Does your accountant routinely hand you paperwork which you do not immediately understand? If so you are not alone.
I have prepared thousands of balance sheets for clients over the decades I have been in business. Some people will ask questions about the numbers they see and some people do not.
Years ago I had a bookkeeper working for me who was both sneaky and incompetent. This is a bad combination. When she was recording the bank deposits showing on the clients bank statement, if she could not match a deposit to a sale, she would record the…
When Jason sold his business he was relieved and looked forward to a well-deserved retirement. However, a few months into retirement Jason finds himself a bit bored. Missing a sense of accomplishment and looking for more purpose in his life. Could he go back to work? Maybe part-time?
However, Jason gave the new owners of his business a noncompetition agreement as a part of all the paperwork he signed when the business was sold. Now this agreement could be a problem for him in his boredom.
Signed Non-Competition Agreement
When Jason signed the non-competition agreement, he was unworried. …
What is a guarantee fee you ask? Well, this is a payment that is made to a person who offers a personal guarantee on someone else’s debt.
An example will help. Your child is unable to get a bank loan on their own. No surprise. You offer to guarantee the loan. This means you are not making the payments but, if for some reason the child does not repay the loan, the bank has the option of coming to you for the payments. You could end up repaying the entire amount if you guaranteed the loan. …
Business owners make money by making good decisions about their products and their markets. Making a business decision includes gathering the facts, considering the options and then making the decision. Few business owners lend money as their primary business activity. However, business owners are often tempted to lend money to family and friends.
Consider the Decision
Would you have loaned this money if you did not know the person? This is a question that Canada Revenue Agency asks as well, are you in the business of lending money or is this transaction really just personal in nature. Why would you…
My clients ask me this question regularly. The answer I give is “whatever someone else will pay for it. This is true, but my clients are actually looking for a number. Not surprisingly. However, sometimes I have to give them bad news.
Sometimes the Number is Zero
Some of my clients have businesses that are not worth anything to another person. An example would be my speaking business. I have three corporations, my accounting practice, my speaking business and my online training and publishing business.
My accounting practice could be sold to another accountant for about one times my annual…
Your business will not scale unless you can do more work. You personally can only do so much work in one day or one week. If you are able to attract more work than you can do yourself, don’t turn away the work, get some help.
This is a huge step for you and for your customers. You have attracted the work and the customer thinks you are going to be the one to do the work.
Hiring My First Employee
My story, when I started by accounting practice it was just me. Then I got more work than I…
Part of the journey around getting a business off the ground if figuring out your cash flow. Cash flow is different from profits.
If I am teaching a course today, I am earning the money today. That is revenue and will lead to a profit. Most of my clients pay me later. This means I don’t get the money today, even though I earn the money today. So I have a profit, but I do not have cash flow. I have cash flow only when I get paid.
All businesses should have a goal to reduce the amount of time…
One of the disadvantages of being self-employed is that you do not have a client you can charge while you are not working. The idea of a paid vacation only exists for people who work for someone else.
You can take all the time off you want, but you won’t find anyone to pay you when you are not being productive.
Running your own business requires a shift in your thinking. You are the one who issues the paycheques not the one who receives the paycheques. …
Do you know there is a limit to how much you can contribute to your RRSP? The limit is based on your employment income each year and how much you have contributed to your RRSP in the past.
I have written other articles on RRSP’s. You can find out how much you are allowed to contribute to your RRSP by checking your details on the Canada Revenue Agency (CRA) website. You also could look at your last years personal income tax notice of assessment. This was the paper CRA sent you after you filed your taxes last year.
I have been an accountant for more than 40 years and I have heard many, many answers to this question. Not all of them accurate.
I am also aware there are many people who do not care about balance sheets. If this is you, move along, there is nothing to see here.
Balance Sheet Shows Your Equity at Cost
A balance sheet is the financial statement that shows you what your business has and what it owes. …