Industry Canada says that 50% of all entrepreneurs fail in their business by their fifth year, and entrepreneurs can help themselves avoid this fate simply by hiring Edmonton bookkeeping to work on their books in their business. The reason for this is because 29% of those failed entrepreneurs say that the reason why their business failed was that they ran out of money. If entrepreneurs get help with keeping their books, they will be able to have up-to-date financial statements in their business, which can help them make better financial decisions in their business.
Why having up-to-date financial statements helps entrepreneurs make better business decisions, is because those interim financial statements including balance sheets and income statements are going to be able to show entrepreneurs information in their business like how much money they actually have in their business, there revenue and profits, as well as their expenses. Before they make any purchases in their business, they should check to ensure they have the money to do so. They can also use those statements in order to act in their business proactively if they are seeing that their revenue is declining, they can engage in marketing activities, if their expenses are starting to creep up they can use those income statements to help minimize costs. If entrepreneurs are utilizing these tools in their business, they can be much more proactive in ensuring that their business will not run out of money.
In order to help stay organized for Edmonton bookkeeping to do their books properly, business owners need to understand that they should have one bank account for their business. By using this one bank account for all operating expenses, business owners can ensure that their bookkeeper is only having to look at transactions in one bank account. Many entrepreneurs think it is beneficial to have several bank accounts for all of the various purposes or cash disbursements they may have, and this actually is not any easier. Instead of keeping track of many transactions in one account, that will force a bookkeeper to have to sort through many transactions in many accounts. Business owners should also ensure that they only have one credit card for the same reason.
By keeping all of their receipts organized with notes on what was purchased and why, as well as bank statements and credit card statements, this is the information that business owners need to keep organized on a regular basis in order to give to their bookkeeper. By having that information sent off to their bookkeeper on a regular basis, entrepreneurs can be sure that they are giving them the information they need to be able to have up-to-date financial statements for their business. Entrepreneurs should put this in their calendar, to send that information off to Edmonton bookkeeping on a regular basis, so that they can avoid running out of time and not getting it done. Entrepreneurs know that whatever is scheduled in their calendar happens, so business owners need to make this a priority in their business.
By ensuring that business owners are working with Edmonton bookkeeping, they can focus on the business building activities they need to grow their business, without worrying that when they are done they have to then spend additional time working on their books. Often, entrepreneurs start their business with the best of intentions thinking that they will be able to do their own bookkeeping, however, if business owners do not make time for it on a regular basis, they are doing their business a disservice. The reason for that is because when business owners do not have up-to-date bookkeeping, they will not have up-to-date financial statements in their business that can help them make better financial decisions.
The reason why having up-to-date financial statements is so important to entrepreneurs, is because those reports will be able to help entrepreneurs run their business. Before they disperse any payments or make any purchases, a quick review of their balance sheet and income statement can show an entrepreneur if they have the money to do so. If they do not, they can create more revenue, or engage in some Accounts Receivable to bring the money in. If a business owner wants to make an asset purchase, but they discover through their balance sheets that they do not have the finances to do so, they can come up with a plan on how to generate the income needed to make that purchase. Not only can help entrepreneurs make purchases and payments, but it can also help entrepreneurs see if they are still having the same profit margin that they expect, and if not what can they do about it. They can always engage in some revenue-generating activities as well as minimizing expenses in order to ensure that they are generating the profit that they expect.
Because it is so important for business owners to have those statements any time they disperse cash for making payments, business owners often wonder how often they should be getting interim financial statements from Edmonton bookkeeping. While many bookkeepers think that once a month is adequate, business owners should actually find a bookkeeping service that allows them to get their statements every two weeks. This is mostly because entrepreneurs often pay their staff every two weeks, and so that is a good opportunity for business owners to get into the habit of reviewing those statements before they run payroll. If they’re looking at their books only once a month, too much can happen in that month that can cause the financial statements to be inaccurate towards the end of the month, making it a less valuable tool in managing finances.
By staying organized with their Edmonton bookkeeping, business owners can have the tools at their disposal to make great business decisions. If they get into the habit of doing this early in their business ownership, they will be able to avoid the reason that causes so many other entrepreneurs to fail.