New Year’s resolutions for your business success
With the New Year upon us, we are often busy setting resolutions to adopt healthier eating and exercise habits, to get more sleep, and to find ways to have less stress in our lives. But if you are a business owner, what are your resolutions to improve financial health of your company? Whether 2018 was stellar or a struggle, why not take this opportunity to improve the financial health and success of your business in the New Year?
Consider adopting these resolutions to get your business in shape.
Update Your Files
As we file away the old, the beginning of the year is a great time to get your current files in organized and in an orderly fashion. Whether you keep files for customers, vendors, employees, or contractors – keeping files current can save time tracking down information, prevent errors, and reduce delays. Here are a few best practices;
Customers – Whether you keep your customer information electronically or hard copy, now is a good time to review what you have on file. Verify contact information and billing addresses, including names, addresses, phone numbers, and email addresses. Depending upon your business, you might review your customer’s history, specifically the frequency of orders and payments. If an account was a little slow in paying or hasn’t placed an order in a while, consider reviewing this activity with them. The New Year can open up the opportunity to improve payment frequency or even win back a customer.
Vendors – Review your vendor files to ensure you have the correct contact and payment information. If your company requires vendors to submit insurance or financial information, be sure to update your files with current data.
Employees – If you have employees, the beginning of the year is a perfect time to ask employees to review their withholdings. This is especially critical for employees if tax laws or withholding thresholds change. Remind employees that any changes to their withholding must be documented in writing on Forms TD1 and TD1BC.
As an employer, you should review your payroll files to ensure that all documentation is current and has not expired, that any compensation changes have been made, and any requests for deductions from a paycheck are current and documented in writing. In some cases, benefits may need to be updated due to the length of time an employee has worked with the company. While this may not occur on January 1, consider putting this on a calendar or schedule so that it is put in effect at the right time during the year.
Contractors – For a business, properly assessing and documenting the independent contractor relationship can save immensely. When classification or documentation errors are made, the taxes and penalties that arise can be very costly to a business. A best practice is to review the nature of the relationship in accordance with the CRA. A business should maintain copies of signed contracts, as well as current insurance certificates, if applicable.
Know Your Deadlines
While 2018 may have come and gone, its deadlines are still lingering. Know what your filing deadlines are and what is required to be filed. Deadlines exist throughout the year for a myriad of taxes and licenses, as well as your annual report. Not only can missing a deadline cause the additional headache of penalties and interest, it can impact your ability to operate if you are behind in your license or corporate annual report filings.
Reflect and Move Forward
How did 2018 end up for your business? If you prepared a budget, how close was your activity for the year? Reflecting on how your business did in 2018 will help you to focus on areas of improvement in 2019. If your telephone or internet bills were higher than expected, perhaps there is a more cost effective plan for 2019. If you found yourself making sales in 2018 but struggled with cash flow, your credit policies may need to be tightened up.
While you can’t change what happened in 2018, you can impact the New Year. Use 2018 to identify trends and areas for improvement. Use historical information to help you set goals for the future. And if you didn’t prepare a budget for 2018, consider putting one together for 2019.
Small business owners are often pulled in multiple directions, handling one urgency after another. Often times, owners get caught up in the busyness of the day that they don’t dedicate time to record keeping. Entering transactions into your bookkeeping system, paying bills, filing invoices, and reconciling bank and credit card statements tend to take a back seat when you are swamped. While it’s easy to set this aside with the plan of getting to it later, resist that urge! Updating your records will always need to be done and, rest assured, it will pop at the most inopportune and stressful time.
Staying current will not only keep your stress level down, but it will provide valuable financial information that you need to run your business. You will be able to see where your funds are going, how much you are spending, and if you are charging your customers enough money. It will allow you to provide information timely to your accountant. If you are considering financing equipment or entering into a business loan, you will need to provide current financial information.
In the New Year, resolve to stay on top of your bookkeeping system. Whether it is blocking a few hours out on your calendar each week to dedicate to your books and records or taking an hour each day, staying on top of your finances will not only give you valuable information about your business, it will greatly reduce your stress level. Invest your time in the financial health of your company. Keep your records current.
Be Realistic – You May Need to Delegate or Outsource
As a business owner, always assess where your time is being spent. Many times, owners try to do it at all in the interest of saving money. Perhaps their time is better spent meeting with prospective and existing customers, or forging strategic vendor relationships. Consider the cost-benefit of the tasks that you do as an owner. In some cases, it may be more cost effective to delegate routine or mundane tasks to an employee. In some cases, you might consider outsourcing the function altogether. Owners often outsource their bookkeeping and payroll services, not only to free up their time, but also to receive timely financial information. Timely financial information can empower a business owner to make better decisions about their operations.
A company that is financially healthy can bring prosperity and profitability to its owners. It can provide jobs to employees, as well as give back to the community. Whether 2018 brought prosperity or struggle to your business, consider the financial health of your business your top resolution for year.
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