Twyla Verhelst, CPA, co-founder of Helm (cash flow forecasting tool) and Twenty Eighty Financial Services (bookkeeping and accounting firm)
How can companies make technology their new best friend?
Verhelst: When properly chosen, implemented and utilized, the benefits of technology can be exponential to a business. The choice of technology tools and apps is very vast and often the key is to find the right tool to solve an internal pain point or to create efficiencies. Advances in technology have resulted in small-to-mid-sized businesses having access to apps that can result in a very robust array of automations that historically would have only been available to larger enterprises at a cost of thousands of dollars. Today, apps can be purchased on a subscription basis for just $10 to $100 per month making the use of technology more economical than it’s ever been.
Why is it important for businesses to stop doing payroll manually?
Verhelst: Manual payroll processing is not only prone to error, it’s also incredibly time-consuming. In fact, many small businesses report that manual in-house payroll processing can take up to 10 hours per week. Because of this, often payroll is one of the first things that small businesses automate. Payroll software is very easy to use and is a tool that quickly pays for itself, not only in terms of time but also in terms of payroll accuracy. I recommend using cloud-based payroll software, such as Wagepoint, which is efficient, significantly reduces the opportunity for errors and lowers processing costs.
How can they track holiday and year-end bonuses properly?
Verhelst: When it comes to bonuses, it’s important to note that year-end bonuses and holiday bonuses have different purposes and tax implications. A holiday bonus shows appreciation and is usually given during the fourth quarter of the year. A year-end bonus is performance-based and usually given during the first quarter to avoid confusion with a holiday bonus. All bonuses are taxable income and employers must withhold, report and remit proper tax amounts. Employees should also take taxes into consideration so that they’re aware of exactly how much money they’ll have upfront and after-tax. Employers can help employees understand this by communicating with them at the time the bonus is given.
Should they consider outsourcing accounting in 2020?
Verhelst: Often when we’re running a small business we’re trying to keep our costs down. However, when it comes to bookkeeping, payroll and accounting functions of a small business, the benefits of outsourcing can far outweigh the costs. The modern accountant and bookkeeper provides more than the mundane and necessary bookkeeping and accounting functions that they were known to provide in the past. Today, these professionals provide more value-added services to a small business. This includes service offerings such as forecasting, strategy planning, and cash flow management — while being more of a partner or financial coach to the business owner than they have in the past. Outsourcing allows a business to access a wide array of expertise and experience, without employing an entire team of accounting and payroll professionals.
What is the No. 1 mistake you see Calgary companies making?
Verhelst: The number one mistake that I see businesses make is operating their business without a solid understanding of their cash flow. Statistics show that 50 per cent of all small businesses fail in the first five years of business. And over 80 per cent of those failures are due to cash flow issues. On the flip side, the survival rate for businesses that manage their cash flow is 90 per cent. Business owners often look to their bank balance as a gauge of their financial well being. But the cash in the bank is not an accurate indicator of whether or not they have enough money to meet their payroll and rent obligations next month or to survive and thrive as a business. A modern-day bookkeeper or accounting professional who has made technology their best friend can provide cash flow forecasting and cash management as part of their services to the business which can help the business owner make business decisions with clear optics of their financial future.
Twyla Verhelst was interviewed by Mario Toneguzzi.
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