What Are My Responsibilities?

Many business owners begin their businesses with a small number of employees, sometimes just the owner and a relative or friend helping out. However many employees you have, there are a number of things you are responsible for and should know about. Knowing these things up front will help you be a better employer and have happier and healthier employees – both good things for your business.

No matter what territory or province your business operates in, there are regulations that set standards for employment and the safety of employees in the workplace. These standards cover a number of important issues, including safety, pay, number of work hours and firing employees.

Workplace Safety

Ensuring your employees have a safe workplace is a basic obligation of all employers. Nobody wants people to get hurt while they are doing their job. There is some variation in the regulations on workplace safety across Canada, but several standard requirements include:

• injured employees must be transported quickly to the nearest health facility;
• when someone is injured doing their job, the employer must fill out a detailed report of what happened. The employee is also required to submit a report describing their version of events; and
• employers are required to follow various codes and standards. In Nunavut for example, employers are required to follow the General Safety Regulations, the Code of Practice on Asbestos Abatement and the Code of Practice of Hazard Assessment among others. Rules about how to properly post notices of possible dangers and working in potentially dangerous situations are included in the Consolidation of Safety Act. You can find the full Safety Act for Nunavut here: http://www.gov.nu.ca/safety-act-consolidation.

Injury Prevention

It is important to note that employees have the right to refuse to work in dangerous situations. Employers should have clear safety inspections done on a regular basis to identify any potentially dangerous or hazardous areas of work. Every workplace should create a safety plan and choose a safety officer, as well. Safety plans can include fire escape plans, First Aid kits, emergency contact information, etc. Employees should always have access to appropriate safety equipment and clothing. It is a good idea to have spot checks done regularly to see how well employees know what to do if there is an injury or an emergency.

Training remains a key part of having a good injury prevention plan in the workplace, and you should keep the following points in mind:

• make sure your employees are aware of any potentially dangerous aspects of their job;
• have staff receive First Aid Training;
• make sure staff are trained in Workplace Hazardous Materials Information System (WHMIS). This is the recommended method of dealing with hazardous materials in the workplace and includes safe storage of materials, how to treat injuries caused by these materials and proper labelling of products; and
• review safety plans and training needs for employees on a regular basis.

Compensation

Depending on the province or territory, employees that are injured or become sick on the job are able to access a number of services and compensation arrangements. These may include physiotherapy, continued salary payments and ongoing medical care as needed. Injured staff can receive financial help to cover disabilities caused by work injuries, specialized medical care related to the injury, necessary medical equipment and prescriptions. Employees who are unable to work due to workplace injuries can also be compensated for the income they are losing while away from work. Both employers and injured employees are required to submit a claim to the appropriate Worker’s Compensation Board in their province/territory. You can find the right contact for your province or territory here: https://www.ccohs.ca/oshanswers/information/wcb_canada.html.

Regulations

As your business grows and you hire more employees, you need to make sure that you meet all the responsibilities and expectations of an employer. For more information on the health and safety laws that might apply to you, check the Canadian Centre for Occupational Health and Safety at https://www.ccohs.ca/.

If your business is located in Nunavut or the Northwest Territories, you must register with the Worker’s Safety and Compensation Commission (WSCC). The WSCC provides services to ensure the safety of workplaces across the North. On the website of the WSCC, you can find more information about their services, including reporting a workplace injury or registering for First Aid training. The information is also available in Inuktitut online. You can register with the WSCC here: http://www.wscc.nt.ca/employer-services/register-business.

Your employees are critical to the success of your business. You may think that your business space is safe because you are not doing anything dangerous, but accidents happen all the time. It is always better to be prepared and have a plan, whether your employees are cooking, sewing, driving or sitting all day at a computer. Having a safe workplace must be a priority for all business owners – make sure it is yours.

Every business has assets (possessions or property) and risks related to the operation of the business. Whether it is the truck you use to deliver goods, computers you use to run the business, inventory or the people that work in your business, there are always risks that can affect the ability of your business to function. What would happen if your truck broke down or your business had to shut down because of a fire? What would happen if you or one of your employees was sick for a long time? Being a good manager and careful employer can help reduce risks, but bad things can still happen to careful people. Protecting you and your business is a major priority and must be planned wisely.

To help address the risks that businesses face, there are a wide variety of insurance products available. Having an insurance policy means that if a specific kind of damage is done to your business, the insurance company will pay you an agreed upon amount of compensation. You pay for this insurance through monthly premiums (payments). Even if nothing happens you still pay the premiums each month. But, you have the security of knowing that if something bad does happen to your business, then the insurance company will pay the agreed upon amount.

The specific type of insurance you want depends on what you want to protect or have insured. A good way to find out what insurance you need is to talk to an accountant or other business owners about what kind of insurance they have or would recommend.  Keep in mind that some insurance can be tax deductible which can help offset the costs. Tax deductible means that you can take the cost of the insurance off from the business taxes that you have to pay to the government.

