This process can be simple and old school bring on the FiloFax , or you can use a service like ShoeBoxed.
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For instance, if you have one cell phone, you can deduct the percentage you use the device for business. Bookkeeping is the day-to-day process of recording transactions, categorizing them, and reconciling bank statements. Accounting is a high level process that looks at business progress and makes sense of the data compiled by the bookkeeper by building financial statements.
Technically, Canadians are required to use the accrual method; but to simplify things, you can use the cash method throughout the year and then make a single adjusting entry at year end to account for outstanding receivables and payables for tax purposes. Right away, you need to establish whether that individual is an employee or an independent contractor.
Depending on your business model, you may be planning to purchase and import goods from other countries to sell in your store. These are fees that your country imposes on incoming goods. Take the time to learn about importing goods into the US and Canada , and the associated taxes, so that you know the rules from the get-go.
This saves you the hassle of setting up a merchant account or third party payment gateway. A merchant account is a type of bank account that allows your business to accept credit card payments from customers. If you use a third party payment processor, the fees are generally around 2. You can consult this list to help you find a payment gateway that will work for your location.
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Looking to write a business plan for your ecommerce store? This comprehensive guide walks you through the nuts and bolts of writing your very own business plan. The world of ecommerce has shaken up sales tax regulations and they are admittedly a bit confusing due to location issues. For American store owners, international purchases are tax exempt as well.
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Tax obligations vary depending on the legal structure of the business. Corporations, on the other hand, are separate tax entities and are taxed independently from owners. Your income from the corporation is taxed as an employee. Self-employed people need to withhold taxes from their income, and remit these to the government in lieu of the withholding that an employer would normally conduct.
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In order to calculate gross margin, you need to know the costs incurred to produce your product. The difference between how much you sell a product for, and how much the business actually takes home at the end of the day is what truly determines your ability to keep the doors open. The right bookkeeping solution means you can invest more time in the business with bookkeeping no longer on your plate, and potentially save the business money.
About the author: Kendra Murphy is a product designer at Bench , the online bookkeeping service that pairs you with a professional bookkeeper and uses simple, elegant software to do your books for you.
Get free online marketing tips and resources delivered directly to your inbox. However, there are times when business owners will take on debt in the hope that it will buy enough time to repair a damaged business or to prop up an inability to gain revenue traction in a particular market. Parrish says filing delays in deposits of payroll and other taxes should be avoided at all costs. Are you a small business owner who has successfully overcome cash flow problems? Is so, share your experiences of running into, avoiding and overcoming issues related to small business cash flow.
Cash Flow Photo via Shutterstock. Look into financing.
It is a good way to power cash flow and allows you enough time to pay for the money in the long run. For those running small businesses, it is common to experience problems with cash flow. However, the tips stated above will certainly help avoiding cash flow problems.
Business owners tend to be busy with a lot of tasks that may demand their attention. Therefore, most of the times, they would be unable to keep track of current trends and news in the sectors relevant to their business. Your email address will not be published. All rights reserved. Powered by. Email this Article Print This Article. Take control of your credit!
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Check both your personal and business credit score in one place. Gabrielle Pickard-Whitehead is a professional freelance writer and journalist based in the United Kingdom. Since , Gabrielle has been writing articles, blogs and news pieces for a diverse range of publications and sites.