Industry Canada says that 50% of all business owners fail in business before their fifth year if entrepreneurs can hire Edmonton bookkeeping, they can avoid some of the reasons why businesses in Canada fail. The reason for that is because 29% of all entrepreneurs run out of cash in their business and say that is the reason why their business fails. By utilizing bookkeeping services, entrepreneurs can ensure that their finances are kept organized and that they have great interim financial statements that they can utilize in order to help them make better financial decisions for their business.
There is many tips that entrepreneurs can use whether they do their own bookkeeping, or hire Edmonton bookkeeping to work for them. The first tip that is highly recommended, is business owners should be organized. Being organized makes bookkeeping easier because receipts can be kept in order, and business owners if there prudent can have notes on what each receipt was for. It is also very important that entrepreneurs keep their bank statements for each month as well as their credit card statements with the receipts. When they send the information off to their bookkeeper, this level of organization can ensure that entrepreneurs end up with as accurate financial statements as possible, and the bookkeeper has an easy time working on the files.
The second recommendation for entrepreneurs is to ensure that they have set aside time to regularly speak to their bookkeeper. This is best done once they receive those interim financial statements, and this time allows entrepreneurs to ask their bookkeeper about the statements, fix any errors or discuss any anomalies that, in the financial statements. It is recommended that not only should entrepreneurs have this time, but they do so over the phone as trying to have a conversation through text or email can be time-consuming and frustrating for all involved.
Many entrepreneurs are not sure how often bookkeeping should be done, that a great recommendation is to have it done every two weeks, especially for business owners that pay their staff biweekly. Ensuring that they get Edmonton bookkeeping done before they ran payroll is a good way to ensure that they have money in their business to cover the disbursement of funds. If entrepreneurs get into the habit of reviewing their finances before they spend any money, they can ensure that they will avoid running out of money in their business.
When it comes to keeping their money organized, Edmonton bookkeeping recommends that business owners only have one business bank account for operating expenses, and only have one credit card. This way, the finances can stay simple, which helps bookkeepers ensure that they are creating accurate financial statements.
By being organized, business owners can spend minimal amount of time on their bookkeeping, which can allow them to not only spend their time building their business, but also ensure that they have time to spend with their family because they are not trying to organize their finances.
The problem that many entrepreneurs have, is that they do not keep their finances organized, which makes it difficult for Edmonton bookkeeping to keep their financial statements accurate, and done on time. There are several things that entrepreneurs can do to ensure that they are staying organized so that they can have up-to-date and accurate interim financial statements.
One of the first things that entrepreneurs often wonder when it comes to keeping their finances in order do they need to keep all of their receipts. While Edmonton bookkeeping does not need to see those receipts, as long as they are getting up-to-date bank statements, business owners need to keep in mind that they do need to keep all of their receipts in case Canada revenue agency sends them an audit request. CRA may request receipts up to seven years, so while their bookkeeper might not need to see them, business owners should ensure that they are keeping them organized.
Another question that many entrepreneurs have when they are new in business, is if they need to have several bank accounts. Some entrepreneurs think that it helps them stay very organized to have a different bank account for every one of their expenditures. For example one for GST, one for federal taxes, and one for provincial taxes. This might seem very organized to entrepreneurs, that for Edmonton bookkeeping, this actually adds a layer of difficulty as they have to keep multiple business bank accounts and multiple transactions straight. If they instead, use one bank account for everything, and detail all of the various expenses, it is a lot easier for business owners and bookkeepers alike to stay organized.
When entrepreneurs are looking at the interim financial statements that their bookkeeper gives them, they should see that their balance sheet has the expenses listed in numerically descending order. This organization is extremely important so that if entrepreneurs need to minimize expenses in their business, they can see very easily in clear that the top half of their balance sheet should have all of the highest expenses that the business has. Typical expenses that appear at the top will be a rent as well as administrative salaries. By spending their time minimizing expenses at the top of the list, and not on the expenses at the bottom of the list, entrepreneurs are able to maximize their time and have the greatest effect on their bottom line in the least amount of time.
Staying organized financially is extremely important for entrepreneurs as well as their bookkeepers so that they can have up-to-date and accurate financial statements. By having these financial statements, business owners can use them in order to make better financial decisions in their business, such as purchasing assets, paying themselves or staff, and if they need to increase the revenue or minimize expenses. By utilizing financial statements in their business this way, entrepreneurs can ensure that they are proactive in avoiding one of the most common reasons why Canadian businesses fail.