Every year, small businesses must report income and expenses to determine tax liability to the Canada Revenue Agency. It is not uncommon for a business owner to focus on the task at hand (reporting deadlines) to avoid late penalties, concentrating their efforts solely on the final taxable amount before moving on to the next year or another project. However, tax time is a great opportunity for an owner to review how the business performed over that past year and look for operational improvements and cost saving initiatives. The practice obviously takes a little bit more time, but in the long run it can add tremendous value to your business operations.
Tax reporting time is the perfect time to review some of the following performance indicators as the numbers are fresh in your mind and will give you a starting point for business goals for the coming year.
Here are some key questions to consider in a financial review:
- Were gross sales on target with sales projections?
- Are there any obsolete products/services that underperformed?
- Are there any products/services that surpassed expectations?
- Were expenses more or less than projected?
- Did any expense items increase or decrease in cost?
- Was the owner able to draw the income projected?
- Are there any outstanding Accounts Receivables?
- Are there any outstanding Accounts Payable?
- Was the owner able to earn the projected wage or was there an outstanding unresolved issue?
After reviewing these items, the owner can now determine if any remedial action is required and set financial goals and projections for the following year. By taking some extra time to review the business financial statements, a business owner will have a better understanding of where the business is and where it is going?
One of the goals of the Centre is to empower small and medium-sized enterprises and give you the tools to achieve success. For more information about resources, services, business events and seminars, contact us by dialing 311, 1-866-442-5866, online at halton.ca/smallbusiness, by email at email@example.com or visit us at 1151 Bronte Road, Oakville. You can also follow us on Twitter and find us on Facebook.