How Much You Should Raise Your Prices
Few business owners enjoy breaking the news of an upcoming price increase. However, when you own a business you have to deal with ever-increasing costs. Although inflation is an unpleasant part of life, it is still part of life.
Price increases are inevitable for a sustainable business. If you want to stay afloat, you’ll have to do them – and regularly. Read on for some tips on how to determine how much you should raise your prices.
Company costs
The type of business you run will determine how much it costs to stay in business. If you’re service-based, you will need to consider what it takes to keep your employees. You’re not likely to deter your customers by increasing prices if you have great people who deliver a service they value.
On the other hand, if your business sells physical products, there’s more to the equation. You have to determine how much more it’s costing you to provide the product. Then, calculate how much more you need to charge to get the same amount of earnings you were before.
No matter what type of business you run, it truly is a numbers game. You’ve got to stay profitable to continue providing goods or services. So calculate the difference and raise your prices accordingly.
Bottom line
There are plenty of other things contributing to profits lately, such as supply chain issues and record low unemployment. When considering a price increase, take a look at your bottom line. Did you make more money this year, or less? If you’re like a lot of businesses, the answer will likely be less.
Delve into your numbers to understand how much money you’re making, and how much money you would like to be making. Plan your price increases so that you can get from point A to point B.
When it comes to shrinking the gap, consider whether you’d rather do one large price increase, or several small price increases. If you need cash right away, you might be tempted to just do one big increase and get it over with. Beware, however, that this tactic has the potential to scare off customers and send them to your competitors in search of a better price.
Weigh the potential loss of customers against the revenue from a price increase. Ideally, the increase will cover the few customers who might go elsewhere.
No matter how you do it, make sure you communicate your intentions kindly and clearly. If you have a loyal customer base, they will likely understand and continue coming to you.
See what your competitors are doing
Do your research to find out what your competitors are up to and how they’re handling price increases. Check in with them regularly to make sure you’re staying on par. You don’t want to become too cheap or too expensive.
If you don’t raise your prices along with the crowd, you run the risk of becoming the cheapest option. That tends to cause a reputation of having the worst quality. Get too far ahead, and you’ll price yourself out of the market.
Consider the rate of inflation
Once you know how much you need to keep up with costs, maintain your bottom line, and match your competitors, look at the rate of inflation. A good rule of thumb is to increase your prices by 5-10% yearly to keep your real earnings the same. However, it’s been a wild year inflation-wise and this percentage may vary.
Final thoughts
It can be intimidating to raise your prices because you don’t want to lose customers. However, if you don’t stay on top of it, you risk losing profits or in the worst case scenario, your business. Do your research to make sure your price increases are fair and communicate them well. That way, you can continue to provide excellent services and products to your customers for years to come.
Contact us today or call (888) 857-5750 for expert guidance on determining the right price increases for your business. Ensure profitability while effectively communicating changes to your customers. Stay competitive in the market. Get in touch now!
How to Improve Your Inventory Process
A business that involves inventory is exciting to set up, but it also comes with its share of challenges. It’s easy to become overwhelmed by inventory management. Adopting some helpful tools and strategies will make the inventory management process much easier.
Read on for some tips on how to improve your inventory processes.
Use barcodes
It’s typical for a small business to start out with simple price tags because they’re inexpensive and relatively simple. Something quickly stamped out of a pricing gun or even handwritten is common. However, there will come a time when this practice starts to hurt you.
The margin for human error is large, both when making the labels and when ringing customers out. It’s wise to adopt a barcode system for items so that they can be accurately scanned. It also makes counting inventory easier when you can scan each item instead of reading every tag.
Keep things in order
This applies to your physical inventory and your records. A messy storeroom or warehouse is a surefire way to lose track of items. Take the time daily, weekly, and monthly to complete housekeeping tasks that make counting and locating items easy.
However you keep your records, make sure everything is in order there, too. Go over your paper trail regularly to make sure your numbers match what you physically have on hand. Waiting too long can mean your numbers get too far out of whack–and can mean you have more difficulty determining what’s gone wrong.
Additionally, get in the habit of adopting a policy of “first in, first out.” This ensures that what you’re selling is current or fresh. It also allows you to identify what items are flying off the shelves and which are gathering dust.
Fine-tune your software
Choosing inventory management software is a crucial step in getting your business in order. It will also make your life easier.
Today’s inventory management systems are straightforward, easy to set up, and easy to use. Adopting one will quickly pay for itself in the time you save and headaches you avoid.
Once you’ve settled on a system, set it up so that it works well for your business. Most have tools built right in that can be set up to meet your unique needs. Use what you need, forget what you don’t, and get on with more important tasks.
Make access easy
Your stock levels should be easily viewable from your POS system, even if you have multiple warehouses or storefronts. This allows your employees to better serve customers. It also makes it easier for your inventory manager to see what’s needed without having to physically go check.
Invest in your staff
Even if you have the perfect software set up and your stock room is immaculate, you will experience shortfalls if your staff doesn’t know how everything works together. Take the time to ensure everyone understands inventory movements – and how to identify and reconcile discrepancies.
This training makes your job easier and saves your bottom line. It will also save your staff from the frustration of not knowing where or how to find an item. It also means you have what you need on hand, which makes your customers happy and earns money.
