range of options, but the leading choices boil down to Quickbooks and Sage.

A few things you’ll want to consider when evaluating options are functions, setup and help.

Functions – both packages have similar features. Things like ledgers, inventory, order management and payroll, so it really boils down to ease of use of these features. In our opinion, it’s very close but we think Quickbooks is a bit easier to make adjustments and to manage payroll, so we give it a slight edge. That said, there are a lot of people who prefer Sage because it does a great job of inventory management. Overall, both options are very robust and have strong user interfaces, so it’s hard to pick on this front alone.

Setup – We give Quickbooks the edge in terms of setup, mostly because we like to use the online software which makes it a lot easier for us to get our clients up and running. The desktop version of both packages use similar setup procedures, but in our experience Quickbooks is a bit more forgiving if you make a mistake and need to go back to fix something.

Help – This is the main reasons we prefer Quickbooks. The training, online support, help wikis and other online resources from Intuit are really amazing. If you’re a small business owner and you prefer to do your own bookkeeping, then you can count on needing help at some point with your software. Intuit makes it really easy to get the help you need. Sage has similar resources, but we’ve just found Intuit to have a better understanding of what’s needed in terms of support.

One last consideration is whether or not you want to invest time to do your own bookkeeping. While it does save you a bit of money, it also takes you away from driving your business and working with your customers. Our recommendation is to use a bookkeeper so you can focus on your business, but if you’re set on doing it yourself, then we’d suggest you consider working with a bookkeeper initially to setup your software with you and ensure you have your procedure right. This will save you a lot of time and headache down the road.

At Bookkeeping by Registries Plus, we can help you install and setup either Quickbooks or Sage and get your off on the right foot. Call us today for a free consultation.

Trade Name Registration Price Reduced

Trade Name or Partnership – Now Just $50

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It goes without saying that many Albertans are going through some tough financial times these days. Many people who have found themselves out of work are choosing to go into business for themselves. At Registries Plus, we want to be the first to congratulate you and help you on your way. To make it more affordable for you to start your own sole proprietorship (trade name) or partnership, we have reduced the cost to just $50 plus gst.

We can normally do a Trade Name or Partnership registration for you at the counter while you wait – no need for an appointment. If you want us to do a NUANS search to see if the name you want to use is available, the cost will be an additional $45 and it can take up to 2 hours for the results to come back to us.

We believe that Alberta’s “can-do spirit” is what makes our province great and we want to be part of your success story. Make Registries Plus the first step on your road to success.