Accounting is a comprehensive process that requires you to maintain a proper track record of all the financial transactions that take place in your business. This process is undertaken in order to keep a track of the profits made by the business, to decide what future financial decisions have to be made and to comply with the tax laws. Since this process of record keeping has multiple transactions, mistakes tend to happen. Some mistakes can be costly and you may even end up paying the wrong amount of tax. Therefore, to avoid such discrepancies, a financial audit is created.
Types of Financial Audit
A financial audit can be defined as the process of analyzing your bookkeeping records to verify if the information provided is valid with regards to the statutory compliance. This process is conducted by professionals and is thoroughly done to find any minute mismatch in the bookkeeping. Before you move on to understand more about the purpose of conducting a financial audit, let us understand the different types of the financial audit that exist in Canada.
1. Statutory Audit
A statutory audit is conducted for a business by an external auditor. A statutory audit is mandatory under the law for a company that earns a certain revenue. The need for a statutory audit is mainly in large firms where the ownership of the company and the financial affairs handling is separate. A statutory audit confirms if proper regulations are being followed not only for the government but also to the higher authorities within the company.
2. Operational Audit
An operational audit is also known as an internal audit. It is an initiative taken by the business itself to monitor if their financial records are proper and compliant. This audit is conducted by the employees of the company. The auditor is decided by the board of directors.
3. Public Sector Audit
Public sector audit, as the name suggests, is an audit that is specifically conducted for business and institutes that are owned by the government. This audit is conducted by the auditor general to ensure that these public companies are following a proper financial affair.
4. Forensic Audit
Forensic audits are external audits with legal implications. These audits are conducted by the legal authorities when a business is supposedly indulging malpractices. Situations that generally cause a forensic audit include money laundering, tax evasion, insurance claim fraud, accounting negligence such as entering incorrect entries, etc.
Types of Auditors
Since an audit is an in-depth analysis of your financial statements, it is essential that an expert performs the task. There are three types of auditors you will come across when performing an audit.
1. Internal Auditor
An internal auditor is an experienced accountant assigned from within the company to perform the task of analyzing the financial records internally from time to time. Internal audits help a business to ensure that their financial records are updated and error-free.
2. Independent Auditor
An independent auditor is also known as an external auditor. These are professionals who only work as auditors for different organizations. They conduct the financial audit for different clients with an unbiased opinion.
3. Government Auditor
Government auditors are of two types, a general government auditor and a forensic auditor. A general government auditor performs an external audit for businesses to identify if the company is following all the tax regulations. Forensic auditor, on the other hand, performs an external audit in order to identify if the company is involved in any financial malpractice.
Purpose of Financial Audits
1. Identification of Miscalculation
A company has several transactions to record every day. Your accountant may take care of making a note of every single transaction. However, there are times when you may miss out on a receipt and end up not adding the record to your transaction list at all. When such miscalculation takes place, the business does not get a clear idea of the profit or loss it is making. With the help of a financial audit, such mistakes are caught and rectified.
2. Prevention of Fraudulent Practices
A business owner never handles their own books of accounts. Either the in-house team of accountants manages it, or an accounting agency to whom the process of accounting has been outsourced. Since the owner does not record every transaction that takes place in the business, there are chances that the owner may get fooled by the person handling the accounts. In the end, if a fraud is committed, the business owner will be penalized. To avoid such situations from happening, internal financial audits are conducted at least once a year.
3. Realization of Company’s Worth
There is a huge difference between a financial audit and general bookkeeping. In bookkeeping, you record the monetary transactions that take place in your business. A financial audit, on the other hand, does the complete analysis of your existing records. Regular recording of transactions does not give you significant information about your business. A financial audit gives you details of how your business is performing, and the report generated works as a good credit rating for your prospective investors.
4. Compliance of Taxes
A financial audit is done with the idea to catch discrepancies that were not noticed the first time. One major discrepancy that businesses can end up making is not complying with the tax rules unknowingly. You may miss out on something forgetfully, but the CRA won’t consider it to be a small mistake. So having a financial audit helps you to double check if you have filed your taxes properly. Sometimes, it also helps you to claim some tax deductions you may have not noticed before.
