Archive for the ‘Accounting’ Category

Following the advice of most of the business books I’ve read, I sought to build a team of advisors for our business, some paid, some not.

I started by asking a friend of ours who worked for many years doing business development with a large software company. In his case, “business development” meant buying up small companies and, to do that, he got very good at evaluating their value. He told me some key things to confirm before buying the auto spa like: Do they have any debt? Do they have the trademark rights? Can they provide at least three years of financial records, preferably ones that have been audited by an independent accountant?

The next people I brought in were a lawyer and an accountant – who have both paid for themselves with their advice. I was referred to them by a friend who works in high tech and is a master networker. He’s a member of the Ottawa chapter of an international networking group called TiE. So is the accountant.

One of the first decisions our lawyer advised us on was whether to structure our company as a sole proprietorship or a corporation. I figured creating a corporation was expensive and took a long time – and it was getting close to opening. However, I had also heard that a corporation offered better tax saving opportunities than a sole proprietorship. I was right about the tax thing and it’s very simple. As a sole proprietorship, you get taxed on the money you make at your personal tax rate, around 35% in my case. However, our corporation only pays half that –  the corporate tax rate of around 16%. Our lawyer also told me it would cost about $1500 to incorporate and take two days. And with that, ConsciousImages Inc. was born.

Our accountant told us about the HST we have to collect from customers and give to the government. But he also told us that we get to submit how much we paid in HST as part of our own expenses, like supplies, and claim that against what we collected from customers  (kind of like tax deductions). And he told us to get registered right away so we could claim the HST we paid on the price of the business.

The lawyer and accountant aren’t cheap. But you get what you pay for and together they will save us thousands of dollars.

Next, there was the issue of payroll: could I do it myself to save some money or did we need to hire someone? One of the other franchisees referred me to his payroll guy who I hired after a 15 minute chat about EI, CPP, and taxes – and after he told me he would only charge $50 a month.

We’ve been open a month and things are going great! One thing is already clear however: one of the next team members we will need is an IT specialist. We’ll need her to set up and train us on the equipment we’ll need to capture and use the Big Data relevant to our company. Things like: what times of day/week/season are busiest? What part of the city do most of our customers come from? How did find they find out about us? What are our most popular packages? Are there any generalizations we can see with problem customers?

Time to replace my ancient MacBook!