3 tips to keep your SME in good financial autonomy
According to the Government of Canada's Key Small Business Statistics - January 2019 [Note 1], nearly 75% of businesses in the country have between 1 and 9 employees. Also in the same study, it is explained that 99.1% of the 85,000 annual business closures occur in those with 20 or fewer employees. The financial autonomy of an SME is therefore essential for it to be able to face the vagaries of the market. Here are some tips for ensuring the financial success of your business.
Perform daily financial monitoring
To avoid unpleasant surprises, it is important to take an interest in the financial autonomy of your business on a regular basis. Whether the bookkeeping is done by you or by an accountant, you must remain in control. It is essential that you keep an accurate track of your income and costs. These can add up quickly, and reviewing them regularly lets you understand where your money is going. Plus, with a good understanding of your income and expenses, it will be easier to make realistic financial projections and tailor your business plan.
Calculate your taxable income and tax credits
Regardless of your legal form of business (sole proprietorship, partnership, corporation), you must calculate its net income. You can do this by deducting any reasonable expense that you have incurred or are going to incur to earn business income. This may for example include maintenance and repairs, employee training, advertising or meals and entertainment expenses. Thus, a good understanding of the tax deductions and credits to which you are entitled will help you reduce the taxes payable, which will allow you to use the cash thus available for the development of your business.
Bill promptly
Send your invoices promptly after providing goods or services. If possible, set relatively short payment terms for your domain to ensure payments aren't forgotten or lost. It is also important to follow up on invoices sent. Simplify your task by creating reminders by email or text. Record invoice numbers and compare them with payments to ensure you receive your due.
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