Another good option is to check with your local Chamber of Commerce. Each region in the North has a Chamber of Commerce that can provide a wide range of supports and benefits to businesses that join as members. These benefits can include cost-effective health, life and disability insurance tailored to small and mid-sized businesses. The Chamber can provide you with a good starting point in your search for the right insurance policy.

You can also talk to an insurance broker. Insurance brokers help you to identify what kind of insurance you need and what is the best insurance package for your budget. There are all sorts of insurances that you may be offered, and the trick is to know which ones you need, which ones you’d like and which ones you can afford. Balancing these three things is one of the challenges in determining which insurance is best for you.

Different insurance policies cover different things, have different ways of paying out and can have varying costs depending on what is covered in the policy. For example, a million-dollar life insurance policy for a 65-year old man who smokes will be much more expensive than one for a 22-year old man who has no health issues and doesn’t smoke.

The main types of insurance used by small businesses can be broken down into four categories: owners and key employees, property and earnings, liability, and health.

Owners and Key Employees

• Life insurance — If an owner or key employee dies it can severely disrupt your business and leave your family responsible for any debts that the business has. Life insurance pays out an agreed upon amount of money if the person covered by the policy dies. The money goes to a person identified in the policy as the beneficiary and it can be anyone – a family member or friend.
• Key person insurance — Sometimes a business has employees that are essential to its operation. If the person leaves or dies, the business can be impacted. Key person insurance protects your business against this loss.
• Disability and critical illness insurance – If someone becomes disabled or must leave work due to a critical illness, these insurance policies will provide money to help them. Disability insurance pays an amount of money for a set period of time due to an illness or injury that prevents working. Critical illness insurance usually pays out a sum of money upon diagnosis by a doctor of a critical illness that is covered under the policy.
• Key Man or Partnership insurance – If you have a business partner and they pass away, this kind of insurance provides you with money to purchase the partner’s share of the business. The money usually goes to the estate of the deceased partner.

Property and Earnings Insurance

Business need to protect their physical assets as well as their earnings. If a fire breaks out, it may take a while to do the repairs. Who pays for the repairs and compensates the business for loss of income?

• Property insurance — One of the most common types of insurance. This covers buildings and damages from fire, smoke, water leakage, etc.
• Vehicle insurance — This covers vehicles used by the business. If you use a vehicle for both personal and business use, you need to let the insurance company know. This may affect the premium you pay, but you don’t want to find out after an accident that you are not covered.
• Contents insurance — A lot of small businesses don’t own the building they operate out of nor do they have vehicles. Content insurance covers all the things contained within your business space – inventory, computers, furniture, even the coffee maker. If you don’t have this insurance, the building and contents could be damaged in a fire and you wouldn’t be compensated for your loss. For home-based businesses, you will need to talk to your insurance company to see if you need extra insurance to cover your business possessions.
• Business interruption insurance – This covers your business earnings if your business has to close due to damage to your business space or any other major disruptions.

Liability Insurance

Sometimes businesses can harm other businesses or people by making mistakes or by lack of proper care and precaution. The injured individual or organization may seek damages by suing the business for money to compensate for their injuries and damages. Liability insurance can help address this risk. There are three major kinds of liability insurance.

• General liability — A customer or employee may hurt themselves at your business slipping on ice or a wet floor. General liability insurance provides coverage for these kinds of injuries if they happen at the business location.
• Product liability — If a product you make doesn’t work correctly or hurts someone because of a flaw in the product, this insurance will cover this risk.
• Professional liability insurance — This is insurance used mostly by professionals such as doctors, accountants or engineers in case they make mistakes.

Health Insurance

Once your business has been operating smoothly for some time, you may wish to think about increasing the benefits to your employees. Plans like health insurance can be an important issue for employees, particularly those with children. Health care plans can be expensive but can be tailored to meet your company’s needs and budget.

Remember, nobody expects bad things to happen, but it is wise to plan for the possibility. Insurance is an essential tool in your small business toolbox and one that every businesswoman needs to consider carefully.

As a business owner, an important document to have is a budget for your business. A business budget is used to estimate and plan how much money you think your business will make and spend. Usually, a budget is done every month. When you’re first starting out, you might need to do some research in order to estimate your sales and costs. Over time, you will see that many costs are the same, or about the same, each month and you will be able to plan for them. You may also find that you sell around the same amount of your good/service each month or in certain months. This you will also be able to plan for in the future. A monthly business budget can help you make many decisions and may also be helpful in applying for a grant or a loan.

Revenue

Whether you make your budget on the computer or by hand, the first thing to start with is revenue. Make a list of all the sources of revenue you think you will receive that month. These sources might be sales of your product or service, cash that you have saved for your business, grants or loans. You don’t need to write down every sale you expect to have, but just think of the total amount you expect from each source of revenue. After you write them all down, add them up. This will show you how much money you expect to bring in to your business that month.