Financial audits do the job of rectifying some serious mistakes. Not conducting an audit could be the reason why you will end up being flagged by the CRA for the wrong reasons. So do not wait for a notice from the CRA for an audit and take the assistance of an experienced accountant for error-free bookkeeping process.
A business has different seasons just like summer and winter. There is a season when the sales are high, and the profit figures reach its peak. Then there is a season when the business is just doing well enough to break-even. But the one major season that every businessman gets stressed about is the tax filing season. In Canada, businesses have to be prepared with their tax calculations and file them by 30th of April. But planning for your taxes starts months before the actual tax filing season starts. In fact, the reason why you need to save all your documents pertaining to your financial transaction is for filing your taxes appropriately.
A common reason why many businesses fret the tax filing season is that they decide to do tax accounting without the help of a tax accountant. Even if some businesses do hire a tax accountant, they end up hiring an incompetent one that only increases their worry. So for the next tax filing season do not spend half your time worrying about the taxes and find a good tax accountant.
Types of Tax Professionals
Before you start your search to find a good tax accountant, it is essential that you understand the different types of tax professionals who can help you with your business tax filing process.
1. Enrolled Agents
Enrolled agents are people having a fair knowledge about tax filing. These enrolled agents need to pass a set of examination before they can start consulting businesses and people about the taxation process. Enrolled agents do a decent job of handling the taxes. However, these agents have their limitations. An enrolled agent may be able to represent their client during a CRA audit, but they cannot prepare the audit reports.
2. Tax Preparers
Tax preparers are unofficial consultants who assist individuals and businesses with their taxes. These tax preparers are people who have a fair knowledge about taxation, who use it for the limited period of taxation season by helping businesses. They charge a very minimal fee, which makes them a cost-effective choice for some small businesses. Since tax preparers are not officially recognized consultants, they cannot represent you during a CRA audit.
3. Certified Public Accountant
A certified public accountant is an accountant who has done an extensive study in the field of accounting and is a certified accountant that is recognized by the CRA. A certified public accountant provided comprehensive accounting services including tax planning. A CPA can not only help you in your complete tax planning and filing but also represent you during CRA audit and prepare audit reports.
4. Tax Attorneys
Tax attorneys are lawyers who also manage taxes and tax-related cases. These professionals may help their clients in preparing tax returns, but they cannot perform audits. However, tax attorneys have the authorization to represent their clients for both audits and tax-related court hearings.
5. Accounting Faculty
A college professor who has himself acquired a degree in accounting and now teaches accounts instead of practice accounting may also consult people on taxes. They may help people prepare their taxes and can also represent individuals for their tax audits. Accounting faculty may help you with your taxes for a nominal fee.
6. Certified Financial Planner
A certified financial planner can only help their clients in tax planning. They cannot take care of audits for their clients.
How to find Tax Accountants
Though you have various options when it comes to hiring a tax consulting professional, choosing a certified accountant is always advisable as they have the appropriate knowledge to help you with your tax filing. But the question is where can you find good tax accountants? Well, here are some places where you can start your search from:
1. Online Directories
The very first and the most hassle-free method of finding accountants is by looking up online. Google search can find you anything, including tax accountants near you. The very first directory to check is the Google My Business suggestions made by the search engine. You should also check out other local directories such as Yelp. These directories not only help you with the contact details of tax accountants but also user reviews of how their service is. This will help you in making the right choice of selecting a tax consultant for your business.
2. Personal Connections
People you know may help you find a good accountant. You should ask your friends, colleagues and other people in your network for recommendations of good tax accountants they have worked with. They will give you a complete feedback of how their experience was and what problems they experienced when they worked with the tax accountant.
3. Government Accounting References
A certified accounting firm that follows the proper practice of accounting will be enlisted with the government accounting referral website. So if you want to find an accounting firm to take care of your taxes who follow proper regulations, you can search on the CPA Canada website.
