Know Your Compliance Quotient (“CQ”)
Understanding who you are – and being honest with yourself about your characteristic strengths and weaknesses – is important in life and in business. Over the years I’ve worked with entrepreneurs who were extremely well organized and self-disciplined, and who maintained fastidious records.
I’ve also had clients with very high turnover in the accounting department, abysmal financial records and yet managed to be very successful and profitable.
Along the way I’ve come to believe that certain individuals have a high tolerance and capacity for detail – while others rely more on a kind of ‘gestalt’ overview to keep things in perspective. Those with a higher capacity for detail have what I would call a ‘higher compliance quotient’ – a high “CQ” if you like. These individuals are better suited to running companies that are subject to a lot of scrutiny – for example public companies.
High tech startups in Canada typically receive a great deal of funding from our generous tax incentives for R&D. Maximizing benefits under the scientific research and experimental development program (called “SR&ED” or SHRED) generally requires putting development staff on salary and documenting the development activities.
This is not for the faint of heart – or more accurately it isn’t for those with a low CQ. Payroll must be paid on pay day – you can’t put off employees the way can contractors. You should be aware that the Canada Revenue Agency isn’t particularly tolerant of late payroll remittances.
If you are equipped with a low CQ – recognize it and delegate compliance functions to someone more suited to compliance work. In some cases that may mean dealing with an outsourced payroll service.
At home my wife and I buy everything we can on our credit cards, in order to maximize our travel points. However if we miss the payment date, these credit cards have high interest rates, so they need to be paid on time. Left to me we wouldn’t be able to manage accurately enough, since I’m more focused on my clients’ needs and meeting their deadlines than on my own.
On the other hand my wife is blessed with a very high CQ. Over the years we’ve learned to delegate managing credit card debt to my wife. The downside is that I can’t buy anything without her knowing about it….