Whether you are an incorporated business or a sole-proprietor, large or small, it’s important to be organized. Here are a few tips to get you started on your way to doing your best by planning ahead.
- If you don’t already have this, set up a separate chequing account to hold your earnings and to pay your expenses that are dedicated to your business. Do not mingle your personal money with your business money. At all income levels, you need the separation so you can better monitor the cash flow and for better future planning. (Accountants and CRA prefer it also.)
- What are your business goals for this year? Next few years? And longer term? With a concrete plan in mind for that goal, you can either set aside funds for that spend when the time comes – or be prepared that the ongoing expense will be starting at a future date. For example, if you need to purchase a new computer system within the next 12 months and you know that the cost will be $800 monthly, then you need to ensure the $800 will be available in your cash flow and not committed elsewhere.
- If you are making monthly or quarterly Income Tax or HST payments, make sure you have the funds available at payment time. From each income received, allocate part of it to separate bank accounts, one for Income Tax and one for HST. That way, the funds will be there when it’s time to make those required installments.
- Remember to pay yourself! The business needs to pay all its own bills including paying you. Try to set a standard payment so that on the personal side, you can plan also.
Janet Gray, B.A., B. Admin., CFP®, EPC, CPCA,
Fee-only, Advice-only Financial Planner/Money Coach/Educator/Speaker