Things to Check When Hiring
When you shortlist a handful of tax accountants to choose from, there are a few parameters to check before you decide whom you want to hire. These include:
Tax filing season becomes stressful for everyone. Once you file your tax returns, you breathe easy and feel relaxed. But sometimes the relaxation doesn’t last for long when you receive a notice of an audit from the Canada Revenue Agency (CRA). Often business owners go in a panic mode as an audit is not something they want to go through. But an audit is not something to be scared of as it is just a simple process that includes some basic procedures that tax accountants in Edmonton can take care of.
Tax audits conducted by the CRA are generally of three main types. These audit types include:
Audits In-OfficeWhen you receive an audit notice, you will be informed about the type of audit. In an in-office tax audit, you will be asked to visit the local CRA office. This type of audit is conducted by the CRA when they want you to be present to justify your tax documents in detail. When you are called for an in-office audit, make sure you carry all the tax filing documents along with you.
Audits by MailAudits of local and small businesses are a minor task for the CRA and hence a majority of them are conducted through the mail. In a mail audit, you receive a notice about the audit along with a list of documents needed by the CRA to justify the returns filed by you. You can simply mail the documents needed by the CRA and the matter can get resolved.
Field AuditsField audits take place at your business premises. In such an audit, you first receive a notice and then a CRA officer visits your premises for a detailed investigation of your financial documents. Such audits generally take place for businesses that have too many suspicious transactions.
After an Audit is CompletedAfter the audit process is completed, the next step that takes place is the place where the CRA gives a decision based on your documents. This decision-making process includes:
After the CRA scrutinizes your tax returns, the agency verifies that your documents are complete and as per the regulations. Once your documents are verified, you need to sign the report and the returns can be filed.
If there are certain details that were missing initially in your report, the CRA will ask you to make the necessary changes and alterations in your returns and file them.
If in case the CRA found a major discrepancy but you do not agree with the CRA, you can file an appeal for reconsideration.
Though an official audit is a process initiated on discrepancy suspicions, it is not necessary that there will be major issues to worry about. Sometimes an audit can also take place for minor mistakes. So next time you get an audit notice, do not worry and simply take the assistance of trusted tax accountants in Edmonton.
Tax planning is one process that you prepare for from the very beginning of a financial year. The preparation starts from the time when you save the very first receipt of the transaction that takes place in your business. Saving every receipt and other business financial statements is necessary when paying your taxes. However, the common question on the minds of many is that for how long you keep your business tax returns records. Let us find that out through this article.
What Business Returns to Keep?For the taxation process of a business, the Canadian Revenue Agency (CRA) has defined the need for the following document:
There are situations where you might have to hold on to your business tax returns for longer. One such situation is the tax objection appeal. A tax objection appeal is filed by a person when they think that the CRA was unjust with the documented facts and applied a wrong tax law on them. In case you have filed for such an appeal, it is recommended that you hold onto your business tax returns until the appeal and the matter which is raised is cleared.
Another important aspect to keep in mind is that disposing your business tax returns before six years is not a decision to take on your own. As per the CRA, if you wish to dispose your records before six years, you need to get a permission of the tax service director. Also, if you dispose them before six years without a permission, then you can be prosecuted by the CRA. So if you need more clarity on how to go about the process, get in touch with our tax experts.
We go about our daily life managing our personal finances with ease. All we need to worry about is our regular recording of incomes earned and expenses made. But when the time to file our tax returns arrives, we get worried. Taxation is one aspect of financial management that needs extreme accuracy to avoid major discrepancies and avoid attracting penalties from CRA. Therefore, this coming tax season, do not worry and instead hire an accounting firm to take care of your personal tax. But before you do so, consider the following things.
The Consulting FeeSince we are already talking about managing finances, it is best to start with the aspect of money. No accounting firm is going to provide you with personal tax planning services for free, there will be a cost to it. Find out the cost. Is the firm charging by the hour or comprehensively? Generally, the fee differs from firm to firm, based on the level of seniority of the accountant that is assigned to manage your personal taxes. So, find the different fees of different firms and then choose the one that is suitable for you.
