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There are a more than a handful of people who go into business every year. There are a significant number of start-up businesses that are launched each year too. Sadly, more than half of these start-up businesses close only after a few years of operation. Start-up businesses help the economy in more ways than one. They push the boundaries of technology and innovation. They can provide products and services that big businesses rarely go into. Small businesses can create a market for what they offer, and that’s how they find success.
And yet, in Canada alone, only a little over 50% of all the startup businesses survive for more than one year. A fewer of those usually end up closing down. This brings experts to question – Why do small businesses fail within the first five years of operation? What could be going wrong? Here are some ideas you might want to ponder upon.
· Poor Management Practices
Although most business owners think that bankruptcy is the culprit to the failure of their business, the root of the problem isn't that. They fail to see that it is the poor management practices that led to bankruptcy that is pulling them down. Most entrepreneurs don’t have experience in running a business, which entails managing and directing the people. So before it is too late, plan. Build a management structure early on and work well with others to improve it.
· Negligence In The Company Finances
Are you too focused on making a profit? If you are, then you should think twice about what you are doing. Remember that the goal of every business should not be the profit but how to capture the market. Start-up businesses depend on investors to generate more funding. It can be quite easy to lose control, but you should always be grounded. Know the financial situation of your company and work things out from there.
· Poor Marketing Efforts
No matter how good your business idea may be, remember that it cannot sell itself. Don’t expect it to market itself and generate sales. The worst thing that a business owner can do is to come up with marketing campaigns that are not good enough for the target consumers. Without the right marketing, your consumers won’t be aware of the product or services that you offer. This is the reason why you are not making the sales that you expect.
Running a business isn’t easy, and it becomes even more difficult to pass the five-year mark. But knowing what you’re doing wrong is the first step to making it right.
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Are you looking into investing in a new business venture? Determining the capital needed for a new investment includes multi-step processes. No matter how good the new business may be, it is a must for you to determine how much you need to spend on that start-up project. In the long run, doing so will benefit you in a way that you’ll be able also to determine how much profit you can expect out of it.
Long-term financial planning should be one of the best steps that every new entrepreneur must take. Whether it is the purchase of new machinery, the money you put in advertising and marketing or a whole new start-up project to fund, it is a must that you know the tricks that could help you put money in it and make it grow. Here are a few tips to help you get around it:
· Tip 1: Consider the Opportunities that it Comes with
When you’re in business, it is essential that you carefully consider the investments you put your money into. Remember that the goal is not just to earn more, but to also grow more regarding the industry. A business cannot be stagnant as competition is increasing. One must always look into the opportunities that come with new investment. Capitalize on projects that can make the business grow and bring it closer to consumers.
· Tip 2: Make a Rough Estimate of all Possible Investment Costs
Once you have finalized the short list of projects that you’re interested in trying, it is time to look into the financial aspect of each one. Calculate the rough estimate of the cost of each investment project. Then, work out the possible profit that you can gain out of it. With information on hand, choosing which one to push forward would become so much more comfortable. If you plan to use more than one investment project, make sure to prioritize them based on the investment they require.
· Tip 3: Estimate the Payback Period as well as the Cash Flow
Now that you have gone through the details of the project, particularly its financial aspect, it is time to see the project in a bigger picture. Consider not only the profit but the benefits that it comes with for your investment and your organization. Once the project is complete, how will the company benefit from the investment? If it is new machinery, calculate the personnel time as well as the maintenance requirements it may have. At this point, you will need to see how the company can profit from each one.
Capital budgeting plays a critical role in the success of a business. Make sure to consult with accountants in West Edmonton. When it comes to your investments, you don’t want to make decisions too hasty you know you will regret later.
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Did you know that almost 3 million of Canada’s population is self-employed? Whether it is online or a physical store, those who engage in a business relationship with clients who pay are self-employed. Compared to those who work for a company, individuals who are self-employed are in charge of when what and how the payer is going to pay for the goods or services that they offer. Such terms of business may involve incorporation while there are others who choose to be sole proprietors of their business.
Self-employed individuals are taxed by the government too. And although this fact is often overlooked, it is essential that they know the items that are taxed and those that may be exempted. How are the self-employed taxed?
It must first be stated that the nature of the job of a self-employed can be quite complicated. They can earn income in any number of ways and is not limited to just one. They may own a business, paid through the practice of profession, commission, fishing or even farming. When it comes to the definition of their business income, it can happen from some sources. Income is earned from any activity that is carried out with an expectation of payment, whether for output or services rendered.
Such activities may include products that are sold in retail in a physical store or through online. Consultation for professional services is also included in the many forms of businesses where income is expected. It does not matter whether it is for landscaping or repainting of a house, the consultation itself is paid and thus it is considered a source of income. But how does a self-employed report income?
The declaration of all income generated by a self-employed is made through the individual’s tax return form. This is different from those who are part of a corporation because the corporation must declare the income first before the individual does. The net income is calculated by subtracting all expenses from the gross income. The net income is then taxed at the marginal personal tax rate. This means that the income is divided over thresholds that are charged at a higher rate.
How do you know if the income that you earned is taxable? Or whether you are under-declaring? It is essential that you consult with tax accountants in Edmonton that you can trust. They can help you identify income and work it against ones that are taxable. There are some accounting firms in Edmonton, Alberta so finding one shouldn’t be that hard. Before you get charged for something you under declared and pay up higher fines, it is best to consult with the tax expert.
