8 things often overlooked when launching a small business

Finding a business mentor is an effective way to gain free industry knowledge (Getty Images/Carlina Teteris)

The runup to launching a small business is an exciting time for entrepreneurs. Once a strategy is created and goals and objectives are set, planning shouldn’t stop there. According to experts, there are numerous, often-overlooked minute details that can make the difference between smooth sailing or rough waters in the future. 

To ensure a successful entrepreneurial experience, here are eight tips to keep top of mind when launching your own business.

1) KNOW WHAT’S AVAILABLE

Local resources offer a plethora of business information that many entrepreneurs miss simply because they do not know they exist, experts say. Provincial, city and even local chambers of commerce host websites that provide entrepreneurs with a wealth of knowledge to help users learn how to set up their business and gain additional insight, such as by registering licenses and understanding provincial tax laws. 

CPA Melanie Schroeder, CEO and founder of Out of the Box CPA, points to local sites such as B.C.’s OneStop Business Registry and Small Business B.C., as starting points. Other provincial-specific information, such as Ontario’s small business support website and Quebec’s Revenu Quebec, are also available and offer recommendations that walk users through the business registration process while providing materials and contacts for entrepreneurs. 

2) INCORPORATE YOUR BUSINESS 

Deciding whether or not to incorporate your business comes with implications, such as liability. Knowing your obligations is the first step, experts say. Deciding what to do comes next. 

Incorporating a business can come with perks, such as becoming a legal entity, which can alleviate some risks. CPA Sandy Lyons, senior manager, Grant Thornton Limited, recommends beginning as a proprietorship with set targets that will determine when you are ready to incorporate and what you need to do to get there. Start by asking “what is the ownership of my business going to look like?” says Lyons. This should help you define and outline where you want to go and lead you to your next steps.

3) OBTAIN A GST/HST NUMBER

Aside from incorporating, new owners also need to decide whether to register for a GST/HST number—and, if so, when. Signing up allows access to tax credits but, if held off on, those benefits are lost, as well as the ability to charge GST/HST.

In this instance, GST credits are missed out all together, Schroeder says, because “you can’t retroactively claim those input tax credits,” without a registered number.

But she has also seen instances where people have collected GST, yet never registered an account. In this situation, the tax must be filed. So, if you haven’t registered a GST or HST number, you cannot get that input tax credit. 

“Make sure that you understand how the GST works and whether you need to register or should register,” she says.

4) KNOW THE TAX RESPONSIBILITIES 

If you’re used to being a salaried employee, transitioning to self-employed income comes with responsibility. 

“I see a lot of entrepreneurs surprised by interest charges in their account when they miss instalment payments that they weren’t aware of,” says CPA Lisa Zamparo, founder of The Wellth Company. “Read your letters from the CRA carefully and, if you’re not sure what it’s telling you, ask an accountant.”

Zamparo recommends entrepreneurs learn about available tax deductions, “especially when it comes to business expenses,” she says. “It’s important to think about this ahead of time so that you know which receipts to keep.”

5) MANAGE YOUR MONEY

All experts agree keeping business and personal finances independent of each other is a must. 

“A separate bank account and credit card are important to make record keeping simpler,” says Zamparo. This can be as simple as using a designated personal chequing account to save on bank fees if you’re unincorporated, she adds, because you don’t need to set up an official business account with your bank.

Lyons agrees, adding that different financial accounts can help ensure personal and business expenses don’t become intertwined. 

Zamparo also recommends making business purchases slowly. “You don’t want to tie up all of your cash in equipment right from day one,” she says. “There are so many different places to spend money in your business. I would prioritize the things that will help save you time and streamline your operations so that you can focus on growing the top line.”

Reviewing monthly expenses is crucial, too. Between online software, service subscriptions and automatic payments, those $5 and $10 monthly fees quickly add up, says Lyons. “Keeping those subscriptions straight can become an issue … All of a sudden you look back and you’re spending $100.” This goes for your phone and internet charges, as well as other utility usage. 

And, again, make sure you know your tax responsibilities to avoid late penalties and interest fees (see point 4). 

6) INVEST IN PROPER SOFTWARE AND HARDWARE

As a business owner, you want to be vigilant with your funds and not overspend, but there are certain investments that can help operations run smoothly. For Lyons, one such purchase is a quick flash scanner/photocopier/fax machine for its ability to process multiple pages at a time.

Good bookkeeping software is another good spend. Not only does it keep invoices organized, Lyons says, the system can also capture client snapshots, which is beneficial as you start to do repeat business. In addition, the software’s built-in organization is invaluable when filing taxes.   

Lyons also recommends using a content management system that can handle online payment—for example, through PayPal, e-transfer and credit cards—since e-commerce sales are growing.

Another invaluable investment is a reputable malware program. “You see so many people who don’t [purchase or use] Norton or McAfee, and their business is all of a sudden suspended,” says Lyons. So, instead of spending money on the business, you’re now spending money on computer repairs. 

7) STAY UP-TO-DATE ON BEST PRACTICES

Free webinars and courses are widely available and it’s a good idea to take advantage of them to stay on top of industry trends, experts say. But it’s also important to spend your time wisely and put your new knowledge to use. 

“The best way to learn is by doing,” says Zamparo, “so just make sure that, after learning about something like how to create a Facebook ad campaign, that you actually go out and do it.” 

Many organizations, such as CPA Canada and Mentor Works, offer free resources such as financial toolkits, tax considerations and funding advice to help with business planning. 

8) ASK QUESTIONS

“You don’t know what you don’t know,” says Schroeder, who insists people shouldn’t be afraid to ask questions. “I have 25 years of experience working with small businesses and, with the laws and the legislation, I’m still learning,” she says.

Lyons agrees, and suggests that entrepreneurs find a mentor through standard networking channels or local chambers of commerce to help navigate these new waters. “You don’t want to reinvent the wheel of everybody else’s past mistakes,” says Lyons.

LAUNCH YOUR OWN BUSINESS

Want to know more about starting your own business? This webinar offers key financial tips for entrepreneurs. CPA Canada has also teamed up with the Government of Ontario to provide entrepreneurs with resources to help navigate business through COVID-19. And find out how these CPAs blazed a trail and launched their own successful small businesses, with a food truck and clothing shop.