Expenses

Below your list of revenue, make a list of all the expenses you think you will have that month. Expenses are generally grouped into three categories: fixed, variable and irregular.

Fixed costs are the exact same amount every month. No matter how many items you sell, these expenses will always be the same amount (i.e. rent). You can easily plan for fixed costs because you know how much they will be in the future.

Variable costs change each month depending on how many goods or services you produce and sell. One example is materials and supplies; the more items you make, the higher will be your expense for materials and supplies.

Irregular costs don’t happen every month and most months you may not have any, but it’s still important to think about when these expenses might happen and plan for them. For example, if you pay for someone to do your accounting at the end of each year, then accounting expenses would be considered an irregular cost.

Depending on the type of business you own, expenses might be fixed, variable or irregular. Do some research if you aren’t sure; this way you can plan carefully each month. Then, add up all your expenses so you have a total amount of money that you expect to spend that month.

Total

At the bottom, take your total revenue and subtract your total expenses. The result is the amount of money you have made as profit that month. If the number is positive, you have profit, but if the number is negative, your business is losing money that month. Seeing all your revenue and expenses planned out can help you with your business decisions. If your business is losing money, you can plan which expenses you need to decrease or whether you need to increase your sales (maybe by raising your price). If your profit is large and you are making a lot more money than you are spending, you may plan to increase some of your expenses (such as your salary).

Try to make a business budget each month, estimating what you expect will happen. At the end of the month, you can fill in happened – the revenue you received and the expenses you had. It is very helpful to compare what actually happened to what you planned for; this will help you make your budget for the next month. If there is a big difference between your plans and reality, you should probably do some research to find out why.

Once you have gotten used to making a business budget for each month, you can also start making one for the year. To plan for expenses 12 months away, it will take a lot more time and research. It will be easy to figure out your fixed costs, but it may be difficult to plan for your sales and your variable and irregular costs. For some loans and grants, you may need to prepare a budget for a year to show all the money you expect to have coming in and out of your business. This is called a Cash Flow Projection; it’s very similar to a monthly budget but has a column for every month of the year.

If you are keeping a copy of all the invoices and receipts that you give to customers, then you will have a record of how much money you have received or are going to receive. This is your business revenue – all the money coming into your business. Just as important, you need to keep a record of all your business expenses – all the money going out of your business. You need to keep all the receipts that prove you bought goods and services for your business. It is a good idea to keep all these receipts organized by month in a file folder or accordion file, just like you should do for all the receipts and invoices that you make for customers.

Revenue 

You need to keep a record of all the money coming into your business. This includes the money that you make from sales and any money that you receive as a loan or a grant. Just like you keep copies of all invoices and receipts you give to your customers, also keep all documents that prove you have a loan or grant. For a loan, keep a copy of any contract that you sign; his contract is your record of how much money you owe, to whom and any other details about what the money can be used for or when it needs to be repaid. For a grant, make sure you keep a copy of the cheque and any documents that come with it.

Along with keeping your revenue invoices and receipts organized, you should also keep track of the amounts on a separate sheet. On the computer, or even by hand, make a sheet to record every receipt that you have. This way, you don’t have to dig around for receipts every time you want to add up your revenue. A simple revenue sheet will have three columns:

Expenses

Make sure you get a receipt every time you spend money for the business. If there is no description of what was purchased, write it on the back of the receipt. If they do not have a receipt to give you, write one out for them and have them sign it, this way you can prove that you paid. Just like for your revenue, make up the same sheet for your business expenses with the same columns. Always try to record your revenues and expenses as soon as you can!

With your separate tracking sheets for your business revenue and expenses, you can create a ‘record of transactions.’ This document combines all your revenue and expenses on one sheet, showing all the money coming in and out of your business as it happens. With the record of transactions it is very important that the transaction is recorded as soon as it happens. Tracking this can save you a lot of money in accounting fees, because you will have done the basic work. To create a record of transactions, you should use five columns:

Every time money comes in or leaves your business, write down the date, the invoice # if there is one, what was sold or purchased and whether it was revenue (money coming in) or an expense (money going out). Then use a calculator to find out how much money your business now has. For example, if you made a sale for $100, you would put $100 in your revenue column and add it to your balance. If you bought something for $100, you would put $100 in your expense column and subtract it from your balance. Your balance column shows the total amount of money you have in your business at that moment.

Bank Statements

You can ask your bank for a statement on all your account activity every month. This statement can be used to check against your record of transactions where you have recorded all your revenue and expenses. Your record of transactions and bank statement should match if you have been using your bank account properly and putting all your revenue in it. The bank statement will also have bank charges that you need to record in your record of transactions. Call the bank if there are things on your statement that you do not understand. Banks can make mistakes, too! Additionally, remember that if you wrote some cheques close to the date when the statement was printed, they might not appear on the statement.