Know Your Numbers
Hello All,
I recently came across an article about a taxpayer who found themselves in trouble with the CRA and subsequently blamed their accountant. However, the Tax Court of Canada rejected this defense, with the judge stating:
“(The taxpayer) cannot simply throw his hands up and say that he blindly relied on his accountant, without making any attempt at seeking a better understanding of his obligations and without making any effort to verify the accuracy of the income reported in his income tax returns.”
This is an unusual case, and it’s hard to believe that the taxpayer wasn’t complicit in willfully misrepresenting their situation. Nevertheless, it highlights the importance of understanding your finances.
Many small business owners, understandably, don’t have finance backgrounds. That’s why they outsource their accounting and tax functions—so they can focus on growing their businesses. The problem arises when they place blind trust in their accountant/bookkeeper/ employee/ partner etc. This can lead to missed opportunities for tax savings, overlooked financial red flags, or even serious errors that could hurt the business. Not having this knowledge can also contribute to the stress that arises from uncertainty.
Having a fundamental understanding of your business’s finances is therefore essential. It enables you to ask the right questions, catch potential errors, and be more confident with your decision making.
So, what are the key areas of finance/tax to turn your attention to? Here are some key ones:
Pricing of products and services, and tracking sales
Business expenses and how much you’re spending
Financial reports like profit & loss statements, balance sheets, and cash flow (money coming in vs. going out)
Your tax obligations and tax deadlines
Opportunities to minimize taxes
How you plan to compensate yourself.
There are numerous resources available to help you continue your learning—blogs, podcasts, and YouTube channels. CRA’s website is also surprisingly user-friendly and informative. You’ll also find free and paid courses or books on finance. (Of course, by being a subscriber to this newsletter, you’ve already taken a step toward building this understanding :))
For some of you, this can sound overwhelming, but the goal is to build knowledge over time, not all at once. I’ve found that learning is easier when it’s tied to something practical. As a business owner/ solopreneur, you can apply what you learn directly to your business, which makes it much more relevant and easier to grasp. The aim isn’t to become a finance expert (unless you love it!), but to sharpen your critical thinking. This will help you spot issues, identify inconsistencies, and add value at a high level.
From the Blog
A Guide To Payroll Deductions for Employees and Employers
So, if you have ever been an employee in Canada, you have received a paycheque. The salary or hourly rate is decided upon by you and your employer. Your employer is then responsible for calculating
18 Accounting Terms that every new business owner should know.
When starting a new business, you will be subjected to a variety of financial jargon. This can come from your bank, Revenue Canada or Revenue Quebec, suppliers, customers and various other business
Business Videos :
How To Manage Products/Services in QuickBooks Online
5 Commons GST/HST Mistakes and How to Avoid Them
Check out my channel for other QBO, accounting and tax tutorials