Service SpecialtiesAccounting firms generally have various accounting services and personal tax planning will be one of them. Apart from different services, accounting firms also specialize in services for specific domains of business. For example, an accountant who specializes in taxation services for businesses may not be proficient in personal tax or vice versa. So choose a firm that will be able to manage your personal taxes in the right manner.
CredentialsWhen hiring a tax consulting firm, you need to look for specific credentials. Not every accountant is well-versed to handle taxes. Tax management needs adequate knowledge about the tax rules and regulations. In Alberta, an accounting firm needs to have Certified Tax Preparer’s certified accountants. Checking these credentials before hiring an accounting firm is necessary.
ExperienceLastly, you need to know how many personal tax consulting a firm has done before you opt for it. Hiring professionals with prior experience in taking care of personal taxes is always better than hiring someone who is doing it for the first time. When looking for an accounting firm, make sure the firm has at least five years of experience in handling personal taxes.
You may think that this coming tax season would be easy and you can manage on your own. But why takes chances? Hire a good accounting firm to ensure that you do not face any issues this tax season.
As a small business owner, you are passionate about running your business and concentrating on the tasks you love doing. But there are certain business functions that you may need an expert to help you out. Business bookkeeping is one such function that needs a professional help. This is because inaccurate bookkeeping or calculative mistakes could lead to huge losses. Just imagine, you end up paying less tax because you missed some financial transaction. Once the Canadian Revenue Agency (CRA) identifies this, they will charge you a penalty. Hence, bookkeepers are hired to lighten the load on small business owners and prevent them from making costly mistakes.
Having an experienced and qualified bookkeeper on hand to manage the paperwork involved in running your small business allows you to free up your time and focus on revenue-generating activities. Not only can bookkeepers do your paperwork a lot faster and more accurately, but they are also up-to-date with all of the latest laws and regulations. Small businesses owners should consider hiring a bookkeeper for the following tasks as well.
Manage Financial DataA bookkeeper records all the financial transaa ctions in your accounting system. An updated balance sheet will help you know the financial position of your company. At the same time, it helps you to take a future course of action. For instance, if you notice that there’s a dip in the profit figure compared to the last year’s profit figure during the same time of the year, then you make amends to your marketing strategies or try to reduce costs to improve the current year’s revenue. Also, managing your financial data helps you in other processes like filing tax returns, increasing the payment of your employees, etc.
Manage Cash FlowSmall businesses are in a transition phase that needs more attention in running the business than accounting inflow and outflow of cash. A bookkeeper in Edmonton manages all of the cash flow data and ensures that the company does not face a liquidity crisis. As and when the payments are due, the accountant will raise an invoice. Accordingly, they will get in touch with the vendors and clear the expenses before the due date. Some responsibilities of a bookkeeper in Edmonton include:
Offer Payroll AssistanceSome bookkeepers offer payroll assistance to small business owners. They reduce the time spent on administration through developing and implementing a computerized payroll system that will facilitate timely payments and help in preparation of tax returns.
Offer Financial Consultancy
There is nothing more important than getting your money’s worth. Bookkeepers also provide financial advice that helps you take right financial decisions. Since bookkeepers have up to date knowledge about the law, they can translate financial regulations and assist you in legal decisions as well.
When you know where your money is going, you can freely focus on the other things where your expertise is needed more. Consult an experienced bookkeeper in Edmonton who can be trusted to undertake your small business bookkeeping.
Accounting is one of the things that everyone needs to survive in life, but its one that is often overlooked. Luckily for those who don’t have the gift of math skills, there are numerous accounting firms they can hire to help them with their business accounting needs. While it is true that accounting plays a significant role in the world of business, very few people recognize its importance in our regular daily lives. What is accounting good for?
Reconciliation of Charges
Each month, your bills come to your doorstep reminding you to pay off what you owe the lender company. Whether it is paying for the goods or paying for services that they provide, it is essential to be sure that you are only paying them for what is right. It is part of basic accounting to know whether or not you’ve been charged too much or not. When was the last time you checked your bank account or perhaps even the electric bill? Did you notice any difference in the cost of what you’ve been charged with?
