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.
Webinar Follow Up:
Thank you to everyone who attended my GST/HST Made Simple Webinar! Your attendance and feedback were hugely appreciated.
For those of you that missed it or weren’t able to attend, the pre-recorded version is available for sale at the link below:
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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 :
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Check out my channel for other QBO, accounting and tax tutorials
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If you would have a request for a video please leave a comment or email me directly at ronika@montrealfinancial.ca
Articles of Interest
Should You Still Invest within Your Corporation After Capital Gains Increase? The answer is yes, according to the experts, since the amount you have to invest is higher within the corporation which leads to a higher corresponding gain.
A CRA List of Links when making changes to your business including updating representatives, address, resuming operations, changing your year end etc.
A Webinar from the BDC on trends including sections on AI, and other expert advice from 4 economists
Use ChatGPT for your Marketing : As anyone who has tinkered with ChatGPT might know, the quality of the output will often depend on your prompts. This article helps you set up marketing focused prompts.
Celebrity Voice AI? It seems that Meta’s AI will allow you to choose a celebrity voice including Judi Dench, John Cena or Keegan-Michael Key
How I Help
My goal is to simplify finance, accounting and tax for small business owners, minimize the stress that comes from uncertainty and help improve confidence through financial literacy.
Educational Resources
Books to help Canadian small businesses improve their financial literacy (Get 15% of by using code “special”)
Personalized Consultations
For those of you who would like personalized guidance about your situation, I provide one one one consultations. For more details, and to book a consultation, check out my services page.
Note that I no longer provide ongoing accounting or tax preparation services.
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I would love to hear your comments on my current blog posts, topic ideas for new blogs, book feedback or anything else that you want to talk to me about. You can use my feedback form or email me directly at ronika@montrealfinancial.ca.
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Wishing everyone a lovely Autumn weekend!
Ronika
