Tag: solopreneur

Bookkeeping New Year's Resolutions

Bookkeeping New Year’s Resolutions

Do you always keep your New Year’s Resolutions?

Unfortunately, studies have shown that most new year’s resolutions simply don’t work. We enter into the new year with the best of intentions, planning on making significant changes to our lives, but before we know it… it’s February, and we haven’t taken any steps towards our resolutions.

One of the reasons for this is because most resolutions resemble wishes rather than actual goals. They are too general, e.g. “I want to lose weight,” or overly ambitious, e.g. “I want to be able to run a marathon by February.” If you want to make a new year’s resolution that you’ll keep, it needs to be both realistic and actionable.

This year, why not make your new year’s resolution about your small business’ bookkeeping? There are a ton of concrete steps you can take to make your bookkeeping habits and practices even better for the upcoming year. Take on any of the following resolutions, and you’ll not only be able to keep them, but you’ll also see some major positive changes to the way you handle your personal and small business accounting!

Resolve to: Digitize Everything

The days of keeping your receipts and invoices in a series of shoeboxes are long gone. Nowadays, thanks to digital technology, you can make sure that everything is optimally organized so that you can find any document in a matter of minutes (if not seconds).

While you do need to keep paper copies of all your receipts, you should be creating digital copies that are correctly named and organized on your computer. It isn’t as difficult as you might think, as there are dozens of high-quality apps that allow you to simply take a photo of a paper receipt with your phone. These apps will then automatically name and file that record into the proper place in your bookkeeping system.

Creating a system like this can have countless benefits. First, searching for a necessary receipt is going to be easy as pie. Just type the name into the search, and the corresponding document will pop up. If you’re using accounting software, it will help you keep track of all your receipts, organizing them for you by date and type.

It’s also going to be easier to work with a bookkeeper or accountant when your financial documents and records are already “filed” and organized on your network!

Resolve to: Hire a Bookkeeper

One of the biggest time sucks for small business owners is doing their own bookkeeping.

Bookkeeping is something that needs to be constantly updated and maintained. If you’re a super busy small business owner, that can result in updating your financial records being put on the backburner. Over time, this ends up becoming a huge backlog of work that you MUST do to keep your business happily humming along.

When you hire a professional bookkeeper, you’ll have the time to focus on the job of growing your business rather than having to monitor and update the books every day. The cost of hiring a bookkeeper is often more than covered by your increased productivity, and that’s not even mentioning the levels of stress that you’ll be avoiding!

If you don’t currently have a bookkeeper, you’re probably dreading going over all of your year-end financial records. By hiring a bookkeeper, you can instead rest easy and enjoy the start of the new year!

Resolve to: Modernize Your Bookkeeping Software

Do you keep all of your financial records in an Excel spreadsheet? Now, there is nothing wrong with that—Excel is a fantastic program! But wouldn’t it be better if you could use a program designed specifically for bookkeeping and accounting, rather than continually having to customize spreadsheets to your desired specifications?

By using online cloud-based accounting services like Xero or Quickbooks Online, you’ll be streamlining the way you input your financial information and records. You’ll also be ensuring that everything will be safely backed up to the cloud. If the unthinkable were ever to happen, all of your financial information would be secure.

At the start of this blog, we told you that most people don’t keep their new year’s resolutions. Why not be an exception to that rule this upcoming year by making your resolutions into actionable plans and strategies that will simplify your life? At The Number Works, it’s our goal to help you keep all of your finances in order with exceptional accounting services. If you want to get the new year started right, please feel free to contact us today! We can’t wait to make 2020 the year that you get all of your accounting under control!

Better Understand Your Business' Finances By Breaking Down the Balance Sheet & Key Ratios

Better Understand Your Business’ Finances By Breaking Down the Balance Sheet & Key Ratios

Do you know what your company is really worth?

Whether or not you use a professional bookkeeper and/or accountant, knowing how your business is doing at any given time is an essential part of success. While income statements and cash flow statements can give you a view of your business over a period of time, a balance statement (BS) can give you a snapshot view of your business as it exists at this moment. Add to that an understanding of financial ratios, and you’re well on your way to having a firm grasp of the financial underpinnings of your business!

What Is a Balance Sheet?

Simply put, a balance sheet is based on an equation:

Assets = Liabilities + Equity

In this context, your assets are what you own, your liabilities are what your company owes, and your equity is the net worth of your company.

