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To Expand Or Not To Expand? – Determining Your Cost : Benefit Ratio

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Your mother clearly dropped you on your head as a child and as a result, you decided that you wanted to be an entrepreneur when you grew up. You took the leap and low and behold the crazy idea you had actually worked out and business is going great but you are at a tipping point where you either need to expand or start turning away business. Sound familiar?

While it’s always tempting to keep welcoming growth and leap into the opportunity to expand it’s not an easy black and white decision. You need to be strategic and know your cost to benefit ratio to ensure the decision to expand will actually be good for your business and not harm your bottom line long term.

Here are 5 things you need to consider when determining if taking the leap makes sense

Can you afford it?

This may seem like an obvious question that is easy to answer but it’s not as simple as it sounds. An expansion, whether it’s of a physical space (ie: retail location) or simply bringing on new team members to manage demand is a money sucker in the beginning.

You need to make sure you can afford any closures, renovation, and new inventory costs as well as any hiring and training costs in addition to your regular operational expenses.

Ideally, you want to have this money saved and only finance the expansion after discussing your numbers in detail with your accountant to confirm the additional costs make sense.

Need Help With Your Bookkeeping? Contact Us Today

 

Know Your Break-Even Time Frame

How long will it take you to make back the money you spent on expanding? In most cases, expansions don’t happen overnight and increased profits aren’t guaranteed as soon as you open your new door. You need to know how long it will take for you to break even after an expansion so that you can ensure you have enough money saved to cover your increase in ongoing costs in advance.

Know Your Numbers

We say this in every post for a reason – because it’s essential if you want to grow a strong, profitable business and make smart, strategic decisions.  

Without knowing your numbers you can’t accurately and successfully plan an expansion. You need to understand your cash flow projections so that you can create a financial plan designed to help you survive your worst case scenario and a marketing plan to achieve your best case scenario.

Understand Your Target Audience

Don’t rush into an expansion simply because you experience a burst of requests and it feels like demand is there. Research your target audience thoroughly and ensure that the demand is real and ongoing. You may discover that demand is seasonal, much smaller than you anticipated or can be addressed with some extended hours or a few special order requests.  

Making the decision to expand isn’t going to be easy but completing a thorough analysis of the costs, benefits, and demand will ensure that when you make the decision it’s strategic and optimized for success.

If you need help understanding your numbers and determining if an expansion makes sense for you contact Homeroom today!

Need Help With Your Bookkeeping? Contact Us Today

Tax Tips For BC Yoga Studios

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It’s safe to assume that Vancouverites LOVE their Yoga. There is no shortage of studios in this city and a most of the time they are filled to the brim with people gaining strength and learning to control their breath. Even though we have a large community of Yoga lovers in the city you can’t ignore the fact that competition is fierce and if you want to remain in the game you have to stay innovative and manage your business well.

Here are our top tips for staying zen and remaining profitable

Outsource Your Payroll  

I know that it seems like we are trying to trick you because we are a bookkeeping company but we can confidently say even if we were in the jump rope industry this would be our advice.

Many studios make the mistake of getting the reception team to take care of duties such as payroll and bookkeeping. Your reception teams number one focus should be providing exceptional customer service so that your customers have a great experience.

Constant distractions and inexperience can lead to costly mistakes by creating the ideal environment for data entry errors. By outsourcing your payroll to a reputable provider you can ensure that you are deducting the correct amounts from your employees AND remitting the correct amounts to the government.

Reputable providers take responsibility for any errors and therefore are much more thorough with their entries. They also know the tax laws inside and out, protecting you from unnecessary penalties.

Need Help With Your Bookkeeping? Contact Us Today

 

Ensure Your Sales Are Recorded Correctly

This may seem like an obvious simple step but you would be surprised how often businesses set up their sales software and tax amounts incorrectly. Ensure that all your sales (from all sources) are recorded in Mindbody (or whatever software you are using) correctly. Have a professional double check your set up to ensure that you are charging the correct taxes and that the money that goes into your bank is properly recorded as income.

