Starting and running a new business can be an exciting time. You’re probably buzzing with ideas on how to run your business and all the products and services you want to offer. 

However, part of running a successful business is dealing with the day-to-day tasks, like handling your finances.

While some new entrepreneurs may already have accounting and business management experience, others do not.

In these cases, hiring an accountant would be an excellent option. 

Launching And Managing Your Business

Businesses play an essential role in the Canadian economy. Small businesses, in particular, are key players, hiring around two-thirds of the country’s private labour force.

Starting a new business can be hectic, especially since you need to handle various tasks across different departments.

Meanwhile, day-to-day business operations require setting up suitable systems to keep your finances in check. 

Here’s how a reliable accountant, like one from Faris CPA, can help you get your business off the ground and stay afloat.

1. Creating Your Business Plan

A business plan lays the foundation for your future success. And because failing to plan means planning to fail, you must approach your business plan with the same passion and diligence you intend for your startup. 

Your business plan is your vision, the strategy you create for your company’s survival. In it are sections a business must succeed in to make it from the startup phase to the growth phase and, from there, long-term success:

  • Executive Summary. This section provides an overview of your business, highlighting its unique selling proposition, target market, and financial projections. It must capture the essence of your business plan and financial possibilities to entice investors to look at it seriously.
  • Company Description. Here, you provide detailed information about your company, including its legal structure, mission statement, history, and key accomplishments. Every successful business must sell customers and investors on its mission – whether expressed in a statement or in the way it conducts business.
  • Market Analysis. This section examines your target market, industry trends, and competition. It includes market research findings, customer profiles, and your competitive advantage. It demonstrates that you’ve thoroughly analyzed your market and understand your customers’ needs.
  • Organization and Management. Describe your organizational structure, key team members, and their roles. Highlight their expertise and how their skills contribute to your business’s success. Investors want to see that you have a capable team in place.
  • Product or Service Line. This is where you explain what you offer, emphasizing its features, benefits, and how it meets customers’ needs. Include details on any intellectual property, research and development efforts, or unique aspects that give you a competitive edge.
  • Marketing and Sales Strategies. Here you outline your marketing and sales plans, including your target market, pricing strategy, promotional activities, and distribution channels. Show how you plan to attract and retain customers.
  • Financial Analysis. You must also present your financial forecasts, including income statements, cash flow projections, and balance sheets. Include assumptions and explain your revenue model, pricing strategy, and expected expenses. This section demonstrates the viability of your business. See the next section for more details on this part of a business plan. 
  • Funding Request. If you’re seeking funding, you must clearly state the amount you need, its purpose, and how you plan to use it. Describe your repayment plan or potential return on investment for investors.
  • Appendix. Here you will include supporting documents such as market research data, resumes of key team members, permits, patents, or legal agreements.

Remember, these are general sections, and the content may vary depending on your specific business and audience.

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A Closer Look At The Financial Analysis Section Of Your Business Plan

Every comprehensive business plan requires a financial analysis section. This part contains details about present funding for your business, the funds necessary for growth, and your operating expenses.

An in-depth financial analysis for a new business will usually contain the following elements:

  • Balance sheet
  • Cash flow analysis
  • Personnel expense forecast
  • Profit and loss analysis
  • Breakeven analysis

Creating a financial analysis for your business plan can require technical skills and in-depth financial understanding. An accountant can help you through this process.

2. Complying With Legal Requirements

Starting a new business in Canada involves accomplishing different requirements, like name registration, choosing a business structure, and acquiring various licenses and permits.

The legal structure of a business plays a crucial role in its operation and financial success.

Here are the key reasons why it is important to pick the right business structure when registering your business, and why the advice of an accountant for this decision is a must:

Liability Protection

A business’s legal structure determines the extent of personal liability that business owners have for the company’s debts and legal obligations.

For example, in a sole proprietorship or general partnership, the owners have unlimited personal liability, which means their personal assets can be at risk in the event of business debts or lawsuits.

In contrast, in a limited liability company (LLC) or a corporation, owners’ personal liability is generally limited to their investment in the business, providing a layer of protection for their personal assets.

Tax Implications

Different legal structures have different tax obligations, including their income taxes, GST/HST taxes, and payroll taxes.

Choosing the right legal structure can help optimize tax advantages and reduce the overall tax burden for a business and its owners.

Access To Funding And Investors

Your legal structure can impact your business’s ability to secure funding from banks, investors, or venture capitalists.

Certain structures, like corporations, offer more attractive options for raising capital through the issuance of stocks or shares.

Investors often prefer investing in businesses with clear legal structures that provide protection and formal governance mechanisms.

Governance And Decision-making

Alegal structure defines roles and responsibilities, outlines how ownership is divided, and sets rules for major decisions.

Having a well-defined legal structure promotes transparency, accountability, and efficient decision-making processes, especially in larger organizations.

Perpetual Existence

Certain legal structures, such as corporations, offer the advantage of perpetual existence.

This means that the business can continue to operate even if ownership changes due to the transfer of shares or the death of individual shareholders.

This stability and continuity are important for long-term success and succession planning.

Choosing the appropriate legal structure for a business requires careful consideration of the above factors and more, and it must make sense for the type of industry you’re in, your business and financial goals, and the size of your business.

Add this decision to the importance of your business plan’s financial analysis section, and it’s clear why consulting a reliable accountant when setting up a business is a necessary step.

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3. Keeping Business Records

Bookkeeping is essential to running a business. This process involves keeping track of all your business transactions. 

This information lets you analyze your figures and determine your profits and losses. You and your accountant must also use these records when tax season comes.

4. Creating Financial Reports And Statements

An accountant can help you create different financial reports and statements that detail your financial activities and their implications for your business. 

While highly technical, these documents can help you make better-informed business decisions. They can help you project future profits, determine what areas of your business require further investment, more efficiency, and whether a growth opportunity is the right move for your business.

5. Filing Tax Returns And Handling CRA Issues

Every business needs to pay taxes on time. An accountant can help you file complete and accurate returns for each tax season.

Complying with the Canada Revenue Agency (CRA) tax requirements keeps your company clear from possible audits or government investigations.

Should your company face a CRA audit, an accountant will help you prepare for it. They will also help you answer questions and present relevant paperwork to the auditor. 

But more crucially, an accountant knows how to save your business the most it can on its tax obligations through deductions, shelters, government programs, and more.

Why You Must Consult An Accountant As A Business Owner

Establishing and running a new business sometimes requires you to wear many hats. Hiring an accountant can help ease the load, especially regarding your finances.

While their services come at a price, they are often essential to your business’s growth and success.

The money invested in consulting the right accountant to keep your business on financial course from the start and pays back numerous times over in the long run.