qprev_HBB Manual 2.qxd - Small Business BC

Keys to managing these relationships includedelegating responsibly and giving credit so thathelpers/family/workers feel recognized andworthwhile.Manage Your FinancesSeek additional CapitalAt different times and for different reasons, manybusinesses need to find an infusion of workingcapital – due to a boom, a rush of orders, anexpansion, a move to another business location,or to tide the business over a period ofunexpectedly low sales.Sources for start-up capital may also be sourcesof operating capital – friends, family, and lendinginstitutions. Because an established business hasa track record and tangible or real assets, it canbe easier to borrow money for operating than forstart-up. Other possible sources for operatingcapital:• Have customers leave a deposit when theyplace an order.• Stagger product deliveries to match sales sothe business isn’t stuck with a large inventory.• Take goods on consignment, which means youdon’t pay until an item sells.• Obtain supplier credit.• Take the full time allowed to pay your bills –in a cash flow crunch, the hope is you willhave turned your inventory (sold the products)when your suppliers’ bills come due.• Consider sharing the work with a partner.• Ask friends to invest in your business.• Merge with another company.• Seek venture capital.Reduce Your Taxable IncomeAccording to the Canadian Income Tax Act, allmoney you spend “...for the purpose of gainingor producing income” can be deducted from yourbusiness and full-time employment income. Ifyou work out of your home, you can deduct aportion of your telephone and rent, as well as aportion of lease or mortgage expenses. Checkwith your accountant. A reasonable portion ofvehicle expenses, office equipment, furniture andsuppliers, business stationery, and relevant bookscan also be deducted. If you already own these,you can transfer them to your business at “fairmarket value” and still use the tax deduction.Depreciation rates on equipment are set byCanada Customs and Revenue Agency (CCRA)as part of taxation laws. These rates are differentfor different categories of equipment.Some possible ways to reduce your taxableincome from a home-based business:• Write off all business-related books,magazines, manuals, journals and newslettersyou have bought over the years that have beenused by you to make money in your business.Make a list of titles and value, and sell thereferences to the business. This lets you showthe resources as a business asset to be writtenoff 100 per cent when you show a profit. Talkto your book-keeper about this option, whichmay involve claiming the value as personalincome.• Sell overdue accounts to a collection agency.solutions for small business home-based business 89