The last thing you want to do is discover after several months of taking payments that you aren’t charging your clients correctly or recording your payments effectively. This can lead to significant losses, especially if you end up having to pay additional taxes from your own pocket.

Pay Your Taxes On Time

One of the easiest ways to avoid unnecessary expenses is to pay your bills on time, taxes included. Ensure that all your PST/GST returns and payroll taxes are filed and paid on time to avoid late filing penalties. If you find deadlines difficult to manage in-house then hire a professional bookkeeper to manage this element of your business. The CRA won’t tell you if you’re early or have overpaid but they will be quick to seriously penalize you for being late.

Save Your Pennies

Businesses tend to ebb and flow. Make sure you have a clear understanding of your fixed costs and create and maintain a monthly cash flow budget so that you can avoid stress during slower periods.

In addition to offering your services create passive income when possible, rent out your space to other professionals and community groups during your down times to maintain your income.

During our time offering bookkeeping services to Yoga studios around Vancouver, we have seen all the common mistakes that Yoga studios make and the great ideas that work. If you have a yoga business and need help with your bookkeeping don’t hesitate to contact us today.

Need Help With Your Bookkeeping? Contact Us Today

Homeroom E-Return: “I am digitally illiterate. How does the e-signature work?”

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Forget that pen. Unplug that printer. Signing documents just got hella easier and funner. Let’s jump right in!

Now that you know how to securely submit your online tax documentation, how do you sign all the paper we email your way without turning on your printer?

Each year, we get more advanced and efficient with everything we do. Next year, we will be using the user-friendly DocuSign app to send tax returns securely.

E-Signature Is The Way

The electronic signature allows you to sign your tax return draft from anywhere! The Canada Revenue Agency (CRA) accepts personalized electronic signatures. Save the paper err day, all day!

How does the e-signature work?

  1. Go to your inbox and open the email from Homeroom Team.
  2. Click on the yellow button “Review Document.”
  3. Read the document carefully to ensure everything OK eg your address, full name, etc.
  4. Tap “Start” (top right) to begin signing.
  5. Click on the area on your screen that is highlighted with a tiny red arrow pointing down to begin to sign.
    1. Mobile Phone: Use tip of your finger to sign your name.
    2. Computer: Use your mouse to sign * Make sure you are using personalized signature NOT the typed-out version.
  6. Click FINISH (top right corner) when you are done.
  7. You will receive a copy via email. You can securely save your document online FREE with DocuSign.

If you experience any issues or get stuck along the way, give us a call at 604-739-9536.

Next week’s blog post will highlight the turnaround of filing your tax return!

 

Bittered Sling: Spice up your life with award-winning culinary and cocktail delights!

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It’s all about the taste! Throw in a mix of select natural herbs, fruits and spices and enjoy an original culinary or cocktail creation bursting with flavour that ranges from savoury to sweet AKA bitters! We’re down with THAT!

 

Bittered Sling, the award-winning retail line of high-quality cocktail bitters and culinary extracts, is the brainchild of mixologist Lauren Mote and world-class chef Jonathan Chovancek.

Ever since their launch in 2012,  the company has been buzzing with success, making local and international headlines.

BitterSWEET name, yo!

The name Bittered Sling derives from the May 13, 1806 edition of The Balance, and Columbian Repository (Hudson, NY) that defines a cocktail as “A stimulating liquor composed of spirits of any kind, sugar, water and bitters. It is vulgarly called a bittered sling and is supposed to be an excellent electioneering potion inasmuch as it renders the heart stout and bold, at the same time that it fuddles the head.” — Bittered Sling website

Add a dash of MAGIC to your culinary menu!

Bitters are used as a flavouring agent. Add a dash to your plate, or squeeze a few drops into your spirits or even sparkling water to create a powerful potion of exciting flavours! Yum yum yum.

Be the star of ANY party with fun and tasty recipes, like Coffee Swizzle, with Bittered Sling bitters here.

As part of our New Client Feature series, we caught up with Chovancek, who together with Mote, has over 30 years of professional experience, on healthy eating, motivation and startup advice!