The role of the accountant is to make sure that the bank balances, as well as the flow of money in the company, are reconciled. The cost of how much you spend in a month as well as the amount of income that comes in. Keeping the household expenses together is much like maintaining the costs incurred in the business. Perhaps the only difference is that the extra income in the household goes to savings while the excess is business is considered profit.
What happens when you spend more than what you earn? Doing the math is simple. When you do spend more than what you make, you end up with debt. Sadly, when debt is not paid, it earns interest, and the debt you owe only goes higher. Overspending can sometimes be uncontrollable in the household, especially those with kids. However, overspending today is not going to help save for tomorrow.
Accountants emphasize the need to only spend within your means. Proper budgeting is also part of basic accounting. Knowing where to put your money and determining how much needs to be set aside for the bills should be what every household should learn. To prevent debt, it is best to learn to budget.
Planning for the Future
At a time when the economy seems unstable, it is common for people to worry about their future. The desire to have enough funds to send the kids through college, to buy that dream home and to have enough money to go on vacation will always be there. The first step is careful planning for your finances. The ultimate goal of everyone is to have a financially healthy future. The only way to do it is to ask an accountant on how it can be done.
Accountants will not only help you manage your finances, but they could give you advice on making investments that could bring financial stability in the future. Savings, investments, debt control are among the other things that can help financially plan for your future.
Accounting is a part of daily life. And unless you want to have financial problems in the future, it is best to learn the basics of it from only the best.
Have you been advised that you’d be better off incorporating your business? When you started your small business, you have always imagined it to be a big one. Through the years of operation, it has grown its consumers in number and its profit higher. Is it time to incorporate your business? What does it mean to have a corporation compared to sole proprietorship of the business?
Business progress always brings about good news. It means that more customers are happy and satisfied with the product or services that you provide. But as the business expands, it is essential to consider some changes to put it in a better position. If incorporation is one of its options, it is best to learn more about it and how it could be good for the business.
Incorporation means making the business a corporate entity. It is now a separate entity from its owners. When incorporated, the business is no longer under sole proprietorship nor is it owned by a partnership. And because incorporating a company is a big step, here are some of the advantages that you can expect to enjoy.
Advantages of Business Incorporation
Limitation in Liability
Running a business comes with a list of responsibilities, and sole proprietorship primarily gives most of it to you. The liability of the business is your responsibility. But when you decide to incorporate it, you are running the business as a corporation, with limited liability on your shoulders. When the business is incorporated, you automatically become one of its shareholders. The best part of it all is that you are not liable to pay off any debt as a shareholder. Nobody can sue you for non-payment of debt as the business is considered a separate entity from you.
Better health services for employees
A business that is incorporated can offer its employees with private healthcare services and deduct a part of its payment on behalf of the employees. More importantly, as a corporation, the business can offer more benefits to the employees and make it tax-free too. The extra health care services for employees will surely give them more reason to stay and work with the company – to help it grow and become more stable for the future to come.
Business operations can entail a lot of costs. From the salary of employees to the overhead expenses including the electricity and water services. And as the business grows, the value of operations also increases. When you remain to be a sole proprietor, all the stress of raising the money is on your shoulders. But as a corporation, there is a likelihood of an increase in capital coming from its shareholders. The shares will help finance the business, not to mention as a more straightforward way to raise the share capital that you need for business.
Is incorporation of business the best option for you? It depends on the nature of your business and the industry that you are in. Each situation is different. To make the best decision, consult with a reliable accounting firm. They can help you get a complete understanding of the nature of your business and the value that it comes with.
How much is the market value of your business? This does not depend on how much you value your business. Instead, it is about determining how much your business is worth if you were to sell it. Business valuation is one of the most effective ways to assess business worth. If you were to decide to sell it or merge it with another business, it is best to know how much it is valued for. Accounting services in Edmonton will be able to help you determine the best price for your business.
