Accounting is collecting & processing data and presenting it in various standardized reports.
Standard reports include:
This report is used to determine how much money a company makes over a certain period of time.
This is what a company owns and what it owes.
Shows the actual movement of cash
Accounting formula
Assets - Liabilities = Equity
SALES - COS = GROSS PROFIT
GROSS PROFIT - OPERATING EXPENSES (OPX) = EARNINGS BEFORE TAX
EBT - TAXES = NI
Debits & credits
Journal entries
Accounting ledger
Now where to begin?
Point of accounting is to know how much $$$ you are making (profits) and how much money you owe the CRA (Canada Revenue Agency). Or how much money you are losing...
You generate profit by selling your agency services (Agency Sales) for more than it costs you to build out said services (Cost of Agency Sales or COS).
Probably some expenses not directly related to a specific client, but needed to run your agency.
This would be your agency's operating expenses (OPX).
After you subtract taxes (corporate taxes) from that you get your agency's Net Income.
And then bam, you know how to calculate your agency's net income after corp taxes.
All of this info would be found on the accounting statement known as the "Income Statement" aka "Profit and Loss Statement" aka how much money is my agency making over X period of time.
Ok great, so let's say this past year you invoiced $120,000 for social media management and you spent $45,000 on graphics and you started Jan 01, 2021 and your fiscal year end is Dec 31, 2021. And this is your first year of business.
$120,000 Sales
$45,000 COGS
GP
$12,000 OPX
EBT
T (if you are incorporated, you'd fill out a T2 form and submit to CRA, this is due 6 months after your year end, they want the money within 3 months though)
NI This is how much money you get to take home... not quite
Depending on you would pay yourself, there are even more taxes.
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WHO is the gross profit & who cares?
WHAT can you do with GP?
WHERE do you use GP numbers?
WHEN is it calcuated and used?
WHY people care about gross profit?
Not everyone, depends on factors such as size, goals, risk tolerance, and tax situation.
Tax advantage(s) and legal advantage(s).
Canada Revenue Agency: https://www.canada.ca/en/services/business/start.html
Any time.
Silicone Valley Bank & Signature
Could not pay all withdrawals
Mostly US operating bank
Friday March 10th
Too many people trying to take out $$ at once.
The T1 is for all Canadian residents.
A Canadian tax form for individuals to fill out. Looks like this, trust me, it's not that complicated, and most fields probably don't even apply to your situation.
Tax filing & payment due to CRA, file online @ wealthsimple.com
Every year before end of April.
Because CRA collects money needed fund rest of the gov't.
The T1 General Income Tax and Benefit Return is a tax return form that individuals use to determine their annual tax liability and claim federal or provincial benefits, such as the GST/HST Credit.
The form summarizes the taxpayer's income, deductions, and tax payable, as computed on supporting forms and schedules, and calculates any refund or balance due.
The T1 form consists of five parts:
1) Identification
2) Total Income
3) Net Income
4) Taxable Income
5) Refund/ Balance owing
Online, In-person, mail, Tax professional
To ensure timely submission, the completed T1 form and any outstanding balances are due by April 30th of the following year (by June 15th for self-employed individuals or common-law partners). If these deadlines fall on a weekend or public holiday, the deadline is extended to the next business day.
Because CRA
Business owners need to build a company track & stay on it.
Key Performance Indicators are common statistics & ratios a company would keep track of.
Pulled from business & financial reports
Always be keeping track of KPIs and perform variance calculations.
Ensure mone is being made.
WHO needs to know?
ROI important metric for business decision makers.
WHAT is ROI?
Rerturn on marketing spend is how much profit is made from a given number of marketing cost.
WHERE can you collect this data?
Marketing ROI = SALES CHANGE/ MARKETING SPEND
WHEN should you look at Marketing ROI?
Constantly
WHY pay attention to marketing ROI?
Determine what is most profitable for business.