When it comes to healthy and happy eating, Chovancek suggests fermented foods and drinks. Plant and seafood-focused and plenty of exercise. “Find activities you find fun—don’t get stuck in workout ruts!”

What do you enjoy most about being a business owner?

“The independence.”

What’s your favourite part about the food and beverage industry?

“The people we interact with everyday.”

Your fave food/ cocktail pairing?

“Anything with a Bittered Sling cocktail.”

What motivated you to start your own business?

“Fate.”

What’s your #1 motivator?

“My business and life partner!”

What’s your vision for the business?

“Grow, grow, grow. Unite people around the world through flavours.”

What advice do you have for other people who would like to start their own business?

“Find a niche that is under represented in the market. Allow your passions to guide you.”

How do you achieve a work/ life balance?

“Work is life!”

Who could benefit from your services?

“Anyone who enjoys delicious food and beverages. We are all about taste!”

 

 

Homeroom E-Return: “My tax return is too complex. How will I properly explain my situation?”

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Is your tricky tax situation keeping you in the dark?  | Photo by Alexas_Fotos via Pixabay

 

By now, you’re probably feeling a bit more keen to dip your toes into the world of online tax filing, and save yourself time and money!

But what about that extra self-employment income you earned mid year after that messy divorce when you quit your full-time job at the school your kid goes to, right before you moved out and started working part-time as an actor?

Sure. Not every tax situation is clear-cut and on a snap-and-send basis, like the Homeroom E-Return requires. You might feel the need to explain your situation to us in-person.

Thing is, MOST of the time, clients presume their tax situation is more complicated than WE know it is. We’ve seen it all, and it is seldom THAT extra.

Do it up, and leave the rest to us, the pros! We know where to find you (and we mean that in the nicest, non-stalkerish, most helpful way possible!)

  1. Complete the intake form.
    1. This form is designed to ask ALL the important questions that will allow us to file your tax return.
      1. Eg: How many tax forms do you have, which year are you filing for, what is your marital status, are you self-employed, etc.
  2. We will review your form and send you instructions on how to submit your tax documentation.
  3. We will schedule a phone call or email you any questions we may have.
  4. We will send you a tax return draft to review.
  5. We will e-file your tax return when we receive your signed tax draft.
To encourage easy and safe tax filing, you will receive the best Homeroom rate when you request the Homeroom E-Return!
Next blog post will delve deep into the electronic signature that will make even the computer-illiterate want to e-sign!

Homeroom E-Return: “Is it secure to submit my tax docs online?”

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Look up at the bright sky dotted with tiny humans dangling off stringed balloons, and you might wonder why anyone would want to take such a beautifully vicious plunge to their death. Statistically, however, paragliding is as safe as driving.

And just like driving or if you are inclined, paragliding, submitting your personal tax documentation online has never been more secure or fast! Send us photos or scanned copies of your paperwork in a snap and know that a professional has got your back!

We will email you instructions on how to securely submit all your paperwork to our unique LedgerDocs email address (see waaay below).

Here’s a blurb from the LedgerDocs website on the security of the growing app:

LedgerDocs’ first priority is to ensure that your information remains safe. We have invested in innovative architectural engineering to provide maximum data durability and availability, while using cutting edge security features to take special care of your data.

  • LedgerDocs uses a 256-bit SSL encryption to protect any information that travels between your browser and LedgerDocs. This is the same encryption that banks use for online transactions.
  • All of your data is backed up regularly to multiple locations, ensuring that there is no data loss in the event of a natural disaster.
  • Users are able to easily grant and revoke access privileges to documents and files with one click

On the real real

  • Avoid losing paperwork
  • Send files from anywhere with Wi-Fi *no appointment or parking required
  • Feel like a professional is holding your hand the entire time *in a non-creepy way, of course!

How do I send my files?

