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When entrepreneurs get the interim financial statements from their Edmonton bookkeeping company, they need to be able to read those statements properly and use the information in them to make financial decisions in their business. The reason that entrepreneurs are running out of money in their businesses, is because they either do not know how to read these interim financial statements, or they are using the income statement alone to make those decisions. However, business owners should understand that they not only need to read their income statement but they also need to read their balance sheet and read the balance sheet first. By using both interim financial statements, they paint a complete tour of the financial health of the business. Running how to read the balance sheet is extremely important for entrepreneurs to do so that they can make the best business decisions possible.

Business owners should understand what the balance sheet is. And the balance sheet gives business owners an overview of what a corporation has in the business and put the corporation over there in the business. When listing all of the assets and liabilities in the balance sheet, entrepreneurs should know what counts as an asset as well as what counts as a liability so that they can fully account for that in their corporation. When listing the assets, entrepreneurs should be sure that they are listing only things that count is an asset and that is being used in the corporation. On the balance sheet, Edmonton bookkeeping says that anything that should be listed as an asset would be anything over a thousand dollars that has a useful life of one year or more. For example, things that should be listed as assets include the building that the entrepreneur owns and operates the business out of, vehicles, equipment in the business including computers, furniture, and fixtures.

When listing the liabilities on the balance sheet, entrepreneurs should also ensure that they are listing things correctly. This includes corporate credit cards, invoices from vendors and bills. In addition to that, payroll and source deductions count is liabilities in the corporation as long as the entrepreneur has employees. Edmonton bookkeeping says that entrepreneurs often believe that their personal credit card can be listed on the balance sheet. While it is frowned upon for business owners to co-mingle personal and business accounts, if for some reason that entrepreneur has used their personal credit card for corporate offices, instead of listing it on the balance sheet, business owners should take that money out of the shareholder’s loan account instead. By keeping this completely separate, business owners can take a clear picture of their balance sheet and what the corporation is owed and what the corporation over others to get a clear understanding of the business finances.

By understanding the balance sheet of the business, Edmonton bookkeeping says that entrepreneurs will be able to use that information alongside the income statement of the business in order to get a clear picture of the finances of the business and that will allow them to make great business decisions.

Being able to be financially literate on the interim financial statements should be considered an extremely important priority according to Edmonton bookkeeping. Because if a business owner does not know the financial state of their business how can they expect to grow their business and succeed? By being able to read the balance sheet alongside the income statement can help entrepreneurs understand financially what is going on in their corporation so that they can make the best financial decisions possible. Since 50% of all entrepreneurs fail within five years, and 29% of those entrepreneurs say the reason why they fail is that they ran out of money in their business, this is really business owners can avoid that.

When business owners look at their balance sheet, they should see that it is listed and numerically descending order, with their assets on the top, but also with all of the amounts that they owe listed so that when entrepreneurs need to reduce expenses in their corporation, all they have to do is look at the top half of their expenses. It will generally find that what is listed at the top of their balance sheet includes things like rent of their office space and administration salary. The information is other than liabilities that are on the balance sheet the assets, but the corporation’s others, what others all the corporation and the equity that exists in the business.

What questions that Edmonton bookkeeping says that entrepreneurs typically have about their balance sheet is what is the equity. The equity is listed at the very end of the balance sheet and includes all of the things that the business owner has taken out of their corporation. This includes shares, dividends paid to entrepreneurs, anything that the owner has taken out of the corporation, for example, shareholder loans. This is important to know so that an entrepreneur knows everything that has come out of their business in the ways that they have profited.

Edmonton bookkeeping says that entrepreneurs also want to know what should be considered liabilities on their balance sheet. Ultimately this is everything that an entrepreneur owes in their corporation including credit cards that they are in the middle of paying off, and he payroll deductions such as withheld taxes from staff and anything that is over within the fiscal year.

When entrepreneurs are able to understand the information that exists on the balance sheet, they will really able to use that information and then read their income statement together in order to get a clear understanding of where the business is that financially. Any time an entrepreneur needs to make a financial decision in their business, they should be consulting these interim financial statements, to gain an understanding of if they have the money in their corporation to be able to make that decision.