When it comes to your business’s finances, knowledge really is power.
If you’re like many self-employed Canadians, tax-time might be the only time of year you’re getting a real picture of your business’ overall health. Instead of waiting until you’re preparing your tax return, why not keep yourself informed year-round? Knowing your numbers can bring opportunities to save money and grow your business.
Here are some great reasons to track your self-employment finances year-round.
Identify patterns in your business activity
With the day-to-day hustle and bustle of running your business, it can be hard to see the big picture. By keeping track of your self-employment activities year-round, you’ll have better insight into your business’s peaks and lows.
If you’re new to being your own boss, compare last month’s activities to this month.
- Has business picked up?
- Should you order extra supplies or cut back on your inventory?
- Are you making a profit?
If you’ve been in business for at least a year, compare your business’s health to last year at this time.
- Is your business doing better or worse overall than last year?
- If your lean months are coming up, would this be a good time to start advertising or begin a promotion?
- If your extremely busy months are approaching, should you consider hiring extra help? Are there tasks you can complete before the rush starts? How can you set yourself up for success?
Leverage your value with suppliers/providers
Knowing your worth as a customer is valuable information. It’s much easier to negotiate a discount with your inventory supplier if you can quote the actual amount of inventory you’ve purchased in the last three months.
- Could you be saving money by buying supplies in larger quantities?
- Do other providers offer better deals?
- Does your supplier offer an incentive for paying your balance due early (or impose a fee if the balance is paid late)?
- If you’re using a credit card for your business, is there a more suitable one you should be using?
- Does your bank/insurance broker/internet provider offer business rates?
Make tax-time a breeze
Keeping track of your self-employment activities throughout the year makes preparing your tax return easy. Instead of wading through a year’s worth of receipts and invoices, you’ll have all your income and expenses at your fingertips.
Take a few minutes each week/month to total your costs by category keeping in mind the different entries you’ll need to enter on your tax return. Common tax categories include
- Office supplies.
- Vehicle expenses including gas, repairs, insurance, etc.
- Business-use-of-home expenses such as utilities, rent, property taxes,
To make tax-time even easier, track your business’s activities with QuickBooks Self-Employed! This mobile app that makes it easy to stay in control of your business finances and helps you prepare for tax time while on the go with effortless expense, mileage, invoice and HST tracking all in one place.