Without truly understanding the importance of Edmonton bookkeeping, entrepreneurs may either put it off, thinking that they can save money by doing it themselves, or by not hiring a bookkeeper to help them. If entrepreneurs do this in their business, they put their business at risk of running out of money. A very surprising statistic from industry Canada says half of all Canadian businesses fail, and out of those failed entrepreneurs, 29% of them said that the reason why their business was unsuccessful was that they ran out of money. If entrepreneurs can ensure that they have up-to-date books, they can use those current interim financial statements to guide their business decisions. By doing this, business owners can increase their chances of avoiding that reason for business failure.
Regardless of who ends up carrying for the books of the business, entrepreneurs should get into the habit early on of being extremely organized financially. This means ensuring that they only have one business bank account and one business credit card. Many entrepreneurs think that having multiple bank accounts can help them stay organized, or that multiple credit cards can help extend their credit. But all these things do, is make it more difficult for Edmonton bookkeeping to keep accurate financial records. Instead of one bank account and one credit card with transactions to keep sorted, entrepreneurs end up having to sort through multiple bank accounts and multiple credit card statements and multiple purchases.
Another way for entrepreneurs to ensure that there organized is to completely avoid using their personal bank account for business. If this is unavoidable, occasionally entrepreneurs can get away with it, and have Edmonton bookkeeping attribute those expenses made on their personal account to their shareholder loan. However, on a regular basis, it is much easier and much simpler for entrepreneurs to never run business expenses through their personal bank account. Avoiding this will allow Edmonton bookkeeping to not have to go through both bank statements with a fine tooth comb questioning every single expense.
Once a business owner have their bank accounts and credit cards all sorted, they also needs to ensure that they are keeping a record of all their purchases and why each of the purchases was made. To some entrepreneurs, this means keeping organized receipts, and while the bookkeeper does not need to see the receipts as long as they have a copy of all of the transactions from their bank account with notes, business owners need to understand that they do need to keep their receipts. If Canada revenue agency sends them an audit request which is possible for up to seven years after the fact, that business owners need to be able to present those receipts.
By allowing their business finances to stay very organized, whether they are doing it themselves, or hiring Edmonton bookkeeping, entrepreneurs can be certain that this organization can help make the bookkeeping in their business easy, which allows for up-to-date and accurate financial statements.
Entrepreneurs should get into the habit early on in their business ownership to make Edmonton bookkeeping a priority in their business. Whether they are doing it themselves or hiring someone business owners to need to put it into the schedule of their business to set aside time to organize all of their statements and receipts, and if they’re hiring a bookkeeper, to send those financial statements off to their bookkeeper on a regular basis. Entrepreneurs should understand that if they do not set aside time to do that, there is a high chance that it is not going to happen.
In addition to setting aside time to send off their financial information to their Edmonton bookkeeping service, entrepreneurs also need to set aside time devoted to talking to their bookkeeper. It is extremely important that entrepreneurs find a service that will allow them to have these regular phone calls because this is an opportunity for business owners to ask questions about the statements and find out what each of the reports means and how they can use them to make business decisions in their business. This conversation can allow entrepreneurs to help their bookkeeper fix errors, to get clarification and discuss any information is missing. The more often an entrepreneur is able to have this conversation with their bookkeeper, means the less time consuming it is eventually going to be. If entrepreneurs want to be able to completely understand their interim financial statements, they should ensure that they are setting aside this time in their calendar to speak to their bookkeeper.
When it comes to understanding their financial statements, business owners need to understand that they should look at their balance sheet first because there may be obvious errors that they can find on their financial statements that are less obvious on their income statement. Once they have understood their balance sheet, Edmonton bookkeeping says entrepreneurs can then move onto the income statement. If entrepreneurs are only using the income statement to make financial decisions, they could be missing important information. However, the reason why entrepreneurs often only use the income statement is that it is much easier to read. Therefore, entrepreneurs should ensure that they are speaking to their bookkeeper on a regular basis to understand those financial statements completely, so that they can help themselves understand the information so that they can use it better.
When looking at their income statement, business owners should see that the revenue is at the top, it will also include the cost of goods sold, and have the expenses. Business owners should understand that the expenses should be listed in numerically descending order, so that the most expensive items at the top the list. If business owners want to minimize expenses in their business, all they have to do is spend time minimizing the top half of the list.
By hiring Edmonton bookkeeping in their business, business owners can ensure that there always have the most up-to-date financial information in their business, and that they do not have to end up worrying about doing it themselves, and then they can spend as much time in their business as they can growing it and marketing it.