  1. Scan your tax paperwork OR snap pictures of it
  2. Go to your personal email inbox and attach up to five files MAX
  3. If you’re feeling up to it, type us a message as you would ANY other email
  4. Send to our LedgerDocs email: homeroom@app.ledgerdocs.com
    1. Subject: [YOUR NAME] Tax return
    2. Email: Please find attached [NUMBER OF TAX SLIPS]
  5. Delete from your Sent Mail email folder (if you want to be extra safe)
  6. Your job is done! Now you have the rest of the day to do what makes YOU happy! Paragliding, perhaps?

So stop wasting time with in-person appointments and get your E-Return started today!

 

Start Your E-Return Now

Liquid Amber Tattoo: Local talent leaves a lasting mark with beautiful, unique art

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“Hold on tightly to the things that inspire you” — Unknown

Liquid Amber Tattoo owners Luvia Petersen and Justina Kervel, through persistence and perseverance, and lots of heart, helped shape tattoo industry into a business that is not bound by gender. | Photos by Jessie Robertson

 

“OMG, what am I doing with my life?”

Even the hugely successful tattoo artist Luvia Petersen grappled with the occasional existential life moment. She injected that energy and angst into her business, Liquid Amber Tattoo & Art Collective.

“It made me feel like I was contributing to society and to my own life in a powerful way,” expressed Petersen.

It was 2000. While strolling the charming streets of  Paris, Petersen and her business partner Justina Kervel came across a female tattoo artist Phillipine of Kaplan Art Studio. Enamored of the female-run studio in the then male-dominant industry, they came to Canada and opened up their own, mostly-female run, tattoo shop in 2001. Their goal? To contribute to the rise of females in the tattoo industry.

And, girl, has the tattoo industry grown!

“When we first started it was rare to see a female tattoo artist. Now, they are commonplace. I love that this very old traditional profession has been able to usher in an equal gender identity and at equal pay,” admitted Petersen.

Today, the spacious, brick-walled shop in the heart of Gastown is home to top local artists, who, through passion and dedication, give life to drawings that pour out of them like ink.

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In turn, the shop supports and donates to an array of great causes and organizations, like BC Children’s Hospital and Girls Rock Camp Vancouver.

And the good they are doing is etched in the skin of their clients forever.

As part of our Client of the Month blog series, we caught up with Petersen, who’s “enjoyed the process of seeing [her]  business grow over the years,” on everything from her most memorable tattoo project to what makes her wake up in the morning to her ‘Aha!’ moment:

 

The fave project you were part of

“There are so many favourite moments, but one that sticks out is tattooing four generations of women. A great-grandmother, grandmother, mother and daughter. We were proud to be a part of that beautiful bonding moment in the four lives of these amazing women!”

Describe your ‘a-ha’ moment

“About 10 years into the business, I realized I really did not know what I was doing. At that point, I was able to let go and enjoy the ride a little more. I stopped trying to control everything and tried to trust in my ability to handle whatever may come in the moment.”

What’s your #1 motivator?

“Seeing my employees and my customers smile because they are enjoying being at the studio. It was always our goal to create a fun atmosphere to work in and when I see those smiles I know we are fulfilling that dream.”

What’s your vision for the business?

“To be a catalyst for artists to showcase their work, be it on skin or canvas. We want to continue to expand our art gallery and host art shows.”

What advice do you have for other people who would like to start their own business?

“Make sure you LOVE what you do. It will make the long hours and hair-pulling moments a little more tolerable.”

How do you achieve a work/ life balance?

“Haha…what’s that? Joking…You hire the right people whom you can trust to take care of the business while you are living your life.”

Who could benefit from your services?

“Our tattoo studio is for anyone looking to bring some new art into their lives.”

 

Get in touch with Liquid Amber Tattoo today here for quality, custom tattoos that you will love  for life.

 

 

How to pay yourself as a corporation

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“Siri, how do I pay myself if I’m incorporated?” | Photo by Viktor Hanacek via Pic Jumbo

So you have gone through the process of incorporating and have finally reached the super fun part: PAYING YOURSELF WOOOOOO.

When it comes to paying yourself as a corporation, you have two options: You can either pay yourself a salary or you can pay yourself dividends.