Your assets can be either current, fixed, or long-term. Your current assets are the ones that you will be using in the near future. Your fixed and long-term assets are those held beyond one year and often depreciate in value (unless the asset is land, which tends to mature rather than depreciate). You can also include your long-term investments as part of your long-term assets. Your assets can also include intangible things like your brand, trademarks, and patents.

You can think of your liabilities similar to the opposite of your assets. Similarly, there are both current and long-term liabilities. Current liabilities are generally payables and short-term debt that can be paid within a year. Long-term liabilities can include debt to the bank or to your investors.

Finally, equity can be different depending on the structure of your company. If you operate as a sole proprietor or partnership, you’ll likely have an owner’s equity. If your company is a corporation, then you’ll probably have shareholder’s equity. On your balance sheet, equity is usually made up of your retained earnings over the years; the value of what is left of the assets after all liabilities are cleared. This can also be where your capital stock is listed.

Let’s Look at Ratios

But how does any of this information help you? To take advantage of the data in your balance sheet, you need to look at financial ratios. The three most common kinds are:

  • Current ratio
  • Quick ratio
  • Debt-to-equity ratio

Your current ratio should lay out the liquidity of your company and its ability to pay current liabilities with your current assets. In this case, you want a ratio of 2:1 or higher, as you want to be able to cover the current liabilities you owe completely.

Your quick ratio is a more detailed version of your current ratio, removing your inventory from consideration. Much like current ratio, you want this to be 2:1 or higher. That being said, you don’t want it to be too high, as this would mean you aren’t reinvesting your cash back into your company.

Finally, your debt-to-equity ratio is the level of debt you hold against your equity. You want no more than a 2:1 ratio here, as anything above that means your company is taking on more debt than it can handle versus your level of equity.

Having accurate metrics of how your business is doing is vital to your overall success. You can’t rely on luck alone when it comes to growth. Knowing all about balance statements and the financial ratios that can be derived from that data can be invaluable. If all of this sounds pretty complicated, don’t worry because we can help!

At The Number Works, we’ve helped countless small businesses thrive, taking care of their complicated finances. If you want to ensure that everything at your business is kept in financial balance, contact us today! We can’t wait to help you better understand all of your financial statements!

Taking the Leap Towards Self-Employment

Taking the Leap Towards Self-Employment

Are you ready to strike out on your own?

Being self-employed is the dream of countless Canadians. They fantasize about the freedom that comes with being the master of their own destiny…

But of course there’s another side to being self-employed. The rewards of being self-employed can be huge, but so are the risks and strains. Yes, you’re your own boss, but that means all of the responsibilities and risks are yours as well. If you want to be an entrepreneur, you need to provide your own motivation, pushing yourself every day towards success.

To be clear, we are not trying to talk you out of starting your own business! However, it’s important to have a clear understanding of what’s involved. With that in mind, here are some of the things you need to consider before making the leap to being self-employed.

What Do Your Current Finances Look Like?

Whether you’re considering going freelance or you’ve decided to start your own business, you cannot count on your endeavour becoming profitable right away. In fact, for the first year or so, you might be losing money.

Jumping from a reliable paycheque to invoicing clients and hoping they pay on time can be nerve-wracking—not to mention finding those clients and getting through the start up expenses. You must have detailed knowledge of your finances and your risk resilience before you make the full leap to being self-employed.

Not sure where to start when it comes to your numbers? Luckily, this is an area where The Number Works can help. We can walk you through all of your current financial data, showing you exactly where your profits and expenses are and what you can do to shape things up before you go into business for yourself.

Do Your Research

Before starting your own business, you should probably ask yourself the tough question, “Do I have any idea how to start my own business?”

There can be a real “look-before-you-leap” mentality when it comes to becoming self-employed. It isn’t just about the state of your finances; it’s also about learning the ins and outs of creating your own business and managing it effectively.

The first thing you might want to do is talk to some of your entrepreneurial friends. Getting a first-hand account of what it’s like to be self-employed can be invaluable, enabling you to bypass some of the mistakes they made in the early days of creating their businesses.

You’ll probably also want to read some books about entrepreneurship. While countless books have been written on the subject, you should be selective about which you pick up. There are significant differences between the Canadian and U.S. markets, so be sure your book is focusing on Canadians laws and guidelines. You also need to make sure it was written (or at least updated) within the last four to five years. Technology moves so fast that anything before 2015 will be borderline useless, omitting vast chunks of what it means to be self-employed today.