Methods for Business Valuation
This method looks into the possible cash flow that your business will have in the future based on the cash flow that it has at the moment. A steady business cash flow means higher profit in the future. Not only does it help determine the number of people who see value in the products or services that you offer, but it translates this so-called "value" to actual sales. Cash flow will also help determine how much your business will be worth in the future. Once potential buyers of your business have the idea of the actual cash flow that the company has, they can calculate the real-time value of the business. The accuracy of such a method of valuation depends on two factors: the actual cash flow value and the estimated value in the future.
The easiest and perhaps the simplest in all the methods of business valuation is looking into the hard assets the company has gained over its years of operation. You are looking into the resale value of machinery, equipment, and other devices that help keep the business operational. Although such type of valuation only seems into a part of what the company is worth. The real value of the company should also include its market value and its liabilities. Good accounting services will help you get the exact value of the company.
Comparison in the Industry
Another one of the most common processes focuses on how other businesses of the same nature is worth. The accountant will look into other companies that have been sold recently. Companies from the same industry are evaluated to compare how much they are worth considering the status of the company as a player in the industry. Industry conferences that are conducted annually can give business owners the idea of how much their business costs.
Most accounting services in Edmonton use these strategies to determine the value of a company. Knowing how each one looks into the value of your business will give you an idea of how you can conduct your business valuation better.
Is it time to hire an accounting firm to help you manage your business finances? You’ve been running the business on your own and occasionally employ an accountant to fix the books when it seems you can no longer take the pressure of keeping the balance. But is this practice something you’d like to keep on doing? Have you ever thought of the money you could lose when time and again your books don’t seem to find balance when they should?
Hiring an accounting firm to take care of the books as well as the finances of the business might do you better. It might save you a lot of costs in the long run. With the right people doing the funds of the company, you are sure that it is kept intact and the books in a balance all the time. In particular, hiring an accounting firm can benefit you in the following:
Can Give you More Time to do Other Important Things
Unless you are an accountant yourself, it is best to hire professionals to do it. When you delegate the task, you bring in more time for you to take care of the other parts of the business. The launch of that marketing campaign has been put off for months and now is the best time to review it. Focus on the work that you can do best and let the accounting firm in Edmonton take care of all the rest.
Can Make your Office Space More Cost-effective
When you hire an accounting firm, you are getting all the expertise that the team can provide. Compared to hiring only an accountant, you will be paying for something more cost-effective, not to mention that they can genuinely finish that job that you need them to.
Can Provide you with Quality Assurance
There is nothing more important than getting your money’s worth. The accounting firm that you hire should not only provide you with one service that they are known for but an overall package of what can be done to help your business thrive – including ways on how to save on taxes.
Can Consult with the Best in the Field of Accounting
Although most accountants are skilled in handling money and finances, it is different when you’ve been doing it for years. The expertise will help you run the business and make it a success. When you know where your money is going, you can quickly focus on the other things where your expertise is needed more.
What do you get from hiring an accounting firm? You get peace of mind that your business finances are not all over the place. The experts will take care of it.
Only businesses with a well-managed payroll system can genuinely find success. Whether it is a small-scale business that’s just starting up or a middle-sized one that’s thriving despite the competition, every business owner must see the value of having a well-maintained payroll system to help them solve for anything else concerning the business. When a method to pay off the employees of the company (whether there’s only one or less than ten), it takes your mind off worrying whether you did it right or not.
There are four types of payroll systems that you can choose to adapt for your business. The choice of whether you go for this or that is a matter of personal preference. However, expert accountants usually base their decision depending on a variety of factors including the size of the business and the number of its employees. Now, which of these systems should be your choice?
Payroll System Managed Internally
When you have less than ten employees, it would be best to have the payroll system managed internally. With the limited number of employees, you can easily keep track of the payments made including the deductions as well as the amount of the other social security benefits. The goal is to keep discrepancies to a minimum to none at all. When the payroll is managed internally, you don’t have to worry much about now knowing if everyone has been paid. You may hire an accountant to do it for you privately as a resource.
