In this article, we identify some of the signs that you might need some financial guidance as a self-employed person. It pays to meet with an accountant and/or financial advisor to get advice if:
You have had a previous bankruptcy.
Having a bankruptcy doesn’t mean you necessarily have poor money management skills. Life happens, and a bankruptcy could have been related to many other factors, including huge medical bills, fraud perpetrated against you or your company, or some other type of event that put you in a bad place.
However, as you may be in the midst of dealing with a bankruptcy on your record, you may need some financial guidance about getting credit or handling money in a way that won’t put you at risk for another bankruptcy and that helps you navigate any unforeseen financial setbacks.
You have vague knowledge about financial management.
If no one ever taught you about money — how to save or make decisions, when to spend or invest your money, then you need to learn quickly so you don’t harm your small business through ignorance. Having a basic working knowledge of money, saving, spending and investing can increase a person’s ability to make sound business decisions. Seek this financial guidance through books, websites, a financial advisor, seminars and even college courses.
You are not familiar with business tax guidelines.
This is entirely understandable given the fact that you previously had an employer who took care of tax deductions, income tax, and any other tax-related issues. As a self-employed person, you are now faced with handling taxes by yourself, including income tax, Canada Pension Plan payments and other completely foreign activities.
You don’t want to do anything that could incur fees, penalties or an audit, so this is the time to learn about all the tax issues that impact you as a self-employed person. Look to the Canada Revenue Agency small business center or an accountant who can help you understand and navigate this new tax framework.
You don’t plan for any seasonality for your business.
Every business has seasons where there is more or less revenue, but if you have never been in this position of having to understand seasonal issues in your business, you may not realize how to plan for slowdowns. Therefore, you may be short of much-needed cash on some months and not able to cover your bills, putting your business at risk.
A financial advisor (like a CPA) can help you track and plan for this seasonality. They can then help you create a plan, including knowing when to make purchases and when to conserve resources.
You are working a lot, but aren’t strategic.
If you work all the time (and maybe too much) you have not created a long-term strategic financial plan that allows you to work smarter rather than longer for the same amount of money.
It could be the type of clients you have selected, your pay rate, how you are billing or not billing, or your inability to save. No matter the reason, getting assistance with these issues can help you know when it’s time to increase your rates or improve your payment terms. A guide will help you understand the importance of an emergency fund, and the knowledge of how you can evolve as a business to take on more projects with the assistance of more talent.
You think you already know everything.
If you believe this, then you are the one most in need of financial guidance from others. Others who can and will give you financial advice don’t know it all and they’ll admit it. Running a business means that you’re continuing to learn and add knowledge as rules, compliance and regulatory issues change. Instead of thinking you know everything, or believing that someone else knows everything, be open to listening to what many others have to say and to what they can teach you about running your business in a financially sound manner.
None of these signs that you need financial guidance should be taken to mean you won’t be able to keep your business running. However, you can increase the likelihood of your success if you focus on having a good working knowledge of financial issues and getting advice when you need it.