Ongoing management of finances can be another big hurdle for those who want to jump into the self-employed arena. If you’ve never had to manage anything larger than a personal budget, you might need a hand getting started. That’s another thing we can help you with at The Number Works. Right from the first minute of your business, we can be there to support your financial position and ensure you’re optimized and running things as smoothly as possible.

Start Slowly

Have you ever heard of a “side hustle?” It’s essentially part-time self-employment. A side hustle could be as simple as setting yourself up with an an Etsy store to sell things that you’ve created in your spare time, or taking on a single freelance client to get your feet wet in your desired industry.

Having a side hustle can be a great way to get a small business started. If you’re feeling nervous about jumping into self-employment with both feet, this can be an excellent starting point, building muscles that will come in handy when you decide to quit and go into business for yourself full-time.

Keep in mind that it can require building some serious discipline to force yourself to work even after you get home from your job, but the result can be more than worth it. And you’ll need all that discipline when you’re a full-time entrepreneur who has to continuously self-motivated.

Do Not Forget About Your Taxes

One of the biggest shocks that a self-employed person can go through is their first tax season.

When you’re working for a company, taxes are automatically taken off your paycheques. Now that you’re self-employed, you’re collecting the entire amount you’ve earned… until tax time that is. When tax season rolls around and you need to calculate your taxes, you might be in for a shock! Yes, you knew that your tax bill would be higher than usual because you’re now self-employed but… Surely there must be some kind of mistake, right? Don’t be one of those people who realizes they owe thousands of dollars to the government that they’ve already spent!

While, yes, there is a chance that you made a mistake, it’s much more likely that your numbers are correct and you need to give the government a sum of money that you hadn’t planned for. It’s shocking, but there are several ways you can mitigate this situation.

One thing you should definitely have is an accountant experienced in working with self-employed entrepreneurs in your province. At The Number Works, we know all of the deductions and legal tricks for Ontario that could save you big bucks, especially come tax time. With our help, we might be able to get your taxes down to a slightly less jaw-dropping amount. And we’ll certainly help you prepare so that you aren’t caught off guard when you see the amount you’ll owe.

We also recommend that, rather than just dump every paycheque you have into your Chequing account, you take off about 25% off and put it into a separate savings account that you use for taxes. That way, you’ll have a reserve of money ready for you come tax time, reducing any sense of “sticker shock” when you figure out precisely what you owe.

Take Care of Yourself

For new entrepreneurs and freelancers, self-care can become an afterthought in the pursuit of making your business a success. This is a massive mistake!

If you’ve been putting off going to the gym, heading to yoga, buying healthy groceries, or spending quality time with family or friends, be sure to start scheduling it in your calendar like you would a business meeting or other important event. Same with making sure that you take appropriate breaks for lunch and for stretching if you’re sitting down for long hours. If you don’t take care of yourself physically, you’re going to start getting worn down by the job. Manageable things could start to feel overwhelmingly stressful, all because you aren’t caring for your personal needs.

There is also a mental self-care component of being self-employed. Some people start feeling like every minute they aren’t working is a minute they’re losing money; an unhealthy mindset that can lead to self-esteem issues and self-abusive thoughts of “laziness”.

Even though you’re self-employed and can technically get up at any time of day (including well after 9am), try setting “business hours” where you do your work throughout the day. Working 9 to 5, even if you’re doing so from home, can help you maintain a healthy work-life balance. If you prefer unorthodox hours, that’s ok too but make sure that you schedule your on- vs. off-time. It can keep you from feeling guilty that you aren’t working at 9pm on a Saturday rather than spending time with friends.

It takes a great deal of bravery to be self-employed, either by starting a new business or by going freelance. No matter which path you choose, you can bet that at The Number Works we’ll do whatever we can to help. We work with freelancers and entrepreneurs every single day, helping them balance their finances and making sure they’re fully prepared come tax season. If you want to simplify your financial life while moving towards self-employment, get in touch with us today. We’d love to help your entrepreneurial dreams come to life!

How to Create an Unstoppable Virtual Support Team for your Business

How to Create an Unstoppable Virtual Support Team for your Business

Are you a budding entrepreneur? If so, chances are you’re a natural-born risk-taker! But trying to do everything yourself as a business owner is a risk you really can’t afford to take.

Every business owner needs an unstoppable support team, and in today’s digital world, there’s no reason your rockin’ team can’t be a virtual one!

