If entrepreneurs think that they do not need to hire Edmonton bookkeeping that they can just get away with using an accountant alone, they may be making poor financial decisions in their business that can negatively impact them. Since 50% of Canadian businesses fail, 29% of those failed businesses say that the reason why they failed was that they ran out of money. If business owners want to avoid this all too common fate they should hire bookkeepers in their business so that they can not only be more financially organized but so that they can get more regular financial information in their business that can help them make financial decisions more proactively.
Business owners who do not have Edmonton bookkeeping end up being disorganized. This is an all too common scenario that bookkeepers and accountants see: a business owner who is ready for their year-end brings in a giant box or bag of disorganized receipts, and expect to be able to file their financial year-end on time. This is very difficult for accountants as well as bookkeepers to deal with, and while both professionals will be able to do it, if accountants end up working on this for entrepreneurs, it will take them a lot longer, and be a lot more expensive. Bookkeepers are a lot more cost-effective, but they still will end up costing a business owner far more if they have to do it at one time rather than slowly over the entire year. By filing their year-end financial statements late, they end up getting penalties by Canada revenue agency
Another way that they can organize can help entrepreneurs is in Canada revenue agency sends out a letter with an audit request. Business owners only have 30 days from the date on the letter to respond to the audit request with the audited financial statements. If all they have the receive that audit letter is a bank of proceeds, there is no way that they are going to be able to respond to the audit request on time. Many entrepreneurs believe that if they do not respond to the audit request on time, but it somehow goes away, but unfortunately, this is not the case, Canada revenue agency ends up assessing whatever tax they feel is accurate to whatever businesses did not respond to the audit request on time. Since paying taxes is a huge burden for many businesses to bear, avoiding paying unnecessary taxes is extremely important.
By expecting their accountant to deal with organizing their year ends can end up costing an entrepreneur far more money. While the accountant will organize it, it will take them a long time, and also cost the business owner a large the, to do charge out the accountant’s rate in order to organize that information. By being proactive and calling Edmonton bookkeeping ahead of time, business owners may end up paying the same amount of time to organize their statements, but at a much lower rate.
Even though many entrepreneurs believe that Edmonton bookkeeping and accounting do the same things, they actually work on very different areas of business financing. While accountants take care of the finances from a higher viewpoint and work on the year ends, tax planning and business planning, accountants work more on the ground level with entrepreneurs, organizing the finances and creating interim financial statements that businesses can then use in order to make better financial decisions in their business. Since 50% of all Canadian businesses end up failing by their 5th year, 29% of those failed entrepreneurs say that the reason why they failed is that the ran out of money in their business. That is a huge statistic of businesses that failed because they were not able to make better financial decisions. I hired a bookkeeper and being more organized financially can help many entrepreneurs beat the odds and stand business longer.
It is not only important for business owners to get interim financial statements from Edmonton bookkeeping, but they also need to be able to understand and read them. Entrepreneurs should know that the balance sheet and income statements together with work hand-in-hand in order to paint a picture of what the finances are in business. The balance sheet shows the current financial position of the business and the income statement shows what money the corporation is making. The information that business owners can plan on seeing on their balance sheets are cash, Accounts Receivable, Accounts Payable as well as assets. The information that is on the income statement is revenue which appears at the top, the cost of goods sold, expenses and the profit of the business.
When an entrepreneur can easily understand the finances of their business, they can make better financial decisions overall. This is especially important to know when the business owner wants to know how much money they can take out of their business. They should get the hang of doing this before they hire on employees, and have to be responsible for being able to pay for the well-being of other people. When business owners get into the habit of revealing the amount of revenue that their business made and seeing if there is going to be a shortfall, they can be proactive and what they are going to do to increase the revenue so that they can end up meeting all of their financial commitments that they need to.
Another thing that utilizing Edmonton bookkeeping in order to stay on top of the financials of the business can help is through making other day-to-day financial decisions such as buying assets, hiring people, laying people off, or judging how effective their advertising and marketing has been. By being able to review their interim financial statements, and then adjusting what they are doing accordingly, business owners can be proactive in their business and avoid running out of money by not making purchases that they need to, or by increasing revenue-generating activities when needed.