Getting Back On Track: Old Ways vs New Approaches

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Getting Back On Track: Old Ways vs New Approaches

Q&A with Heather Mason and Kim Miller on how they help clients significantly improve their businesses.

Q: What benefits can you provide to business owners?

A: Managing and understanding a business’s finances is critical to success, yet most business owners don’t have the expertise or the time to ensure their company’s financial systems are effective, optimally organized, and efficient. Whether you have a sole proprietorship or a corporation, it’s simply not possible to be an expert in all areas, especially in accounting and taxation. That’s where we come in. With our suite of services, we can offer the financial advice needed to address the most important questions facing business owners.

Q: What are some of the most common reasons people come to you for help?

A: Government compliance is a big driver that brings people to us – people find themselves behind two years or even more in filing HST, corporate and personal taxes. This creates so many problems, not the least of which is the stress and burden of this hanging over a business owner’s head.

For many businesses, especially sole proprietorships or partnerships, a big challenge is getting them to separate their business finances from their personal. We had a couple who worked together and their personal and business finances were completely inter-mingled. We also met a client with nine different sources of payment! If these clients were audited, they would have huge problems with all of that information — business and personal — completely intermingled.

Sometimes clients come to us because they need to obtain a mortgage or a loan and they are two years behind on filing corporate and personal taxes.

Another reason is growth or increased complexity in a client’s business structure. As an example, one of our clients, a sole proprietor, was doing well and had a great system overall. She struggled somewhat to figure out what her net income was, but she did understand that what she took was the bottom line and she did her personal income taxes from that point. But then her business grew to a more sophisticated structure with two companies — a corporation and a holding company — and she was just not able to handle that on her own. So we came in to help her set up the proper financial systems so she could understand where the income and expenses were for each entity, what salary she was going to take, etc.

Q: What steps do you take when you first begin with a client? What is your forensic process?

A: The most important step in the process when we are starting out with a client is having the initial conversations to try and see where their biggest stress is and to understand how they got there. We are not going to be able to change everything instantly. It begins with figuring out who they are, how they work, and how they got to where they are. From there we can begin to devise a plan to help them, both financially so that they can get a clear understanding of their financial situation, and so that they can become compliant.

As an example, a very profitable client came to us because he and his accounting staff member had attended a seminar for the accounting software they were using. Throughout the seminar, the owner kept asking the accounting staff member “do we do this” and the employee kept answering ‘no’. So that’s when we were brought in to review their processes.

We went in and listened to their pain points and complaints about their current processes and started working on creating some internal policies and procedures to help streamline the accounting process. We recognized early on that one of the main issues was a lack of communication between the accounting staff member and the owner — they simply did not communicate well about accounting issues. So, we arranged to meet monthly with the accounting staff member and the owner where we would analyze the monthly statements together. This process opened up a dialogue between the owner and the accounting staff member and they began to review and have open dialogue about how they did things. Do we need to change the way we handle our discounts? Are we recording our discounts properly? How is the cost of goods sold affected when we sell things in a different way? Through this process, the owner began to understand what was going on in the books on a micro-level and we were able to tweak their accounting processes to make them more efficient and more profitable.

Q: What are some savings that you can help your clients realize?

A: Compliance is a big one. Clients can realize significant savings in staying compliant because you will pay significant penalties for late filing of your HST, corporate tax and other compliance items. The government will charge you a 5% penalty on the balance owing. That is just money you are throwing away!

There are also savings to be realized in working with us on a regular basis as opposed to calling us in when you are at a crisis point. For example, it would take us significantly longer to sort out and catch up on a year’s worth of paperwork than if we had done it monthly for a year.

Initially, we will look at it as two projects: we need to get the client caught up and compliant, but we would also need to stop the bleeding by getting their processes structured and organized so that, going forward, the client doesn’t run into this situation again.

Q: What are some recommendations you would make to a business owner?

A: We find typically that the business owners often just want a high-level overview of the financial position of her or his company — what’s in my bank account and who owes me money? While those are great things to be aware of, you need to go deeper as a business owner. You need to analyze things and start to ask questions like: What were my sales this year versus last year? Why did they go up, or down? Why is my insurance so high? Why did wages go up $20,000 but we didn’t have any new staff? Why is our cleaning lady coming in every week? How much are we paying her? So when you look at the numbers, you can start to dig into the details to see what is happening in your business.

These are just a few examples of the micro-level details that can add up and have a significant effect on your business and your bottom line.