Internal accounting systems process daily sales, purchases, and payroll transactions; effective owner-managers review the general ledger bank balance, accounts receivable, accounts payable and the payroll summary on a regular basis. Management needs these in-house financial statements to meet some if not all of the following requirements:
· All provincial corporations’ acts require financial data to support financial statement filing requirements.
· Shareholders have a right to yearly financial statements based on recorded transactions.
· Creditors may require regular financial statements to evaluate the quality and sufficiency of collateral covering a loan and to ensure the loan conditions are being met.
· Potential investors may want to review monthly financial statements to evaluate throughout-the-year performance.
· Comparable monthly historical financial statements give valuable information to a potential purchaser if the owner-manager retires or sells all or part of the business.
· Financial decisions based on monthly facts and figures provide insight for planning and budgeting.
· Comparative financial statements can reveal whether changes in sales or expenditures are creating variations in the bottom line. Such comparisons allow management to take corrective action and ward off potential working capital problems.
· In-house financial statements establish how management is guiding the company.
· Financial statements provide information about the availability of sufficient assets to meet liabilities.
· Operating results provided by financial statements inform management whether action is needed to increase sales, cut production costs, or reduce wage costs.
· Properly structured income statements provide insight into the cost of production compared to sales. As a result, management can more rapidly decide whether sales prices need to be increased or job costs better controlled.
· Monthly financial statements show errors in environmental, tax, payroll, pension, workers’ compensation, GST/HST or employee health tax remittances.
Before company accounts are ready for a third-party user, the external accountant usually has to make some adjustments to provide the information in the form needed by the third party. Consider the following:
· Data provided by an in-house system designed to give information about the day-to-day operations must be distilled into a summary format that provides information in accordance with Canadian financial statement disclosure requirements.
· Statements prepared by an independent accountant lend credibility to the corporate entity because the preparation is independent of internal bias.
· Reporting requirements change regularly and must be reflected in the financial statements.
· Independent preparation of financial statements may identify anomalies within the corporate records, which need review to ensure they are correct. For instance, capital assets purchased may have been expensed.
· Preparation of financial statements by your external accountant usually identifies items that are income tax sensitive such as shareholder draws, penalties and interest or personal use of corporate vehicles that may have to be adjusted.
· An external review may determine whether the valuation of assets is accurate or whether capital assets should be written down or accounts receivable amounts should be written off.The external accountant ensures that comparative figures are truly comparative, not only to ensure a better analysis of progress throughout the years, but also to provide insight as to the reasons for material variations in the event lenders or regulatory authorities question the differences
In the final analysis most external accountants would agree that you know your business better than they do, but they know business better than you. Working with your accountant and helping them understand your business will ensure the financial statements provided to management, third parties and regulatory and tax authorities adequately explain the corporation’s financial position and operational results for the year.
It was not so long ago that mobile phones were used primarily for making voice calls. The ability to send and receive short message service (SMS) text messages was effectively a bonus feature that became immensely popular, thanks to clever foresight by the architects of the GSM (Global System for Mobile communications) mobile phone system in the 1980s and 1990s. Text messages are so popular now that we collectively send about eight trillion every year. The evolution from cell phones to smartphones has effectively changed how individuals communicate by giving them the ability to receive, create, edit and send almost any kind of content, from email and documents to pictures and videos, all “on the go”. In short, communication has become incredibly easy.Communication only occurs when the sender and receiver understand each other. The fact that nearly everyone has access to email and text messages is the measure of their ongoing success. Nevertheless, ubiquitous though they are, email and text messages are not secure and were never intended to be
The 2017 RRSP contribution limit is 18% of your 2016 earned income to a maximum of $26,010. (For those who have not topped up every year, this is the additional room now available.) Earned income includes self-employed net income, net income from a partnership, payments from supplementary unemployment benefit plans, CPP/QPP disability payments, salary, wages, taxable alimony or maintenance received, royalty and net research grants and net rental income.
Passive income such as investment income, taxable capital gains, death benefits and limited partnership income is not included within the calculation.
Losses from a self-employed business or partnership must be used to reduce earned income. If net rental losses are available, earned income is reduced accordingly. Any deductible alimony or maintenance payments also reduce earned income for the purpose of calculating your RRSP contribution limit.
The Canadian Centre for Occupational Health and Safety defines workplace stress as the “harmful physical and emotional responses that can happen when there is a conflict between job demands on the employee and the amount of control an employee has over meeting these demands.”
The growing recognition of the problem of workplace stress has led the Ontario government to pass the Stronger, Healthier Ontario Act (Budget Measures) 2017 last May that amended the Workplace Safety and Insurance Act, 1997 to entitle workers to benefits as a result of mental stress. These amendments are effective January 1, 2018. Most other provinces already have or are in the process of initiating legislation that recognizes how mental stress impacts workers.
Despite the ease and relatively low cost of modern telecommunications, it is still necessary for business people to travel to be onsite. This is especially true for business owners who want to grow their businesses internationally and need to meet suppliers and customers to establish the personal connections that will be the foundation of future success. Flying to remote suppliers or clients makes jet lag a reality that should be factored into travel plans.To control the color or size of this text, please change the global colors or text size under the Design section from the left menu of the editor.
The more a task can be automated, the greater the increase in productivity and the greater the reduction in employee overtime and management frustration. Even though technology can speed up operations and reduces costs, far too often owner-managers continue to embrace legacy behaviours that keep their businesses from being as productive and profitable as they could be.
Implementing some or all of the following suggestions could be the first step to increasing productivity and making the workplace more efficient and more enjoyable.To control the color or size of this text, please change the global colors or text size under the Design section from the left menu of the editor.
Owner-managers work hard in their businesses but are often overwhelmed by the reporting requirements for the Canada Revenue Agency. Few owner-managers enjoy the time spent and cost required to meet the CRA requirements, let alone the actual taxes that have to be paid; nevertheless, owner-managers must establish good business habits to ensure they stay on the right side of the tax authorities.
So, here are a few suggestions on how to make your relationship with the CRA much easier for yourself over the long run.
Media ads constantly bombard us with images of happy, attractive couples enjoying their retirement years on a sunny beach in Jamaica or on a cruise ship in the Mediterranean. But to reach that dream, it is necessary to invest today’s earnings so that they will grow into tomorrow’s retirement fund. Certainly, the earlier one starts a systematic investment program, the greater the probability that today’s fantasy will become tomorrow’s reality.
Investing is more than just putting money in Guaranteed Investment Certificates or the stock market. From the start until you actually retire, you must keep reassessing your financial and other life circumstances to determine whether the strategy chosen yesterday is still valid today. Several approaches to investing are available but each is dependent upon your personality, your age and your life situation.
Because lighting, heating and cooling represent 19%-25% of the cost of operating a commercial business, control of energy costs is essential to improving profit margins. A reduction of even 10% in these costs can produce a significant improvement. But, because Canada is located in a part of the world where temperatures can range from 40C below zero to 35C above, it is inevitably expensive to keep internal temperatures at levels needed to maintain comfortable working conditions through the changing seasons.
Setting the price point for your product or service is not simply the process of determining the cost of production then adding a mark-up. It is more a matter of understanding the price the consumer will accept as the value of your product or service and keeping the costs of production to a level that will give you a profit at that price.