The Magic Number

As a small business owner, it is important to study our business financial statement package on an ongoing basis: it could be monthly (preferably) or quarterly. The annual audited statements that are provided by the accountant are extremely important, but if we wait for an entire year before analyzing our cash flow, budgetary variance and profit, it might be too late to prevent a ship from floundering.

The financial statement package consists of two important documents: the balance sheet and the income statement. There is one magic number that is the same on both statements. And that is, profit.

Please contact me #TrushaDesai.com for discussion of your financial statements.

#financialcoaching #financialstatements #smallbusiness

They Move Too

Fixed assets on a Balance Sheet are not exactly fixed. A laptop is mobile, and so is a tablet or a high-end smartphone. Vehicles when used for business purposes are termed fixed, with a sub-category to expedite depreciation calculation.

Emoji copyright Trusha Desai Innovation Management Inc.

The Canada Revenue Agency has different classes for fixed assets and schedules have to be carried forward from year-to-year so that the accumulated depreciation reconciles on the T2 tax return.

And most importantly, we must always ensure that we have correctly captured the half-year rule.

For discussion of your financial statements or for bookkeeping, GST, tax and management consulting issues, please contact me #TrushaDesai.com

#financialcoaching

It's not all Current

The assets on the Balance Sheet of a business are not always current. There are long-term assets which include investments that are owned or held by the company for a period longer than

Art copyright Trusha Desai Innovation Management Inc.

a year. These could be GICs (Guaranteed Investment Certificates), Stocks, Mutual Funds, ETFs (Exchange-Traded Funds) and Bonds.

When we evaluate the long-term assets, we need to bear in mind the risk tolerance of the business owners and related parties. If an interest rate of 0.75% or less on an annual basis seems to be negligible on the surface, it is certainly better than losing one's shirt while betting on a lost cause.

Property, plant and equipment are also examples of long-term assets, though some accountants may prefer to categorize them as fixed assets. It is essential that information of purchase, sale and serial numbers of fixed assets are securely maintained in the accounting software.

Goodwill, patents and copyrights that are intangible assets also fall under long-term assets. These come forcibly into play when succession planning is being done.

For discussion of your financial statements or for bookkeeping, GST, tax and management consulting issues, please contact me #TrushaDesai.com

#financialcoaching #smallbusiness #investments