Winter is typically a month of high business expenses because of the cost of utility bills. When spring comes around, it’s time for a refresh in mindset, and your approach to your business’s finances.
Hiring a New Employee
Spring is a popular time to hire a new employee. This is typical because bills have lowered slightly from the winter months, and businesses often have funds they can reinvest into their staffing.
Before hiring, the first thing to do is check your cash flow. Book a 30-minute meeting with your bookkeeper to get a good idea if a new hire is within your budget. Then, check in with your staff to see where you need extra support. This will help you frame a new position in terms of salary and job description.
If your business is tighter on finances because of the unpredictability of the past year, look into hiring a subcontractor instead of an employee. A subcontractor is a great option for businesses needing an extra hand but don’t have enough work or capital for a full-time employee position. There was a vast amount of people that were laid off in 2020, and those people are open to different work opportunities. Additionally, many breadwinners of households are looking for an extra source of income to supplement their full-time employment. Hiring a subcontractor opens the possibility to have someone work on an as-needed basis. Flexible employment and working positions are more mainstream and sought after now, making it easier to find your ideal candidate.
Setting Budgets
March 31st is the fiscal year end for many businesses. If this is the case for you, it’s a great time to re-evaluate your business’s goals. Looking into your business’s financial goals helps you set expectations for the months and years to come. In order to apply for any funding, you need to project two years of your finances. Though this may feel challenging, it’s important to have a realistic budget documented. Given the changes that have taken place in the past year, projecting a ‘best’, ‘worst’, and ‘most likely’ financial forecast will help you in feeling more prepared for any potential challenges ahead. It doesn’t have to be perfect, and the forecasting can be updated quarterly as things change. The best way to do this is to have an Excel Spreadsheet of all your finances. This way the document can be easily updated with formulas already in place.
Another great way to learn where your business can save money is to collaborate with your bookkeeper. Your bookkeeper holds important information for what finances it takes for your business to run. Having an ongoing conversation with them will assist you in learning where you can cut costs and where you can invest more.
Working from Home Tax Implications
Tax season is upon us. The taxes this year introduce new challenges because of so many employees having worked from home. To have a mutually beneficial situation, it’s important to communicate with your employees what exactly your business will cover for their home office expenses or if it will have to be claimed by your employee. Make sure to be very clear on how expenses should be claimed when submitting taxes. Ensure that both you and your employees are educated on the Government of Canada’s changes in an effort to simplify claiming at home work space expenses.
We hope you found this article helpful on Spring Cleaning Your Finances as a Business Owner. With so many changes in the past year, we feel optimistic that the businesses today have resilience for any challenges to come.
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