The success rate for entrepreneurs is often surprising, with 15% of businesses feeling in their first year, 30% failing by the second year, and 50% feeling by year five, if business owners got help from Edmonton bookkeeping they may experience a slightly different fate. The reason for that is because by getting into the habit early on in their business ownership of having organized finances, can help entrepreneurs make better financial decisions in their business.
The reason why organized finances can help entrepreneurs succeed is that those up-to-date interim financial statements that are provided by Edmonton bookkeeping can help entrepreneurs be proactive in their business finances. For example, if an entrepreneur consults their balance sheet and income statement to see that their expenses have started to rise out of control, they can spend time minimizing those expenses, in order to bring their profits back to where they should be. Also, if entrepreneurs get into the habit of checking their balance sheet before they make any financial purchases or even before they pay their staff, they will start to see what their finances are before that cash leaves their business.
It is extremely important that entrepreneurs are using all the tools that they can in order to make great financial decisions, that utilizing Edmonton bookkeeping can positively impact the business. Although in order for this tactic to work, entrepreneurs need to understand that they need to be organized from the very beginning. The easiest way for entrepreneurs to be organized with their finances is to ensure that they are keeping their business bank statements, their business credit card statements, and organizing their receipts. By sending the information off to their bookkeeper on a regular basis, can help them get the most current and up-to-date financial statements possible. If they are not organized, no matter who they hire to help bookkeeping, entrepreneurs will have a harder time getting proper information.
In order to stay that organized, business owners should only have one bank account. While it might be tempting for entrepreneurs to have multiple bank accounts, and some do in an effort to stay super organized, Edmonton bookkeeping says that it is actually even easier for business owners to have one bank account for all of the operating expenses of the business. If they need a credit card, they should only have one and keep those statements separate from all other statements.
Some entrepreneurs believe that it is okay to use their personal bank account for business, but this is again strongly recommended not to do. If a business owner has personal and business expenses coming out of the same account, it will be much more confusing and time-consuming to go for the financial statements and figure out which payment was for personal, which one is for business and to put it into the right account.
By staying organized early on in their business, entrepreneurs can ensure that they are ensuring that their bookkeeper has the right information in the best way possible for them to be able to give the entrepreneur as accurate financial statements as possible.
Entrepreneurs are not utilizing interim financial statements to make decisions in their business may be doing their business a disservice says Edmonton bookkeeping. The reason for that is because interim financial statements can help entrepreneurs make guided financial decisions in their business that cannot only help them avoid running out of money but help them understand if they should cut expenses and grow their revenue. Business owners should see keeping their finances organized as a vital part of their business growth.
Whether a business owner is keeping their books themselves, or if there hiring Edmonton bookkeeping, being organized can help entrepreneurs have current and up-to-date financial statements. By organizing receipts early on, and keeping monthly bank statements and monthly credit card statements altogether, entrepreneurs are able to have the information that is needed in order to do their books on a monthly basis. If entrepreneurs can also make notes on all of the receipts, on what was purchased and why it can help ensure that the payments are going to the right account.
Many entrepreneurs do not think it is necessary to keep receipts, and while Edmonton bookkeeping says they do not necessarily need to see the receipts, especially if they have the bank statements, entrepreneurs need to understand that yes they should keep those receipts especially in case Canada revenue agency decides to audit them. All entrepreneurs should keep their financial information for seven years.
Business owners should aim to have interim financial statements from Edmonton bookkeeping on a biweekly basis. The reason this timing is important, is most entrepreneurs pay their staff biweekly as well, and so entrepreneurs should be reviewing those balance sheets and income statements prior to dispersing payroll. This is an entrepreneur the chance to ensure that they have money in their bank account to make that payment. If they happen to not have enough money, having a information ahead of time forgive an entrepreneur enough time to generate more revenue, or engage into some accounts receivable in order to have the money in their bank account to make that payment.
Business owners should be putting into their schedule a time that they need to send their financial information off to their Edmonton bookkeeping, and that they also need to schedule a time to speak to their bookkeeper when they receive those interim financial statements. This is extremely important so that entrepreneurs can, first of all, ensure that it happens, but also having a regular talk to their bookkeeper can help ensure the accuracy of those financial statements by allowing both parties to ask questions, fix errors and get clarification.
By getting into the habit early on in their business ownership of keeping financial information organized, entrepreneurs are able to ensure that they have the most accurate and up-to-date information that they can, to help guide them in their day-to-day business operation.