Learning how to enter tax payments correctly into the accounting software is important says Edmonton bookkeeping. But there are several things that can make it tricky to learn.
By entering the tax payments correctly into their accounting software. Can help entrepreneurs have the most accurate and up-to-date financial statements. That will help them make more informed financial decisions.
In fact, since the second most common reason why entrepreneurs in Canada fail. Is because they run out of money in their business. Being able to make more informed financial decisions. Can help entrepreneurs avoid that challenge that many business owners face.
The reason why it is difficult for entrepreneurs to enter tax payments properly into their accounting software. Is because they are unaware of all of the different tax payable accounts that exist.
In fact, many entrepreneurs make the assumption that there is only one or two. And end up combing going all of the different taxes that they are paying.
When this happens, not only are they not keeping track of all of the taxes that they have page. And might overpay or underpay taxes.
But their accountant and their Edmonton bookkeeping company may have a more difficult time of calculating their financial year end in the next year. Or calculating how much in taxes they owe as well.
Therefore, business owners need to understand how many different tax payable accounts there are. So that they can be very specific in accounting for what taxes they have paid, and putting that in the right account.
The first thing that entrepreneurs need to know, is that there is going to be a federal and provincial tax payable accounts. No other province in Canada accounts for these taxes separately.
And all other provinces simply send all of their provincial and federal taxes to Canada revenue agency. Who calculates how much provincial tax they owe, and sends it to the provincial government on their behalf.
However, this is not the case in Alberta says Edmonton bookkeeping. And an entrepreneur must be calculating the provincial taxes that they owe and send those off to the provincial government. While keeping their federal taxes calculated separately. And sent off separately as well.
However, there is more than just to tax payable accounts. An entrepreneur must also have a separate tax payable account for GST. This might the fact that GST is a federal tax.
This tax must be accounted for separately in its own tax payable account. So that entrepreneurs can understand how much of their GST that they have paid, and how much they have left owing.
Finally, an entrepreneur will also need to understand that there is not going to be one payroll tax accountant. There is going to be separate payroll tax accountant for each of the various payroll taxes they are responsible for.
This means there is a payroll tax account for the employer portion of CPP as well as the employee portion of CPP. As well as the employer portion for EI, and the employee portion of EI.
Understanding that all of these taxes must be accounted for separately. Can help entrepreneurs avoid making critical errors on their bookkeeping.
Keep those books updated with our Edmonton Bookkeeping!
Learning how to enter payroll taxes into their accounting software is important for all business owners says Edmonton bookkeeping. This will help ensure that they understand how much in taxes they have paid and how much they owe.
But also, this will help ensure that they have the most accurate and up-to-date financial statements. So that when they use these financial statements to make informed decisions about their business finances.
They will be able to make the best an informed decision. And that can help them avoid spending money that they do not have. Or help them understand when they need to engage in some revenue-generating activities.
Many business owners make the mistake of thinking that they can look at their bank balance. In order to understand how much money they have in their business to use says Edmonton bookkeeping.
And this is not going to help them make more informed financial decisions. Because while the bank account will show them exactly how much money they have in their bank account at that moment.
It will not allow them to take into consideration any checks that have been written but not cleared the bank yet. Or any other electronic fund transfers that they have pending.
This in and of itself can cause entrepreneurs to and up spending more money than they have in their business. But also, looking at the bank balance alone. Will not tell an entrepreneur what their debt servicing currently is in their business.
By looking at their financial statements. Edmonton bookkeeping says entrepreneurs can understand not just how much money they have in their business.
But how much money they need to pay to meet their financial obligations. So that they do not end up making a decision that increases their debt servicing to point that they cannot manage.
When entrepreneurs are starting to enter taxes that they have paid into their accounting software. They need to not save it where their accounting software will want to default the amount to.
Their accounting software will typically want to default this amount into the business is payable account. Which is not where it belongs.
By putting it here, entrepreneurs could end up with incorrect financial statements. Or having the profit of their business impacted, by making it look like the tax payment is a payment of the business. When this is not the case at all.
Therefore, business owners need to understand that when their accounting software has anything default thing to a specific account. They should question whether it belongs in that account or not.
And if they are ever questioning their decision. They can call their Edmonton bookkeeping company to asked them if they are posting things to the right account or not.
Their accountant or bookkeeper will always be willing to answer questions on where a business owner should be posting payments. So that their job can be made quicker as well as easier. Because they are not fixing mistakes, that did not need to happen.