Managing or starting a small business and looking for financial advice? Vince Iannello fills you in.
Running a small business is hard work. Many entrepreneurs focus on making sales and marketing. That’s often a smart move, but you need to make sure that you don’t overlook your finances, as they can have a big impact on your business. Fortunately, financial expert Vince Iannello can offer advice. Let’s get started.
“Liquidity is one of the biggest pitfalls for many small businesses. You’ll see situations where the business is generating sales and overall doing well. However, they failed to build up enough liquidity and quickly find themselves in a crunch.”
Of course, the simplest solution to increase liquidity is to bring in more money, something most businesses strive to accomplish day in and day out. Building up revenue is important. In the meantime, you can help improve liquidity by keeping tight control on your inventory, payroll, and other costs.
One common problem is hiring too many “overhead” workers. These workers are people who aren’t directly involved in making or selling products. Think human resources staff, accounting, and the like. If your overhead staff grows too big, it could sink your business. Still, the right overhead staffers can help you save money and build a more efficient company overall.
“Your overhead staff is definitely important, but it’s smart for businesses, and especially smaller businesses, to focus on quality over quantity,” Vince Iannello says. “The right overhead staff can save you from a lot of headaches, but you don’t want to be weighed down by a big staff generating high costs.”
Another major problem suffered by many businesses, big and small, is not saving up enough to pay taxes. Not only can this result in financial problems, but it could get you in trouble with the Canadian Revenue Agency (CRA). It’s smart to plan well ahead and to ensure that you have enough to pay your obligations.
“Tax season is especially stressful for small businesses. If you’re caught unprepared, it could result in a lot of financial and legal troubles.”
If you don’t have an accountant on staff, it’s smart to hire one to prepare your taxes. This way, you can reduce the risk of mistakes and the chances of getting audited. And you don’t want to cram for tax season. This could result in a variety of complications.
Vince Iannello Discusses Taxes and Audit Triggers
Preparing taxes can be a difficult undertaking for businesses big and small. The Canadian Revenue Agency often targets small businesses for audits, and certain red flags can greatly raise the risk of getting audited. Common reasons businesses and entrepreneurs get audited include revenue discrepancies, deducting large business expenses, and claiming your home office for a deduction.
“Business owners should always take advantage of deductions they qualify for,” Vince Iannello explained. “But make sure you don’t fudge the numbers. The CRA is very good at finding discrepancies, and they’re quick to question you when they do.”
So if you’re running a business, make sure you keep taxes and finances in mind. A bit of effort now could save you from headaches later on.