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As you welcome the New Year, it is essential to engage in projects that can help shape a good year for your business. There is no better time to start with new projects that will not only increase business revenues but will assist in the promotion of its products and services too. What kind of projects should you engage in? Here are some ideas you can try:
· Go back to School
When was the last time you learned a new skill you can turn into a business opportunity? If you can no longer remember what it was or when it was, it’s a reminder that it may be the perfect time to go to school. The start of the years brings new opportunities for growth, and there is no better way to improve your business than to offer your clients something new. You can only do this when you submit yourself to new learning and training as well. Read a good book or attend a workshop on something you may be interested in. Who knows you might find a new business venture you’d find success in.
· It’s Time for a Sale!
You end each fiscal year with an inventory. You make a list of what you have and what you have spent in the last year. This is to make sure that you find balance in what needs to be purchased in the coming year. Now that the new year has started, it may be time to say goodbye to old goods to have space to welcome new ones. A garage sale would be a perfect avenue to liquidate the assets that you have. The money that you get out of it can be used for the other needs of the business. The slower moving items in your inventory should help you figure out the many ways you can improve your services to your clients.
· Find out What Brings in More Money
If you are in the business of handling more than a handful of goods and services, it may be time to distinguish the ones that bring in the profit. Breaking the numbers to find out the margins of the products that bring in money to the company against those that are in stock but are rather slow-moving should help you manage the company more. Knowing all these will help you make better decisions for the business to ensure that everything you are holding on to bring in profit.
Is the new year going to bring in more success? It is really up to you. Refresh your finances with these three activities and see the difference that these can make.
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As an entrepreneur, when you run a business, there are various aspects you need to look into. From keeping track of business functions to keeping your employees happy, it takes a lot to maintain the smooth running of your business. One factor which highly affects the happiness of your employees is how well you manage their payroll. Apart from maintaining a basic record of the salary given to your employees, there is a comprehensive system that each business needs to have in place for a well-managed payroll. To help you know more about it, here are some common types of payroll systems listed by experts of payroll services in Edmonton.
1) Internally Managed Payroll Systems
An internally managed payroll system is a method which is feasible for a company which has a less number of employees. With limited employees, it is easier to maintain and manage payroll records without major discrepancies. Managing your payroll is something you can do by yourself, or you can hire a resource specifically for this purpose. The base requirement is the knowledge of maintaining payroll records and awareness about the various laws and taxes applicable.
2) Professionally Managed Payroll Systems
When we talk about professionally managed payroll systems, that’s where the bookkeepers and the certified public accountants (CPA) walk in. If you feel you lack the expert proficiency in managing your company’s payroll, you can opt for outsourcing it to a bookkeeper or CPA. You could also hire an expert on a contractual basis from a reputed accounting firm. Do keep in mind though, that these professionals will only help you manage your payroll records and may not complete the process of making transactions, bank deposits and deductions.
3) Payroll Services Managed by Payroll System Agencies
Another way of maintaining the accuracy of your payroll system is to hire a payroll services agency. These agencies manage the complete payroll responsibilities of your company along with making salary deposits and deductions for every month. Such payroll service agencies often give assurance of total accuracy and ensure that late payments are avoided.
4) Software Managed Payroll Systems
Software managed payroll systems are not widely in use but are gaining popularity slowly. Many software and online portals are now available for you to manage your payroll without going through the tedious process of calculating anything. You simply need to put in the details and these digital platforms record and maintain them for you.
When it comes to managing your payroll efficiently, you have multiple options. If you have a base knowledge of payroll management, you can manage it on your own or with the help a software. However, having a professional providing payroll services in Edmonton with the expertise of the field to work on your payroll is always advisable as it decreases the chances of inconsistencies considerably.
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A general ledger is a collection of your account charts. A general ledger is a must to keep your business accountant in order. If you have a ledger, you can effectively have a view of how to spend and also help you in keeping your business on track. Though there are many softwares that are available, there are some small business that still go for the traditional general ledger. If you are eager to have a general ledger then there are a few things that you need to know when it comes to how to fill out a ledger book.
The date is that date on which the transactions take place. You can get the date from the accounting source documents. The date is important when you prepare a general ledger.
There should also be a brief description of the transaction that has been done. If you have doubts, put in all the details that you think are important and necessary. Just hold your horses when you do it, take your time. The description depends on how you want to make a general ledger.
You are at the liberty of choosing whatever reference with which you can identify the transaction. For example, some use the reference of the invoice numbers. You can write them so that you don't forget them. The best way which many suggest that you can cross reference between the cash booklet and the document. Reference is something you need to keep when you make a general ledger.
Income and Expenses
This column is the most important one when you work on how to fill out a ledger book. It is very simple. Just insert the values of the transaction in the right columns. Try making ‘Money IN’ and ‘Money OUT ‘ columns.
Now that you know what all u need when you make a general ledger, let's take a look at how it is filled.
The cash receipt journals are the one’s where we can track the transactions where the business receives the cash. But there is a thumb rule for it. All the entries that you put in here are to be the balanced one’s. It can be written down as follows-
Here, the cash account is credited by $4000, which shows the credited cash. The further columns show the break up of the cash received. The sales account got credited due to increase in the sales. The capital account is increased by another $2500 as the owner put in more cash. These entries are to be made when you make a general ledger.
The cash disbursement keeps track of the cash sent out. For example, you can refer to this
It is with the help of these points that you can get to know how to prepare a general ledger.
The above points will be of great use to you if you have questions on how to fill out a ledger book. ATS Accounting can be of great help when you make a general ledger.