October Insight: Tips for the Year-end Preparation

As we are approaching the end of the year and tax season is around the corner, now is the time to begin organizing and reviewing your financial documents. October is a good time to start gathering financial statements and records you’ve accumulated over the year to streamline the tax filing process and ensure accuracy. Alongside these preparations, it's crucial to revisit your business plan. Evaluating your performance will reveal valuable insights into what has worked well and highlight areas for improvement. With this knowledge, you can update your budget and ensure you're on track to achieve your goals for the upcoming year.

What should you do, and where should you start preparing?

Getting Ready for the year end and tax season

Year-end preparation can be time-consuming, it is best to plan ahead to allow sufficient time for putting together the necessary documents. Additionally, reviewing strategies and refining workflows before the new year will help set a solid foundation moving forward, facilitating greater business growth.

Let’s explore where you can start preparing and what areas need extra attention!

1. Proper Record Keeping:

Locate Your Documents: The first step in year-end preparation is to locate the related supporting documents, including bank account statements, financial statements, invoices, bills, receipts for business expenses, and tax forms for employees and contractors for the upcoming tax return. As a self-employed person or small business owner, you are required by law to keep records of your business transactions. Proper record-keeping provides you with a comprehensive overview of your business’s financial position.
Organize Your Documents: You must keep the original paper documents, but you can also create electronic images of them in digital formats. When doing so, ensure you follow the requirements set by the CRA. Additionally, you need to retain the electronic and readable versions of records and supporting documents that were originally produced in electronic format. Always keep backup copies of all your business information!

Further reading:
Liaison Officer service - free tax help for small business owners and self-employed individuals - Canada.ca

2. Explore More Tax Deductions:

Advertising and Promotion: Online promotion is not only quick and effective, but it’s also tax deductible! Digital advertising, including domain name registration, website hosting and development costs, paid ads on social media, and paid search campaigns, can be claimed as business expenses. With the holiday season approaching, online advertisements are a great way to boost sales while offsetting revenue.
Business Conventions: Business conventions provide networking opportunities to connect with industry peers and potential clients. You can deduct the cost of attending up to two conventions that are related to your business and professional activities per year.

Further readings:
Guide to CRA-Approved Tax Deductions in Canada - Small Business BCConvention expenses - Canada.ca

3. Tax Preparation:

Know Your Key Dates: Since different types of businesses have varying filing deadlines, so whether you're self-employed, in a partnership or incorporated, it is crucial to identify your due date and submit your tax return early to avoid interest charge.
Know Your Tax Forms: Just like with filing deadlines, different business types require specific tax forms to report income and expenses. Consulting a tax professional can help you determine which forms you need to file.

Further readings:
Small businesses and self-employed income - Canada.ca
Business or professional income - Canada.ca
T5013 Partnership Information Return filing requirements - Canada.ca
Corporation income tax - Canada.ca

4. Year-end Inventory Count:

Review Your Inventory Management: Utilizing tech tools can streamline the inventory tracking process and improve data accuracy by reducing manual errors. Tools like computerized maintenance management systems, barcode scanners, and RFID tags are worthwhile investments, as they allow for real-time stock level tracking, improving inventory control and sales forecasts.
Conduct Inventory Check and Calculate Ending Inventory Value:
Perform a stock-taking exercise to verify the accuracy of your inventory records and identify any discrepancies. Once complete, calculate the ending inventory value by subtracting the cost of goods sold from the sum of starting inventory plus the cost of all purchases. These calculations can be simplified with the help of online accounting tools or inventory tracking software.

5. Assess Business Performance:

Review Balance Sheet and Income Statements: Evaluate the overall value of your business by analyzing the most recent assets and liabilities on the balance sheet. Additionally, review revenue and expenses on the income statements to assess profits or losses over the past few quarters.
Review Statement of Cash Flow: Examine the financial records detailing cash inflows and outflows from your business operations over the past few quarters to adjust your cash flow management strategies. Operating activities, such as payments to suppliers, wages to employees, and payments from customers (whether in full or installments), are critical for maintaining healthy cash flow. Delays in payments can disrupt cash flow, hinder business growth, and potentially delay tax payments.

Further reading:
Balance sheet template—free and fillable | BDC.ca
Financial Statements Template - Free and fillable | BDC.ca
Cash flow statement template—free spreadsheet | BDC.ca

Business Connection

In an ever-changing industry, it is important to keep up with the latest trends. Attending business and networking events offers a perfect opportunity to stay informed about the most up-to-date trends and best practices in your field. Keynote presentations and workshops often provide valuable insights and inspiration on how to implement new tools and technologies in your business, helping you stay ahead of the competition.

Upcoming Events:

Oct 1, 2024 Vancouver Entrepreneur Mixer | Copy Posse Party!, Conscious Lab

Oct 3, 2024 Lean In Network Vancouver: Women, Wealth and Worth

Oct 10, 2024 Business Planning Using AI & Creative Thinking (Victoria)

Oct 17,2024 Entrepreneurs' Roundtable | Young Women in Business (ywib.ca)

Oct 18, 2024 2024 ProductBC Conference: The Year of Reconnection, UBC Sauder Continuing Business Studies

Oct 23, 2024- Creating Spaces for Mental Health: The Role of the Workplace

Nov 6, 2024- Vancouver - Business Transitions Forum (BTF)

Nov9-10, 2024 Franchise Canada Show Vancouver

Monthly Myth-Free Zone

Misconceptions can often lead to flawed decisions, negatively impacting your business. Ignorance won’t protect you when facing legal actions; having a clear understanding, especially of legal and regulatory requirements, is the only way to stay diligent and prevent your company from making costly mistakes."