Payroll System Managed Professionally
This is the system when the bookkeeper or a certified public accountant is hired to look after the company’s payroll system. Not only do these professionals help you manage the system but they also look after the financial status of the company. They can ensure that all transactions involved in the business including bank withdrawals and deposits are managed well. This system is perfect for medium-scale to big companies.
An External Payroll Agency Manages the · Payroll System
This is the type of system when the company does not have hold of its payroll system. Instead, it is entirely managed by an external payroll system. The payroll company handles all the responsibilities that come with it including salary deposits and other deductions for the month. One of the best things about this type of payroll system is that it is handled with complete objectivity with very little to no discrepancies at all.
This is perhaps the most popular form of payroll system wherein the complete payroll list is input in a software. You only need to manage it from a portal. It is convenient because there is no need to solve anything. You have to make sure that everything is in the software and it will take care of the solving for you.
If you wish to learn more about how each system works and how it can benefit you, it is best to talk with a qualified accountant. Their professional opinion will help you make the right choice.
Are you looking at applying for a bank loan? When the start-up business becomes a struggle, it does not mean you should stop. Sometimes, you need to be creative in getting the money you need to keep the company running. Applying for a bank loan is one of the most common ways to get the business going. But how do you manage to get a loan approved for your business?
Taking on a loan from the bank is not easy. In fact, it comes with a lot of responsibilities that you need to be prepared for. The bank doesn’t easily give away their loans, even to those people who already have their start-up business up. The bank will be looking for ways you can grow the money to ensure that they get paid.
So how do you get loan approval from the bank? Here are six tips you can try:
Tip 1: Prepare a Business Plan for the Bank and Yourself
A business plan contains your concept of business as well as the focus points that you are working around in. The strategy of the business plan is to reassure that bank that you know where your business is heading. Not only does it highlight the operational program for the company but it also includes the executive strategy that affects every other decision you make for the business. Be as detailed as you can be. The bank will appreciate it and will lend you the money you need.
Tip 2: Make a Financial Plan Ready for Submission Too
The bank will ask you for a financial plan to ensure that you know what you’re going to do with the money. The details of the financial plan should be precise. When they give you the money that you need, how are you going to use it? How is it going to make the business plan work? The operational costs, administrative expenses as well as the revenue model should all be in that financial plan you are to prepare.
Tip 3: Only Apply for a Loan that you can Afford
The best way to not be approved for a loan is to apply for too much money. You should only apply for the amount that you can pay. Remember to always look at things from the perspective of the lender. The bank will look into your business plan, your financial plan as well as the application you submitted. From there, they will decide whether it is feasible for you to pay off the loan within the period they prescribe.
When it comes to getting a bank loan, you need to be more careful of your perspective. In managing your accounts as well as your application, it is best to consult with a trusted accounting firm in Edmonton. They will help sort things out for you.
When you started your business, you had to shell out a right amount of money to get everything in place. But that is not where the spending ends. Business operations don’s come for free. In fact, the cost of running a business can be quite overwhelming when you’re just starting out. The expenses usually cover the marketing, salary, overhead expenses, manufacturing, and the list goes on and on. Although each business comes with its own set of costs, there are everyday expenses that remain true for all.
Efficiency in the payment of these expenses is the key to genuinely gaining profit for the business. In fact, when you pay these bills on time, you are also able to reduce the amount of tax that you spend. Here is a list of the most common expenditures that a business owner must anticipate and prepare for.
a) Rent – most businesses set up in a tangible place, although selling online has become a popular option these days. Whether it is at home or a commercial space, you need to think of paying the rent and how much it will cost you monthly. Whether it is a leased property or a mortgaged one, you will need to consider the rent payment every month to ensure that it doesn’t pile up and become too big for you to pay off.
b) Administrative Costs – aside from the location cost that comes monthly, there are also other expenses that need to be considered like the cost of administrative personnel and utilities. The cost of the electricity, the phone, the internet as well as the salary of the people who help run the business while in the office should all be added to the overall costs. Whether you have a small or big business, these overhead expenses need to be considered in the monthly accounting.
c) Payroll and Benefits of Employees – these make a huge part of the business expense monthly. Apart from the usual payroll system that the company needs to follow to get the employees paid, there are also several types of benefits that every employee must get while working under you. All these could be overwhelmingly large, but they have to be paid to get the business going.
