When business owners use Edmonton bookkeeping, they are better able to keep their finances in order, which can help them greatly. When business owners are new in business, they often want to save money, and they think accountants and bookkeepers are virtually the same thing, so they opt to only hire an accountant. This would be a huge mistake especially because of the industry Canada statistic that says half of all Canadian entrepreneurs fail in business before they are in business for 5 years, and 29% of those failed entrepreneurs say that the reason why they fail is because they ran out of money. The hiring a great bookkeeper in their business, business owners can stay organized, which can help them when they want to file their taxes, as well as have current financial information throughout the year in order to make fiscal decisions.
By hiring Edmonton bookkeeping, business owners can never be afraid of filing their taxes late. The reason for this is because a bookkeeper will keep their finances organized on a month-to-month basis. When entrepreneurs go to their accountant, with 12 completed statements, it takes the accountant far less time in order to file their fiscal year-end. Since bookkeepers have a charge out rate less than accountants, business owners can save money, by having their bookkeeper look after their finances through the year, and also save money when their accountant does not have to sort through all of their receipts at year-end. When business owners file late, they often get penalties from Canada revenue agency, and they can avoid that simply by filing on time, which is more possible when utilizing a bookkeeper.
Another reason that hiring Edmonton bookkeeping can help business owners, is in case the Canada revenue agency sends a business owner an audit request through the mail. Business owners typically only have 30 days from the date written on the letter to response. By the time they get it in the mail, that date is a few more days closer. If a business owner has organized receipts and monthly financials, chances are very high that an accountant will be able to give a business owner audited financial statements within that 30 day time period. If a business owner is disorganized, if they get an audit request, they may not be able to get their accountant to prepare audited financial statements within 30 days. If an entrepreneur does not respond to Canada revenue agency’s audit request, that usually means they will be assessed whenever taxes Canada revenue agency deems appropriate.
By being organized with their finances in business, business owners can file on time and avoid late penalties, they can also respond faster to an audit request which means they will not get assessed with additional taxes. It is great business sense that business owners are always on top of their finances, in order to eliminate having to pay additional taxes or late penalties alone.
A disservice that many entrepreneurs due to their business without even knowing it is thinking that Edmonton bookkeeping and accounting is the same thing, and only hiring an accountant for their business. The reason why this is such a mistake is because while accountants and bookkeepers both work on the finances of the business, accountants primarily do fiscal year-end financial statements, tax planning, and business planning, while bookkeepers are tasked with the month-to-month finances of the business giving business owners interim income statements and interim balance sheets that can help an entrepreneur stay on track financially through their year. Since half of all entrepreneurs in Canada end up failing before their 5th year in business, and 29% of those failed entrepreneurs say that the reason why they failed is because they ran out of money, staying on top of their business finances can ensure that an entrepreneur is more ready to make better financial decisions by hiring a bookkeeper.
One of the reasons why hiring Edmonton Bookkeeping can help entrepreneurs have better financials is because if a business owner is only waiting to do their year-end review with their accountant, there could be inaccuracies in their finances. It is hard for business owners to remember what each receipt is for a year later, and there is a higher degree of probability that a business owner has lost receipts in the meantime. By hiring a bookkeeper to stay on top of the finances month-to-month, business owners will have a higher chance of remembering which receipt is which and be less likely to lose them since it is only one month at a time. By having more up-to-date finances, a business owner is better able to make financial decisions.
Another way that hiring Edmonton bookkeeping helps business owners be more organized in their business in order to make better financial decisions, is because they will be able to see interim financial statements such as income statements and balance sheets. By learning how to read these 2 statements on a monthly basis, business owners will have a better idea about the cash in their business, their Accounts Receivable, Accounts Payable, their assets, as well as the revenue in their business, the cost of goods sold, their expenses and their profit. By understanding the finances of their business, business owners can make better financial decisions such as is there marketing efforts working? If yes they will see of the rise in their revenue. If not, they may not see the revenue go up at all. If it is working, business owners can decide to continue doing more of it, or at least keep up the activities that are working. If an entrepreneur needs to buy an asset or hire people, they will be able to look at the revenue in their business and determine if they’re able to afford it or not. By not consulting their finances when they make these decisions, business owners can bring a serious risk of running out of money in their business. If they cannot afford to make the asset purchase and they do so anyway, it could have them running out of money which could cause them to have to close their business down.