When entrepreneurs are learning how to enter their tax payments into their accounting software says Edmonton bookkeeping. There is many things that they need to keep in mind. To ensure that they are doing this accurately.
The reason why it is so important to do this accurately. Is not just so that they can end up with the most accurate and up-to-date financial statements possible. That will be required to help them make informed financial decisions.
But also because entrepreneurs need to ensure that they are accounting for the taxes that they are paying properly. So that their accountant and Edmonton bookkeeping company. will know exactly what taxes have been paid. And what amounts they have been paid in.
So that an entrepreneur does not end up excellently paying too much or too little. that could end up with them incurring penalties, especially if they have not paid enough in taxes for that year.
This will happen if entrepreneurs accidentally enter tax payments into the wrong accounts. Mingling the two or more payments.
This is why entrepreneurs need to understand what a tax expense account is, and what tax payable accounts they should be looking for in their accounting software.
The first thing that business owners need to understand is that a tax expense account. Is simply the place where their accountant will put the calculation of how much taxes they owe.
This should only be calculated by their accountant. And should only be calculated at their corporate year end. And this amount of taxes that they owe will be for the previous year of business.
Therefore, business owners should make payments of taxes in instalments. And when they have paid off the taxes that they owe. Instalment payments will go to the current year of taxes. That is yet to be calculated.
The tax payable accounts on the other hand says Edmonton bookkeeping. Our all of the different accounts for all the different taxes that an entrepreneur must pay. So that every time an entrepreneur pays that particular tax. They can account for it properly and their accounting software.
In almost all of the provinces, business owners will pay all of their federal and provincial taxes to Canada revenue agency. Who will figure out the provincial taxes that the entrepreneur owes. And send off that amount of money to the provincial government on behalf of the business owner.
However, Alberta is completely different. In the fact that entrepreneurs must pay federal tax to Canada revenue agency. And then provincial tax the province themselves.
In addition to that, they will have a GST account. As well as payroll accounts, for all of the various payroll taxes that an entrepreneur is responsible for.
This means that an entrepreneur will not only have an EI and a CPP tax payable account. They will have one both for the employer portion. As well as the employee portion of those taxes.
Learning how to account for the taxes that they pay correctly. Can help entrepreneurs not only know how much they have paid in taxes. But will end up with more accurate financial statements.
Is there a specific part of Edmonton Bookkeeping you don’t understand?
There are many things that entrepreneurs need to remember when learning how to enter accounting information says Edmonton bookkeeping. And while many entrepreneurs may not understand why they should worry about entering accounting information in throughout the month.
Especially when they are getting interim financial statements from their Edmonton bookkeeping company every month.
However, entrepreneurs need to keep in mind that reviewing the financial statements they have prior to making any financial decision. Can help them make more informed decisions.
And the more accurate and up-to-date these financial statements are with a make those decisions. Can help them make better decisions. That will allow them to avoid making decisions such as spending more money than they actually have. And causing their business to run out of money.
Therefore, learning how to enter some information on a regular basis. Can help an entrepreneur exponentially. And having the best information possible will increase how good those decisions will be.
One of those things that entrepreneurs should be very aware of. Is that when they go to enter tax payments that they have made. Into their accounting software, default setting will have the payment go into the wrong place.
Business owners will notice that when they go to make a tax payment. That the default will be to put it in the tax expense account which is not accurate says Edmonton bookkeeping.
This is because the tax expense account is for taking note of the taxes that are owed. And should only be entered into the software once by the accountant. And only after they have figured out how much the entrepreneur has owed for the previous year.
Instead, entrepreneurs need to take into consideration that their tax payments need to go into the tax payments account. And the correct one, depending on what taxes they are paying.
By understanding this, can help entrepreneurs gain a very deep understanding of what taxes they are paying. And accounting for them properly. Not only so that they can end up with the most accurate financial statements possible.
Because this is going to help their accountant as well as their Edmonton bookkeeping company to calculate how much they will owe in taxes year. Because they have a good representation of how much they have already paid in taxes this year.
Many entrepreneurs also make the mistake of thinking that their tax payments should get reflected on their profit and loss statement. But this is not accurate either. Because business owners need to understand that the profit and loss statement.
Is only to indicate how much money they have made in their business through selling their products and services. As well as figuring how much money they it has cost them to make that money. And taxes are not a profit, nor an expense of the business.