Business owners in Canada are facing financial challenges left and right, discouraging them from taking on money-making deals. According to the Business Development Bank of Canada (BDC), entrepreneurs cited economic uncertainty, interest rate hikes, and declining sales as reasons for their limited investments.
This short guide aims to help entrepreneurs address the accounting challenges that hinder their financial success. After reading, you can develop a robust accounting process for your business that can encourage growth and increase profits.
1.Delayed Receivables and Payables
One major accounting problem small businesses face daily is managing receivables and payables.
Some small business owners provide products and services while getting delayed payments. This habit creates an unprofitable cycle that entrepreneurs may need help breaking. They could be taking in clients that pay late or do not pay, which can be the downfall of their business.
To overcome this challenge, you must diligently monitor your receivables. You must set up effective invoicing habits and follow up on unpaid invoices.
Try including due dates and imposing fees for late payments. You can use invoicing software to automate the billing process and follow-ups.
Aside from ensuring you collect payments, you must also pay what you owe. Remember that delayed payables can be a significant problem if you fail to address them promptly.
You can develop a reputation among vendors for not paying or making late payments. You can incur late fees and drive vendors to withhold deliveries, affecting production.
Most small business owners do not intentionally delay paying what they owe. Some need an effective system for tracking and paying bills. Remember that these responsibilities fall on your bookkeeper.
To address this problem, get an accounting solution that can help track your receivables and payables. You should also hire a competent bookkeeper to prevent these issues for your business.
2.Cash Flow Issues
Investment opportunity management can be a crucial accounting problem for small businesses. Entrepreneurs wanting to expand their markets may need the right tools to capitalize on these opportunities.
Cash flow refers to the cash you can use anytime for your business. You might struggle to track accounts receivables and balance payments without proper cash flow.
You have upfront expenses to pay if you want to start a small business. These fees shouldn’t be a problem if you have the money to pay them. If you cannot pay, then they can become a critical problem.
Small business owners often make cash flow mistakes. They tend to make big purchases without considering their capital sources, which results in a cash flow problem.
The best way to manage a cash flow problem is to understand your resources clearly. You know how much you can spend if you have a clear picture of your capital sources. This strategy prevents a cash flow problem by helping you make more informed buying decisions.
3.Tax Preparations
Canadian laws require businesses to pay taxes, regardless of their size. Unfortunately, many small business owners still struggle to pay what they owe come tax time.
Common tax prep mistakes include improper filing, under-withholding, missed deductions, and quarterly estimates. If they remain unaddressed, these mistakes can be costly and lead to significant fines.
If you need help preparing your taxes, you may need the help of professional tax accountants. Faris CPA can help you find the best tax accountants specializing in business and personal tax issues.
The firm’s accountants can provide tax help to individual investors, independent professionals, and small- to medium-sized businesses. They offer tax, accounting, and financial services so you can avoid penalties from the Canada Revenue Agency (CRA).