The end of the year is around the corner and many small businesses in Halifax are scrambling to get their books in order. Fintech and payroll expert, Troy Lutz, CTO of Halifax-based Summa Financial Services Inc., shares how small businesses can get smarter about saving time and money in 2020 with four recommendations to start focusing on growing their business rather than getting lost in the numbers.
TRACK HOLIDAY AND YEAR-END BONUSES PROPERLY
Many small businesses will be giving their employees a holiday and/or a year-end bonus soon. It’s important to note that these are two different kinds of bonus structures. A holiday bonus shows appreciation and is usually a gift given during the fourth quarter of the year. A year-end bonus is performance-based and usually given the first quarter to avoid confusion with a holiday bonus. All bonuses are taxable income and employers must withhold, report and remit proper tax amounts. Employees need to take taxes into account so that they’re aware of exactly how much money they’ll have upfront. Employers can help employees understand this by communicating with them at the time the bonus is given.
STOP DOING PAYROLL MANUALLY
Did you know that after just two payroll mistakes, 49% of employees will start looking for a new job? 60% of small businesses still handle this function in-house but it can become a very costly mistake! Sadly, many companies still spend up to 10 hours a month processing payroll with manual in-house payroll resulting in 2X the mistakes. The good news is that cloud-based payroll software, like Wagepoint, reduces errors and lowers processing costs by up to 80%. So why are so many business owners reluctant to make the switch? It’s simple: they’re afraid of what they don’t understand. Once you take the time to understand the new accounting tools available, you’ll wish you had switched a long time ago.
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MAKE TECHNOLOGY YOUR NEW BEST FRIEND
Many small businesses still manually enter invoices and payroll with a pen and paper. It’s a lengthy process that opens you up to accounting errors. Luckily, there are a number of technology solutions available to small businesses can save a great amount of time. If there’s a single recommendation for small business owners, it’s to look into the automated invoicing and expense tracking tools that will make life a lot easier. There are many cloud-based accounting tools available for small businesses — some of the most popular being QuickBooks and Xero — and the majority of these tools are surprisingly easy to operate.
CONSIDER OUTSOURCING ACCOUNTING IN 2020
Many small businesses operate with limited revenue, and it may be tempting to keep operational costs low by managing accounting in-house. The reality, however, is that handling your own accounting can cost companies more money in the long-term. For example, it’s easy for small businesses to misunderstand how to best utilize tax deductions, and accounting errors can be difficult to spot when you’re busy running the show. Hiring an accounting professional can minimize these sorts of issues.
It’s time to focus on what you do best — growing your business — rather than on accounting!