Not only can an unstoppable virtual support team make the difference between the success and failure of your fledgling business, but it will also help keep you sane. Seriously! So many small business owners exhaust themselves working countless hours to take care of their business. While I have great respect for all those hard-workers out there, a bit of assistance from a stellar support team can not only help reduce that frenetic pace, but also boost efficiency and allow your business to grow.

Go For the Best

Typically, an unstoppable support team is made up of two kinds of people: mentors and specialists. Some you hire, some you pay for, and some you find by networking and outreach. Of course, you want your team to be as cost-effectively as possible, but don’t be scared to pay for experience and expertise. Having savvy people by your side is an investment that pays off by saving you years of hard work and mistakes.

As soon as you begin to draft your business plan, you should be on the lookout for members to add to your virtual support team. It’s a great idea to make a list of everyone you know who might be able to help you and your business thrive. Think about family members, old friends from college, even friends of friends who might help you gain the perspective your business needs. Remember, if you believe the person is mature, experienced, and has some relevant know-how, then they could be valuable to you.

The best part about working with a virtual team member is that it doesn’t matter if they move away. Using tools like Slack, Trello, Skype, and good old-fashioned email, you can connect with your entire team, no matter where in the world they’re located.

Decide On Your Team Members

So, what’s the relevant know-how and experience you should be looking for in your virtual team members?

The makeup of a virtual support team might differ a bit based on the industry, but almost every company can benefit from these experts: a designer, a copywriter, an ad specialist, a virtual assistant, and, without a doubt, an accountant.

A talented graphic designer will ensure that all of your branding is flawless, giving your business a truly professional look. Don’t underestimate the power of graphics in today’s online world. Graphics are what catches the eye to entice people to buy from your business. Adding a graphic designer to your team will help communicate your message and enhance the overall feel of your brand story.

Eye-catching graphics are essential, but so is the text that goes with them. An excellent copywriter will get people to click that ‘buy now’ button in record time, making them a major asset when it comes to writing sales copy pieces like your marketing emails and sales pages.

Facebook and Instagram are some of the best advertising platforms out there, and their ROI can go through the roof… if you know what you’re doing! An ad specialist is someone who can create marketing materials that position your calls-to-action in a way that gets you what you’re looking for: more clicks, more sign-ups, and more clients.

A virtual assistant is an asset to any great support team. Virtual assistants are there to lighten your load and take care of more mundane, daily tasks, so you’re free to grow and scale your business. Virtual assistants can help you in so many ways, from taking care of your website to keeping your systems up and running. They may even be able to help the rest of your team with light design, copy, and marketing work.

Don’t Underestimate the Power of a Good Accountant

No matter what size or type of business you run, you’ll need a professional accountant on your team. Why? Because it’s vital that you accurately track and report all the cash flowing in and out of your accounts that have to do with sales, expenses, and salaries.

Properly managing your books is provincial and federal law, but most importantly, it’s the only way to gain an accurate assessment of how your business is operating.

A professional accountant will be able to provide you with the information you need to make informed financial decisions to help your business succeed. In fact, one of the most common reasons companies fail is because they don’t have a professional accountant on their team.

Plus, the expense of hiring an accountant often pays for itself! A professional accountant will know the ins and outs of tax law, ensuring you’re maximizing your deductions, claiming all your credits, and ending the tax year with the biggest return possible.

Leverage Professional Networking

So, now that you know precisely who you should have on your virtual team, don’t limit yourself to local industry meetups or inviting people out to coffee. The whole world is your networking oyster, thanks to the power of the internet.

To attract the right people, make sure you have a stellar LinkedIn profile and active social media accounts, including Twitter, Instagram, and Facebook. Joining Facebook groups is a fantastic way to network and find the perfect virtual team members, while your LinkedIn and other social media profiles are the best way to make a good first impression on your potential hires.

Contact The Number Works

If you’re in the middle of assembling an unstoppable virtual support team and need a professional accountant in your corner, you’ll want to work with The Number Works. We’re a virtual accounting, and financial coaching firm that helps creative entrepreneurs tell their financial story.

We offer a wide range of services, including full cycle accounting, financial statement analysis, strategic planning, and taxes. In other words, we’re your one-stop shop for all your business’ accounting needs in Hamilton and the surrounding Southern Ontario area.

Don’t hesitate to reach out and discover if we’re the right fit to join forces and help your business succeed.