It’s an exciting and, sometimes overwhelming, time. You are starting a business! There’s lots to do and figure out and you want to make sure you set things up properly. We’ll break down some of the steps to help you get off to a great start.
4 important things to do:
- determine your business structure – will your business operate as a corporation or sole proprietorship? This is an important decision that shouldn’t be rushed and is the first thing to figure out.
- register your business name – this is done with the Province of Ontario and is a relatively quick and easy process. There is a fee to register your business and it is required if you are operating your business under a name other than your own personal name.
- decide if you need (or want) to register for GST/HST – required once you are no longer considered a small supplier (total annual revenue of more than $30,000). However some businesses register from the beginning for various reasons, some of which may include:
- you want to claim input tax credits to recover the GST/HST you pay or owe on your business purchases; or
- your clients or suppliers prefer to do business with GST/HST registered businesses.
- open a business bank account – it’s always recommended to separate personal and business finances. Keeping a separate business bank account with all of your business related financial transactions provides a clear trail of business revenue and expenses in case you are audited by the CRA. A business account also makes bookkeeping more straightforward.
5 important bookkeeping tasks:
- select an accounting software package – there are many different options which vary widely in terms of scope and price. Accounting software will help you quickly and easily issue invoices, record your expenses, reconcile your bank account, and view your financial reports. You can also upload and attach images of your receipts to your transactions which helps you stay organized.
- customize your chart of accounts – accounting software will provide you with a chart of accounts however this is a generic list. In order to obtain useful information from your accounting software, it’s recommended that you modify the chart of accounts to represent your business and the categories that are relevant to you. You can hide the accounts you don’t need so that you are left with a reasonable list of appropriate accounts.
- reconcile your business bank account monthly – this will help identify any data entry errors and confirms all transactions on your bank statement have been entered.
- keep all of your invoices/receipts – this will help you maximize tax deductions. Receipts printed on thermal paper have a tendency to fade quickly so it’s recommended that you copy or scan/save these documents.
- maintain an audit trail – invoices and cheques should be in numerical order; never skip numbers, “void” the item.