Your salary will likely be the biggest expense in your business. It is important that you make sure your business is profitable after you pay yourself and your other business expenses.
When you are setting up your finances, you will want to:
- Determine your personal expenses/savings and required salary.
- Determine your required annual and monthly income to make a profit.
- Determine your desired annual and monthly income (your goal)
Here is a guide to setting up the different bank accounts you will need to manage your finances:
Business Operating Account– All of your income is deposited here, then you pay your salary, your collected tax and your business expenses.
Personal Operating Account– Your salary is deposited here. First, pay yourself into your savings, then pay your personal expenses.
Personal Savings Account – The savings from your personal operating account accumulates here.
GST / Income Tax Account – Every time you get paid, immediately deposit the entire GST portion in here and a percentage of your cheque for income tax. Speak to your accountant to determine what percentage should be deposited.
Once enough cash accumulates in your savings account (or Business Operating account) the funds should be invested for further growth.
Remember – The key to financial success is to spend less than you make!
Note – If you do not have a GST number, call Revenue Canada at 1.800.959.5525 to obtain one.
– Written by Lindsey Smith,CIR REALTY – Manager of Operations and Realtor Development
Copywrite, CIR REALTY 2016 – All Rights Reserved