If business owners do not understand exactly why they need Edmonton bookkeeping, they may choose to only hire an accountant as a cost-saving measure. This would be a huge mistake, because not only do entrepreneurs need accountants in order to look at their finances from a very high view, that business owners also need bookkeeper’s, because they do just the opposite, get into the details of the day-to-day finances of the business, so that they can stay organized and make better financial decisions in their business. Statistic from Industry Canada says that half of all Canadian entrepreneurs fail by their 5th year in business, and out of those failed entrepreneurs, 29% of them said that they were not able to succeed because they ran out of money in their business. Part of the great financial team for businesses is to utilize both the bookkeeper and be accountant together so that business owners can make the best decisions possible.
Being disorganized in business can cause a whole host of problems for entrepreneurs starting with filing their year ends meet. Imagine this scenario, an entrepreneur taking a giant box of organized receipts to their accountant or Edmonton bookkeeping. The accountant then has the unenviable task of organizing all of those receipts. Because this is the accountant’s busiest time of the year, they are not able to do it efficiently, and the business owner has to file late. When they file their taxes late, they get triggered penalties from the Canada revenue agency. Business owners who are trying to avoid running out of money in their business should definitely avoid getting penalties for not being able to file their taxes on time because their financial information was not organized.
Another reason why business owners should have their finances more organized is that if they are not organized and CRA sends them all an audit request in the mail, business owners will only have 30 days from the date on the letter to respond to the audit request with completed audits. Entrepreneurs do not have organized finances and just have that disorganized box or bag of receipts for their accountant or Edmonton bookkeeper, they will not be able to respond to the audit request and time and if they do, it will be because their accountant charged him with an extremely high fee in order to do it on time. If entrepreneurs do not respond to the audit request on time, CRA will assess them whatever tax they think is appropriate. This could end up being far more taxes than they actually owe, but that does not matter to CRA they will make their assessment and business owners will have to pay it.
By being disorganized in their finances, entrepreneurs will pay far more than they should, get penalties triggered by CRA, and perhaps be assessed higher taxes for not responding to their audit request on time. These are all extremely important reasons that business owners should hire Edmonton bookkeeping to help them stay organized in their business finances.
If entrepreneurs are trying to save themselves money by only hiring Edmonton bookkeeping or an accountant, they should understand that while both professions work on the finances of the business, what is they do are actually entirely different. An accountant works on the year-end financials of the business, ensuring that they file on time, as well as doing important business and tax planning for entrepreneurs so that they know how much money they can take out of their business to avoid paying taxes, and they have a plan in place on how to grow their business, meanwhile, bookkeepers help entrepreneurs stay organized in their business, by organizing the day-to-day finances of the business including all of the invoices they receive, and receipts that they have made payments in their business, they organize all this financial information and create interim financial statements that business owners can read and use in order to make better financial decisions in their business.
Often, business owners need to make financial decisions in their business a lot more often than once a year. If entrepreneurs are waiting until year-end in order to review their financial statements of the business, that is too long. Business owners do not usually see the financial statements from their year-end until six months after the fiscal year-end of their corporation, and by the time they see those financial statements, the information in them is up to a year to year and half old. That does not help entrepreneurs make very good financial decisions. If they are getting their interim financial statements from Edmonton bookkeeping, they will be able to see what is going on in their business more up-to-date that can help them make decisions.
Another benefit to using Edmonton bookkeeping is with they wait until there fiscal year-end in order to organize their receipts, there is a greater chance that receipts will be completely lost, or information about them is missing in a business owner is not able to remember what those receipts were about now that it is a year later. By using a bookkeeper, and organizing the receipts on a regular monthly basis, can help businesses not lose important receipts as well as remember what each of the receipts they had in each month was about.
Once business owners are getting accurate interim financial statements, they can use the information to gauge the financial health of their business and understand if they are running out of money and they need to increase their advertising or marketing, or if they have enough money in order to pay themselves or by assets for example. This type of proactivity when it comes to finances can help entrepreneurs be successful in business because 50% of all Canadian businesses fail within 5 years, and out of those failed entrepreneurs, 29 percent of them said that the reason why they failed was that they ran out of money. Making better financial decisions can help entrepreneurs not run out of money, and succeed.