Final thoughts
Especially when you’re starting out, it can seem like overkill to adopt robust software and equipment to manage your inventory. However, when you develop these tools early on, you will find your business is easily scalable and that you save a lot of time and money. Get in touch with us or call (888) 857-5750 to learn more about how to improve your inventory processes.
Underused Housing Tax in Canada: What You Need to Know for 2023
Are you a non-resident of Canada who owns vacant or underused housing in the country? If so, you may be subject to a new annual tax called the Underused Housing Tax (UHT). But even if you're a Canadian citizen, resident, or corporation, you may still need to file a UHT return for each of your residential properties. Here's what you need to know about the UHT for 2023.
What is the Underused Housing Tax?
The UHT is a new tax that was introduced in Canada on January 1, 2022. Its aim is to encourage non-residents to make their vacant or underused housing available for rent or sale, which could help alleviate Canada's housing affordability crisis. However, there are situations where Canadian citizens, residents, and corporations will also need to file UHT returns.
Who Needs to File UHT Returns?
If your name or your business's name is on the land title of a residential property in Canada, you may need to file a UHT return. This applies to non-residents as well as Canadians. The UHT return is a 6-page document that asks for information such as the property's location, type, and ownership structure, as well as its occupancy and use during the year.
When Are UHT Returns Due?
UHT returns for the 2022 calendar year were due by April 30, 2023. However, the Canadian government has recently announced that it will waive penalties and interest for late-filed returns and late-paid UHT payable for the 2022 calendar year, provided that the return is filed or the UHT is paid by October 31, 2023.
What Happens If You Don't File a UHT Return?
Failing to file a UHT return on time can result in penalties. For individuals, the penalty for late filing is $5,000, while for corporations, it's $10,000. If you receive a late-filing penalty, you'll also be charged interest on any outstanding UHT payable.
To learn more about how Accountants 2.0 can help streamline your accounting processes and save you time and money, contact us online today or call (888) 857-5750.
The Underused Housing Tax is a new annual tax on the ownership of vacant or underused housing in Canada. While it's primarily aimed at non-residents, Canadians may also be required to file UHT returns for their residential properties. If you're subject to the UHT, it's important to file your return on time to avoid penalties and interest charges.
You can find more information on the Underused Housing Tax in Canada at https://www.taxtips.ca/real-estate/canada-underused-housing-tax.htm and on the official Government of Canada website at https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/underused-housing-tax.html.
Remember, if you're subject to the UHT, it's important to file your return on time to avoid penalties and interest charges. And the deadline for filing UHT returns for the 2022 calendar year has been extended to October 31, 2023.
Why Cybersecurity Should Be a Top Priority for Accounting Firms
Whether you run a high-volume accounting firm with hundreds of clients or a new startup, having strict cybersecurity policies in place is a must to provide the best services to clients, protecting both their important data and yours.
That’s why the Quickbooks ProAdvsiors from Accountants 2.0 has collected some important information here about why cybersecurity is so important!
Preventing Financial Loss
One of the foremost reasons to invest in cybersecurity solutions is to prevent costly financial losses due to cyberattacks, ransomware attacks, and data loss. Studies have shown that some companies are forced to pay up to $50,000 dollars to ransomware attackers. Additionally, if your data is compromised and customer information is leaked, you can face legal actions and in some cases, end up bankrupt.
Reducing the Threat of Legal Representation
As mentioned above, cyberattacks and other issues can result in the threat of legal action, which can be detrimental to your company’s bottom line. Many customers will take legal action if any of their personal information is exposed, which can lead to lengthy lawsuits that cost thousands to hundreds of thousands of dollars.
Minimizing Loss of Consumer Trust
If your company falls victim to ransomware or another type of cyberattack and such a scenario is made public it can cause untold damage to your enterprise’s reputation. Current clients can share negative reviews that explode on social media and stop potential clients from considering your accounting firm.
How Can You Secure Your Accounting Firm?
Above are just a few of the negative aspects of suffering a cyberattack. However, there are some ways you can secure your accounting firm and safeguard your company and client data such as:
Using Cloud-Based Accounting Services:
By implementing cloud-based accounting services with stringent security measures, you can minimize the chance of data loss and cyberattacks. You can also retain previous versions of files to restore your system to a time before a data breach.
Backup All Your Business Data:
Regularly backing up all of your data is key to maintaining a strict cybersecurity policy. Keeping multiple copies both on backup devices and the cloud will ensure your enterprise is well-protected.
Strong Passwords & Deep MFA:
By implementing strong passwords and deep multi-factor authentication processes, you can make it much more difficult for cyber attackers to enter your network.
Maintain a Strict Internet & Wi-Fi Policy:
For those using your company network, implementing strict policies regarding internet and Wi-Fi usage is a must. Often, this will include using a VPN whenever employees are accessing your system to keep your connection private.
Contact our Quickbooks ProAdvisors today for Cloud-Based Accounting Services & more!
For more information about how we can help your accounting firm protect its most important data, contact us online today or call (888) 857-5750. We also specialize in accounting for startups, bookkeeping services, and much more so get in touch today!
Annual Information Returns for Corporations in Canada
Are you a corporation in Canada?
Do you know that you must file an annual information return every year? It's important to do this so that the government can keep track of your business and understand the ownership and management.