You’ve made the leap. The incorporation paperwork has come through and what was once just an idea is now a real company. So where do you go from here? What do you need to do to get your company up and running?
One of the things you’ll realize very quickly is that you need to find a way to manage your new company’s money. You can’t just run this thing from your personal account, that won’t work. So, step one – you need a bank account. Choose your financial institution wisely, each of them will have different account packages and will have various programs in place to help you get access to some initial funding if you need it. Start thinking about how you intend to pay for things – are you going to spend time writing cheques, or do you prefer doing everything online? Make sure your fee structure accounts for that. Here at Positive, we’re partial to staying as paperless as possible, so we always opt for the electronic option.
Start tracking your expenses!
Start right now! It doesn’t matter if that’s in a free accounting software, a paid one, or a spreadsheet you maintain. Trust me. The most painful thing you’ll encounter is needing to present a clean set of books to your;
- potential investors
- credit facilities
- or the government
The last thing you want is to have to scramble together 8 months worth of transactions in a week, so do yourself a favour and start keeping track of every dime you spend and every penny you make. And keep your receipts. It may sound obvious, but if you’re claiming expenses and tax credits, you need to have the backup handy and organized. There are lots of possible solutions for you to scan and store copies of bills and receipts (lots of them through mobile apps) and I cannot stress enough how quickly you should start doing this.
In Ontario, if your business generates more than $30,000/year in sales you must be registered to collect and remit HST. You may want to get ahead of that by registering for your HST number right away and start taking advantage of some tax recovery while you’re building up your product and sales potential. Your accountant (I’ll get to them in a second) can advise you on the best way for you to move forward, as the tax legislation has all the readability of a granite slab. Keep track of this alongside your expenses, you’d be surprised what you can claim and recover in the early stages.
Setting up your company’s finance department is one of the foundational stages of your business. Sure, you’ll start by doing this yourself on a spreadsheet. But you’ll immediately need to start shopping for an accounting firm that you can call on for advice and help with your annual filings. Very few investors will give you the time of day until you can present a set of books that have at least been read over by someone who has studied finance, so you’ll want to find a firm that works for your price point relatively quickly. That’s the first step.
You’ll very quickly find that as the CEO and founder of your company, you have about 85 billion (not literally I hope) things to keep track of and the company’s finances are often one of the first things to drop off that list.
“hey, we have cash in the bank so this isn’t on fire right now” is something we’ve heard countless times.
But then you need books – you have a meeting with a potential investor, and they want statements. You’re going to need to start hiring a real finance resource. The first one you find will be a jack-of-all-trades and probably way more senior resource than you really want to handle your day to day accounting work. That person is your first finance resource and usually takes the first CFO title in the company.
Your CFO should be spending their time devising and implementing your long-term strategy, not making sure that a vendor gets paid on time.
Now you have to make a choice. Do you hire a junior finance resource, or do you look at outsourcing your accounting work to a dedicated contractor? We’ve covered the difference between keeping accounting in-house versus outsourcing in past articles, but the elevator pitch difference is this: If you’re hiring yourself you have the resources on hand all the time, but the skill set is much narrower.
When you outsource your finance, you get access to a much broader spectrum of financial knowledge, and often to multiple resources for the same salary cost as a single full-time resource.
Here at Positive, our clients have access to a dedicated finance team that includes the following functions;
- receivables specialists
- general accountants
- assistant controllers and controllers.
The bottom line…
You need a real finance department, and you need it sooner than you may have thought. Laying your foundations in finance early will give you a much straighter path to getting your business funded. Starting early takes a huge burden off your shoulders as a CEO. Not to mention that if you do end up needing some help to clean up your books a little, you’re already most of the way there.