There’s no denying it’s difficult for startups to ‘make it’.
Everyone has an innovative idea. Every entrepreneur has a game plan that’s one step ahead of the next. And everyone has the financial side of their business streamlined… right?
It’s very easy for entrepreneurs to get caught up in the day-to-day operations involved with running their new business. And when this happens, financial elements can often be sidelined, particularly if there’s nobody taking care of the bookkeeping in-house. This is when things can get really tricky, especially if they aren’t handled quickly.
Which is why you should consider using an external professional to help manage your books. That way, you can keep your focus on what really matters – growing your company – without always having to worry about the financial elements. Luckily, Manning Elliott LLP, a CPA and business advisory firm based in Vancouver and Abbotsford, actually understands the crucial financial and tax needs relevant to startups. They focus on helping you get money back from your expenditures, leaving you with more time to relax (see: continue planning to take over the world) and focus on what lies ahead.
Daily Hive sat down with tech industry expert Paul J. Leedham, CPA, CA, CGA, from Manning Elliott LLP, to find out what it takes to help a startup succeed in Vancouver and just how they can help.
Startups need to remain on top of new trends to continuously advance in terms of technology, and create something better than their competitors. But in order to be able to do this, they need to have a well-balanced cash flow system. The problem is that this can often be neglected until all of a sudden it’s too late, but it can be avoided by proactively working with an external accounting and business advisory specialist who can tailor services to your specific needs to ensure you’re in the black as often as possible.
Leedham believes that the biggest factor to success for startups is cashflow management. “It’s very easy for companies to lose sight of where their cash flows are if they’re not monitoring what’s coming in and what’s going out on a regular basis. Startups can unexpectedly discover that they have a cash flow problem with a shortfall in meeting their working capital requirements. The main thing they need to be concerned with is their cash flow management practices.”
Starting up your own business naturally means that you’ll have quite a few expenses. The good news is that many of these expenses can actually give you something back. For tech startups, there are a number of tax credit incentives offered through various government programs. You just need to find them and know how to apply to get them.
“Tax credit claims generally provide an opportunity for business owners to claim some credits back based on expenditures that the business has paid out in cash,” said Leedham.
Research and development
In order to have the best products and services on the market, you need to know exactly what will work well with your target market. And this means conducting extensive research and development. Tech startups can get cash back for the funds they spend on this with the federal government’s Scientific Research and Experimental Development (“SR&ED”) tax incentive program.
“If startups expend money on doing research for different kinds of innovative products or technologies that they’re working on, they’ll have to pay for those expenditures in cash to fund them, but they can make a tax filing to claim a credit back based on a percentage of the qualifying expenditures that they have incurred,” Leedham added.
When you’re in the throes of establishing your startup, you may forget about the accounting elements that you’ll need down the line. And according to Leedham, that’s a common occurrence that can be rectified.
“I’ve had some clients come to us where they’ve had no bookkeeping or records done whatsoever and all they know is that they need to file a tax return. We’ll help them do their bookkeeping and bring everything up-to-date, or we’ll recommend a bookkeeper externally from our Firm to help them bring their records up-to-date.”
He also noted how some startups will often have an individual in-house managing the accounting and it’s usually a shareholder of the company, a close friend, or relative of one of the principals.
“They’ll have everything current but they’re not able to bring it up to that full stage of completion in terms of getting the financials and tax returns done to a level that meets the needs of their stakeholders,” he said. That’s why clients go to Manning Elliott LLP for financial statement audits, reviews, and more complex matters in relation to the recognition of revenue, measurement of share-based compensation, and treatment of financial instruments.
A stellar team
Of course, how well a startup performs depends on the people as much as the financing. With an awesome team of hard-working, innovative individuals, anything is possible and ideas can come to fruition much easier.
You don’t need to worry about the financial and tax needs of your startup when you partner with a firm such as Manning Elliott LLP. This CPA and business advisory firm will look after these important areas for you and advise on the most effective tax strategies to give you peace of mind and to allow you to focus on growing your ventures.
Manning Elliott LLP is one of the province’s largest independent regional accounting and business advisory firms with offices in downtown Vancouver (604-714-3600), Burnaby (604-421-2591), Surrey (604-538-1611) and Abbotsford (1-604-557-5750). The firm has been in business for more than 65 years and employs over 200 professionals and staff.