The things that business owners can do is hire both an accountant and Edmonton bookkeeping to work in their business. Business owners need to understand that they need both in their business in order to have a complete financial picture for their business. Accountants are able to do financial plans for business owners so that they can grow their business, they also will do tax planning for their business so that they can avoid paying taxes and know what to pay themselves, as well as accountants take care of the year-end filing with CRA. Accountants get paid a significantly higher fee then bookkeepers because they do a higher level of service. What bookkeepers do on the other hand is to help a business owner organize their finances from their accounts payable to their Accounts Receivable, keep track of their cash, their assets, their revenue, their expenses as well as their profit. They put all the information together on a monthly basis in interim financial statements that business owners can use in order to make better financial decisions.
The reason why having these interim financial statements from Edmonton bookkeeping is so important is so that business owners can understand the finances of their business on a regular basis. If business owners do not have bookkeepers working on their financial statements, they typically wait until they get their corporate year-end from their accountant in order to be able to look at what the finances are of their business. When entrepreneurs get this information, they need to understand that not only is it extremely late, since fiscal year ends get completed 6 months after the year-end is over, by the time an entrepreneur reviews their financial statements from their accountant, some of the information is up to a year to year and ½ old. Entrepreneurs typically know that a lot can happen in a business within a year or 2, so trying to make financial decisions in business by waiting on their fiscal year-end is very difficult.
Interim financial statements from Edmonton bookkeeping can also help entrepreneurs because they often have to make financial decisions in their business way sooner than once a year. Decisions like do they need to create more revenue-generating activities, are there marketing efforts working? Can they afford to buy an asset, hire people or do they need to lay people off? Did they have soaring expenses, and need to do cut expenses? If an entrepreneur waits a year in order to make those decisions, he could be waiting too long and their inaction could cause them to run out of money in their business. By having interim financial statements, business owners can be more proactive in all of the financial activities that they can do in their business in order to avoid running out of money. Since 50% of all entrepreneurs run out of money fail business within the first 5 years and 29% of them say that the reason why they fail is that they ran out of money, staying on top of their finances can help business owners significantly.
When entrepreneurs start their business, they often are looking for ways that they can increase their business and decrease their expenses and may choose to hire only an accountant instead of an accountant as well as Edmonton bookkeeping. This would be a huge mistake because while both professions help entrepreneurs financially, bookkeepers help businesses but their finances on a day-to-day basis and can help them make better financial decisions. A frightening statistic from Industry Canada says that half of all Canadian entrepreneurs fail in their business within 5 years and that 29% of those failed entrepreneurs say that the reason why they failed is that they ran out of money in their business. By hiring a bookkeeper to work with them in their business, can mean the difference between making great financial decisions and succeeding in business and making poor financial decisions in their business and having to close their business down.
One of the ways that business owners can be helped significantly by having Edmonton bookkeeping work for them is being organized but their financial statements so that they do not risk filing their taxes late and incurring penalties. A common situation for many small businesses is that their financial filing system is a giant grocery bag, that they bring to their accountant once a year. The accountant then has to go through that entire grocery bag, make sense of it and try to organize it in time for their fiscal year-end. Not only do businesses pay a large amount for that, because accounting rates are very expensive, but it is also not something that accountants typically do, and therefore charge a large amount of money for. If they simply hired Edmonton bookkeeping through the year, they could make sense that grocery bag full of receipts on a monthly basis so that when a business owner is ready to do their year-end filing, instead of taking a giant bag of receipts to their accountant, they can take a folder full of 12 wonderfully prepared statements that can take the accountant even less time to do, saving them money. Not only can they save money on their accounting fees by hiring a bookkeeper, but if they end up paying their taxes late, they also have to pay penalties. For entrepreneurs that need to save money by any means necessary, paying tax penalties is not helpful.
Another way that hiring Edmonton bookkeeping can help entrepreneurs stay organized and avoid problems is when the Canada revenue agency sends them an audit letter. Most entrepreneurs will only have 30 days from the date of the letter to response to the audit request. If all they have is that messy bagful of receipts, not only do they have to pay the extremely exorbitant fees of an audit, they will have to pay even more because our captain is going to have to organize that information before they start doing the audit. But if a business owner had hired Edmonton bookkeeping, they
would be able to already have the information organized that once a business owner gets an audit request, then they take those prepared statements to their accountant and this audit will take less time and less money.