Let's take a look at the selected Biz Myth Busters for this month!

Myth 1: I am a small business owner and I operate my business in a room at my apartment. Therefore, I can claim all of expenses, such as rent, utilities bills, telephone and internet service, as regular business expenses.

Fact: False! If the utilities and services are used for both business and personal purposes, only the business portion of the expenses will be deductible. A reasonable basis of proration should be used to determine the portion of any usage attributable to the individual’s business.
Source: Income Tax Folio S4-F2-C2, Business Use of Home Expenses - Canada.ca

Myth 2: As a small business owner, taxes don’t really concern me until tax season approaches.

Fact: False! Business owners must regularly manage GST/HST, payroll taxes throughout the year. Failure to comply tax obligations can result in penalties and cash flow issues.

Sources: When to register for and start charging the GST/HST - Canada.ca

Get ready to make deductions – Calculate payroll deductions and contributions - Canada.ca

Myth 3: My business is small, so I should handle all the tasks to save some money!

Fact: False! It's common for business owners to try do everything themselves to cut cost, but this can lead to mistakes and, even worse, mentally exhaustion. Outsourcing specialized tasks such as accounting, legal consulting, or digital marketing to experts allow you to stay focused on what truly matters - running your business!

Flashback: Paving the Road to Success

The entrepreneurial journey is never easy; at times, it can be both lonely and challenging. Learning from and sharing with others not only provides new inspiration but also brings comfort in knowing you're not alone. This month, we are delighted to feature the success story of Elena Starikova, a Certified Vedic Astrologer and Vedic Games Facilitator, and the founder of ASTRO-ANALYSIS. Let’s dive into her journey of transforming her passion for astrology into a thriving business.

"Embarking on the path of becoming a Vedic astrologer was both an intuitive calling and a conscious business decision. I’ve always been fascinated by the cosmos and the intricate dance of the planets, and how their movements connect with our lives. Besides I was deeply touched by Vedic philosophy uncovering the underneath Reality. After years of studying astrology, my passion grew into a business where I could share this ancient wisdom with others, helping them navigate their own life journeys.

Starting my astrology practice was not without its challenges. As a woman entrepreneur, there were times when I felt the weight of needing to prove myself in a field that’s often misunderstood or not taken seriously by the mainstream. One of the earliest lessons I learned was the importance of staying true to my values and trusting my intuition. I remember the call from Priyanka and her words of encouragement uplifting my spirit to move toward my goal.

Through IWEP, I gained practical skills that helped me navigate the complexities of starting and running a business. I learned about business planning, marketing strategies, and the importance of setting clear goals. These sessions not only gave me a strong foundation but also helped me realize that being a business owner requires both vision and structure. And the faith! Before IWEP, I had the passion for astrology, but I wasn’t sure how to turn that into a sustainable business. The program showed me how to connect the dots between my skills and the needs of my audience.

One of the most valuable aspects of IWEP was the sense of community and support from the staff and fellow participants, we still getting in touch and cooperate with some of my peers! As a woman entrepreneur, it’s easy to feel isolated at times, but IWEP created a space where we could share our challenges, celebrate our wins, and lift each other up. The encouragement from the staff helped me push through moments of doubt. Their expertise and guidance made me feel like I wasn’t alone in this journey. They provided not only technical business insights but also emotional support, which is just as critical when you’re trying to build something from the ground up.

Building a client base is the most difficult nowadays. Astrology is a deeply personal service, and trust is key. I spent a lot of effort connecting authentically with people, educating them about the benefits of Vedic astrology, and how it differs from other systems. Social media became an invaluable tool for me to reach a wider audience, allowing me to showcase what I offer and create meaningful content that resonated with others.

One of the most rewarding aspects of my journey has been the ability to support other women, helping them use astrology as a tool for empowerment. Understanding the planetary influences in our lives can provide clarity, confidence, and direction—qualities I’ve found essential in my own entrepreneurial journey. As women, we often juggle multiple roles, and astrology offers insights that can help us find balance and strength amidst life’s demands.

Starting a business here in Canada as a newcomer has also taught me resilience. There are ups and downs, as in any venture, but learning to see challenges as growth opportunities has been transformative. Much like the cycles of the planets, success comes in phases. The key is to be patient, stay dedicated, and trust the process.

Looking back, I realize how far I’ve come thanks to the skills and confidence I gained through IWEP. Starting my Vedic astrology practice was a leap of faith, but with the support of the IWEP team, I’ve been able to create a business that aligns with my passion and purpose. I know that I am guided, and I have a Faith." -- Elena Starikova

Feeling inspired? We want to hear from you!

Share your stories of overcoming overworking and underpaying, and how it has impacted your business. Your experiences could be featured in our next newsletter. Submit your stories to your Business Advisors now!

We’re grateful to have you as part of the IWEP family.

Let’s continue to inspire and support each other by embracing change and fostering innovation in our businesses. Strong and thriving companies are just around the corner!