Starting a business is an exciting and exhilarating time. However, the amount of work to get things started can be overwhelming. In the beginning, a new business owner will most likely spend most of their time setting the business up rather than actually running it. Between creating a website, developing your online and marketing presence and networking and sales for new business, doing the actual work can be a balancing act to put The Flying Wallendas to shame!
And though there are a lot of exciting things to start on with your business, the bookkeeping and CRA compliance part of running a business is not so much fun and can be confusing.
Here are some points for you before you begin to help make the way a bit more clear:
The rule of thumb with CRA is that you do not have to register for HST until you have earnings of $30,000.00/year. The problem is that you can’t predict exactly when that will happen. Hopefully your business is running smooth and earning a lot. If it is, you will need to register sooner than later. However, consider registering your company for HST from the beginning. You can gain some HST ITCs (input tax credits) from the expenses you incur even without having income right away.
Once you have registered for HST, CRA regulation states that you must have your HST registration number visible on your invoices to your clients.
Depending on your business, you will either have sales receipts or invoices. Sales receipts are normally from cash registers when you are selling goods, such as a restaurants or retailers. Invoices, are used when you are selling services or products and are not taking payment right away. The CRA will require you to have a record of the sale: what was sold, breakdown of sales tax and the method of payment. A great site that can help you create invoices is Freshbooks (http://www.freshbooks.com/). With Freshbooks, you can create invoices, track your outstanding receivables, and record methods of payment.
Get an accountant and a bookkeeper – Stat!
You will want to start tracking your business activities right away. I’ve seen many businesses let the bookkeeping slip to the side and then so much time goes by that you lose track of where your business stands. Although we all want to save money, shortchanging yourself in this area can cause you grief in the long run. An accountant can help you develop the year ahead and make sure you are planning properly for tax savings. A bookkeeper will help you to stay on track with that vision and will be able to ensure you stay CRA compliant and that you are following the guidelines properly.
There is always so much more information to be given when it comes to starting a new business. If you are thinking of starting a business, or already have and need some guidance, give me a call and see how I can help you!