Last month we were all about brand and image. Your brand can be great, but when it comes to sustaining your life and your new business, the first six months are crucial. And that means keeping the books and keeping them well! We are so excited to talk to Jenny Duffy of Money Talks this July to hear what she has to say about your money in the starting months of your business.
Jenny Duffy of Money Talks
Loaded Bow: If I hire someone and they are doing a lot of the work in getting the business started, how would I know if I should pay them more or offer them a share in the company?
Jenny Duffy: Shares represent an ownership interest in the Company. Generally I wouldn’t offer an employee shares unless you wanted to share control of your company and you foresaw them staying with you for many years.
Larger, publicly traded companies like Microsoft, Walmart etc. will often offer shares to their employees as an incentive for them to work harder. The premise behind this approach is that if employees work harder, the value and hence share price of the Company will increase. The employees could then sell their shares and make a considerable profit.
LB: How do I set up my payroll system?
JD: Once you have determined how often you will pay your employees, you must ensure that you are making the correct payroll remittances for both employee and employer deductions for CPP, EI and Income Taxes. There are payroll tables and/or software programs available on the CRA website which will tell you how much to send to the government, and how much the employee’s net paycheque should be.
These are available at:
Additional detailed information regarding your responsibilities as an employer can be found at:
LB: How do I know how much to pay myself?
JD: Most first year entrepreneurs end up just paying themselves what is left over after paying their creditors and employees. If you have excess cash flow and you can afford to keep some money in the Company, I would recommend saving as much as possible after paying yourself what you need to live.
LB: If I have a great month and have paid myself and rent and all employees and suppliers, should I put the rest back into the business?
JD: Yes! You never know what unexpected expenses may pop up. A broken window, a busted water pipe, a fire etc. These little surprises can severely cramp your cashflow so it’s best to have a rainy day fund on hand.