Having a great financial team in the business is extremely important to entrepreneurs, including their accountant and Edmonton bookkeeping company. Since half of all entrepreneurs fail before being in business for five years, and 11% of entrepreneurs ever seek help when they need it. Having a great financial team in their business, entrepreneurs can ensure that they are making the best financial decisions in their business, not only to avoid financial problems but proactively grow their business and become successful. Therefore, business owners need to take care when hiring not just their accountant, but when hiring their bookkeeper as well. Great bookkeeping can significantly benefit entrepreneurs, but if they hire a bookkeeper who is not experienced, it could end up with extremely disorganized and incorrect financial information in their business.
Business owners should ensure that there Edmonton bookkeeping company has basic knowledge of some of the more important business finances. For example, they should have good knowledge about taxes in a business so that they can help an entrepreneur pay the right amount of taxes, and pay on time. For example, it is not just enough that a bookkeeper needs to know that they need to deduct payroll taxes from staff, but they need to know how much of what taxes to withhold, and then when to remit them. Payroll taxes have significant penalties if they are paid too little, or not on time. Since there so many different taxes that entrepreneurs pay, hiring a bookkeeper that is at least aware of all of the taxes, how to calculate them and went to pay them is important.
It is also important that entrepreneurs are comfortable that there Edmonton bookkeeping company is familiar with shareholder loan accounts. This is extremely important because if an entrepreneur pays company expenses out of pockets, the business owes them, but if they take money out of their business then they owe the company. At the end of the year, their accountant is going to figure out all the taxes that they owe on money that they have taken out of their business. The bookkeeper has been improperly attributing is in his expenses to the shareholder loan account, then business owners can end up paying significantly more taxes than they might otherwise. Since the personal tax rate in Alberta tops out at 48%, and the corporate tax rate is only 11%, this can add up very quickly. It is also important to note that it is difficult for an accountant to trying cleanness account up after the fact, is that ensuring that the information is kept very organized from the beginning is very important.
The next thing that entrepreneurs need to keep in mind when hiring a bookkeeper for their business, is hiring when that can support a business during an audit. Not only does this mean the Edmonton bookkeeping company needs to keep very organized, but they also need to stay very organized and by going through the audit process, they have a good idea of the information that CRA will need so they are able to keep their books in that order from the beginning.
When a business owner is looking to hire an Edmonton bookkeeping company in their business, they need to understand that the best professional that they can hire will be worth the money that they pay. The reason for that is because a great bookkeeper will allow an entrepreneur to stay organized, and have a great bank reconciliation in order to make the best financial decisions possible. And a poor bookkeeper will create a financial mess, one that causes entrepreneurs to make poor financial decisions, and can be very expensive to clean up. Red Adair specialized in extinguishing and capping oil well fires and he said this about hiring the right professional for a job, “if you think it is expensive to hire a professional to do the job, wait until you hire an amateur.” Hiring the best bookkeeper possible, can help business owners have the best information and grow their business, and avoid errors.
One of the most important things for business owners to know when they are hiring an Edmonton bookkeeping company is to find one that has knowledge about accrual accounting. This is the type of books that need to be kept when an entrepreneur provides a product or service but then gets paid at a later date. Restaurants are not accrual businesses, because they provide food and expect to get paid right away. With that kind of bookkeeping, there is a lower chance of air, because the person pays for the product or service immediately. In accrual accounting, there is a higher chance of errors, because the invoice is entered when the purchases made, but then there are several days or even weeks that go by before that payment is received. There could be errors with entering the invoice amount, knowing what happens when the amount received does not match the invoice, applying interest to late payers. It is very important that whichever bookkeeper works for a business is familiar with the type of accounting that happens in that business.
The next thing that is very important for Edmonton bookkeeping companies to be familiar with is doing proper bank reconciliations. Bank reconciliations can be easy, which makes them very easy to do improperly or sloppily. A great bookkeeper is going to be able to do a great bank reconciliation that is going to help an entrepreneur know how much money they have in their business to use. A well-done bank reconciliation will allow the business owner to match the number of transactions that happened in their business against the transactions that their bank has recognized to date. The be able to keep track of the transactions that have yet to come out of their bank, giving them a clear idea of how much money they have in their business to use and spend. For example, if a business owner wrote five thousand dollars worth of checks two days ago, and they have not cleared the bank yet when a business owner sees that they have six thousand dollars in their bank account the bank reconciliation will help them understand that they only have one thousand dollars to spend instead of six.