There are many different things that entrepreneurs should learn when it comes to entering information into their accounting software accurately says Edmonton bookkeeping. And because there are so many pieces of information they should learn.

They should feel free to contact their Edmonton bookkeeping company in order to get the answer they need. To ensure that they are entering the information accurately. This will help ensure that at the end of the year, their accountant will not have to fix a wide variety of mistakes.

But also, if an entrepreneur is entering information into their accounting software correctly. Their financial statements will also be accurate. Which will help them make more informed and better financial decisions in their business.

One of the first questions that entrepreneurs have for Edmonton bookkeeping is due payments to the payable accounts get reflected on their profit and loss statement?

The answer to this question is no and for good reason. Tax payments and taxes in general are not an expense of the business. And therefore it should not get listed on their profit and loss statement.

The profit and loss statement is reserved for calculating all of the invoices that an entrepreneur has generated in their business. And how much money it costs them to generate those sales. Both in direct and indirect costs.

If an entrepreneur ends up with putting taxes into their profit and loss statement. It would make it look like they had even more of a loss in their business then they should. Especially if they decided to pay a large amount of tax in one month instead of another.

The next question that entrepreneurs often have is at what point in the year are the taxes actually calculated and posted?

For most small businesses throughout Canada. The answer to this question is at the end of the year, when their accountant completes their corporate year-end.

At their corporate year-end, their accountant will do their entire year-end and calculate how much taxes they owe. And compared to how much taxes on entrepreneur has prepaid. And then book that expense into the tax expense account.

The sooner that an entrepreneur understands that expense accounts will only be entered into their accounting software once, and by their accountant. The sooner they will be able to understand why they do not need to post anything to this account.

And finally, entrepreneurs often want to know if payroll taxes get posted to separate accounts? This is an important question to know the answer to. Simply because his owners know that there are a wide variety of taxes on their payroll that must get paid.

And ultimately, the answer is yes. Entrepreneurs do need to ensure that they are creating a separate tax payable account for each of the payroll taxes that they owe.

This includes income tax, the employer CPP, the employee CPP, the employer EI and the employee EI. This equals five different payroll tax accounts. And an entrepreneur must take care in ensuring they are entering each one correctly at all times.

It is very important that entrepreneurs keep all of these tax accounts separate. And that they understand what to do when entering taxes into their accounting software. To ensure that they are minimizing errors.

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When business owners are learning how to enter information into their accounting software, Edmonton bookkeeping says they often make mistakes that are avoidable. And while there is a sharp learning curve. The sooner they understand the mistakes that they can avoid. The more accurate their financial statements will be.

Therefore, here are the most frequently asked questions that Edmonton bookkeeping gets. When entrepreneurs are learning how to enter tax payments into their accounting software.

The first question that entrepreneurs often have is what is the difference between tax payable, and tax expense accounts?

Ultimately, the difference is one is where the expenses get entered. Which is the tax expense account. Which is entered one time only. By the accountant, once they have completed the entrepreneurs year end.

The tax payable accounts on the other hand. Our for the entrepreneur to take note of all of the taxes that they have paid. In categories of the various taxes that they will have in their business.

In Alberta, that means there is going to be a federal tax accountant, a provincial tax accountant, a GST account, and five different payroll accounts. To take into account the different payroll taxes that an entrepreneur must submit to the government.

These payroll taxes include income tax, employer EI, employer CPP. As well as employee EI, and employee CPP. By understanding that there are eight different tax payable accounts.

Can help entrepreneurs ensure that they are keeping accurate track of the taxes that they pay. So that at the end of their next year. Their Edmonton bookkeeping company as well as their accountant. Knows exactly how much they have paid. And to what specific taxes they have made their payments.

Since entrepreneurs should be paying taxes in instalments. Before they get there tax calculation for the previous year. By keeping very good track of this ahead of time. Can help their accountant and their Edmonton bookkeeping company to keep track of how much less to they have to oh.

The next question that entrepreneurs often have when learning how to enter taxes into their accounting software. Is why should their profits be higher than their corporate tax instalments?

This is an extremely important one for entrepreneurs to understand. Because since there corporate taxes are calculated once yearly. And for the year that has just passed. Entrepreneurs need to ensure that they are profiting in their business over and above the tax payments that they are making. If an entrepreneur is paying thousand dollars in corporate taxes per month. They need to have at least a thousand dollars of profit. So that they know that they are profiting enough to make a payment. Otherwise, they are continually operating at a loss.

It is very important that entrepreneurs understand their accounting software. And by being able to ask all these questions at the beginning of the process. Can help them avoid making errors that could negatively impact their business.