Which option makes the most sense for you is influenced by your level of income, your corporate structure and of course your accountant’s advice.

Here is an overview of what each option has to offer.

Salary

This option is usually the more expensive of the two from a company perspective.

To set this up you will have to add yourself to the company payroll and ensure the company pays all the applicable taxes on your behalf and issues you a T4 annually.

CON

The company will have to pay payroll taxes on your behalf

PRO

You accumulate more room in your RRSPs to save on personal taxes

Need Help With Your Bookkeeping? Contact Us Today

Dividends

This one requires less work to set up but can get out of hand if you don’t keep track of your spending.

To make this one work you have to:

  1. Get a bookkeeper to figure out how much money you took from the business
  2. Your accountant will declare the money you have taken from the company as a dividend & issue you a T5 from the corporation

CON

You need to keep better track of your withdrawals and can pull out more income than intended increasing your tax rate.

PRO

You avoid paying payroll taxes.

WARNING:

  1. You cannot be a contractor to your own corporation because doing so creates a loophole that causes the Canada Revenue Agency (CRA) to miss out on taxes. Naturally, they have discovered this loophole and shut this option down!!!

As always, when in doubt or unsure of which option makes the most sense for you talk to a professional. A small investment on advice can provide big savings down the line.

Need Help With Your Bookkeeping? Contact Us Today

Hack: I’ve incorporated. What’s next?

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Handshake to that! | Photo by Viktor Hanacek via Pic Jumbo

 

You did it! Took the plunge and incorporated your small business.

Great work! The next question is floating in your head is probably – Now what?

Don’t panic! We are here to throw you a bookkeeping floaty to make sure you do not sink in the sometime cold and unnerving incorporation waters.

FIRSTLY, make sure you do not forget to do the following:

  • Pat yourself on the back. You just got yourself a brand new business for gosh sake!
  • Pick the official operating date
  • Get a new set of books and accounting records

THEN…

  • Apply for new tax registration numbers
  • Open new bank account and credit card, merchant service provider *if applicable
  • Change bills to be in the name of the corporation

HACK:

  • We recommend you see a lawyer before incorporating
  • Remember to put your GST/ PST numbers on your invoice template
  • Track any personal cash you put into the corporate bank account

Next week, we look at how to pay yourself when you are incorporated.

Register for our “Should I Incorporate” webinar on August 24 at 1pm today here to learn everything you need to know before you decide to Inc. up!

Beginner’s Guide: Why incorporate?

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It’s incorporation o’clock!

Incorporating can be the best thing that ever happened to you and your small business or a wrecking ball moment that sinks you into poverty.

Here are the pros and cons of incorporating:

PROS

You are NOT your business

Separate Entity

  • Reduces Personal Liability
    • When you are a operating as a sole proprietor, your personal assets can be seized to pay your business debts. If you incorporate your business, it becomes it’s own separate entity in terms of liability and financial responsibility.

Though your business is still liable for any debts it incurs, as a shareholder your personal assets are protected.

Unlimited Lifespan

  • Unlike a sole proprietorship which begins and ends with the owner, corporations can exist regardless of ownership changes.

Tax savings

  • Corporate tax rate is 13 per cent on the first $500,000 of net income
  • Personal tax rates increase as your income increases

CONS

They say, “Nothing in life worth having comes easy…” and such is often true with business incorporation…

 

Cost to incorporate

  • $1000-$1,500 with a lawyer (one-time charge)
    • Benefit: They will look at the long-term picture to ensure you have the correct corporate structure to maximize tax savings.

More government reporting

  • Annual report for the BC Corporate Registry

More tax returns

  • Once you incorporate you will have to file a corporate tax return AND a personal tax return

    • $1,500/ year if you choose a Homeroom-recommended accountant

Increased accounting costs

  • If you thought that your quarterly bookkeeping package was on the high end, you will be rattled by the cost increase once you incorporate
  • At Homeroom, minimum $2,400/ year for a straightforward home-based business
Need help with your bookkeeping? Talk to us today!