Every business aims to earn a profit and maximize it to help the company grow. Giving substantial attention to the management and payment of these expenses should help increase profit. Consult with a taxation and accounting expert to make sure that you are on the right track in handling your costs.
The primary goal of every business owner is to succeed. And to succeed in business means to be able to establish a steady flow of cash in their account. When they spend money to pay for the overhead expenses including the salary and benefits of their employees, they also expect money to come in to consider as profit. The risk of running a business will always be there. You can never tell when you will need immediate cash. Without immediate payment meant losses for the company.
The money you borrow from financial institutions or lenders could help you at the moment of need, but the interest they come with means expenses at your end. Is it possible to avoid such cashless moments? There are a number of things that can be used to keep yourself from being in that position when you don’t have a choice but to borrow money and pay for the interest. The first step is prevention. Work closely with a trusted accounting firm in Edmonton, and you don’t have to worry about finances. You know your business is in good hands.
Apart from that, here are three business decision mistakes you must avoid to keep your business thriving:
- Going for an extended credit period could mean more losses for the business. The length of time you want to go for to cover your loan payment may seem like you’re paying the creditors less each month. However, what most business owners fail to realize is that the interest rate they are paying for I much higher considering the length of time they took the loan for. If applying for credit to cover expenses could not be prevented, at the very least, make sure to pay it off at the shortest time possible.
- Putting off the updating of the books is one of the worst things that a business owner could do. Reputable accountants in Edmonton would always suggest that the books be updated with every transaction. The risk of forgetting to put in the books the expenses as well as the payments received will still be there. These mistakes may seem simple, but they could alter the books altogether. Recording all transactions when they happen should always be the goal.
- Paying off debt too early than the scheduled payment is not going to help at all. The interest that you’ll be paying for that credit is the same. Paying too first means not having the power to use the money and grow it in business. If your goal is to reach success, then you should be working hard to avoid obtaining debt at all.
When it comes to achieving a steady cash flow, business owners can’t help but take risks and sometimes commit mistakes in the process. The more important thing is always to try to avoid the mistakes to keep the business afloat.
The accountant that you choose for your business plays a vital role in bringing in success. Apart from ensuring that all financial transaction of the company is in place, they also serve many different services that help promote the success of the business. They take care of the systematic recording of the books, the computation of the taxes and the identification of the different ways the company can reduce its taxes. However, when the simple procedures are not taken care of, it might be time to think of hiring a new accountant for your business.
Outsourcing your accounting work from an established accounting firm in Edmonton is always the best way to go. Not only will a lousy accountant ruin the books, but it could cause multiple problems for the company. But how do you know that it is time to hire a new accountant? Here are some tell-tale signs:
- They file the returns late. Tardiness in filing for tax returns is not a good sign. Not only do such actions attract penalties that could cost the company more, but it could be a precedent of something worse. A professional accountant knows the importance and high value that comes with the work that they do. When they hand in their work late, they are not doing the job they are supposed to do. If talking to your accountant isn’t working, then it is time to hire a new one who can do the situation with the utmost professionalism.
- How well does he know the craft? Accounting is not for everyone, and only those who know the terms, processes and the laws should be doing the job. Whether it is about tax-free benefits or tax deductions, it is essential that you work with an accountant who can explain these ideas to you with confidence and ease. Inadequate knowledge of all these accounting terms should be a clear sign that you need to hire a new one right away.
- Most small businesses and start-up owners need a thorough explanation of their financial statements. If the accountant you are working with is not equipped with the skills to help you understand such, then making the business grow financially may become more challenging than it already is. When your accountant could not answer queries that you might have concerning your financial statements, then it is best to look for an accountant who can.
Not all accountants are the same. When your accountant is hiding information from you, could not explain the books or is seemingly manipulating business accounts, it is time to consider hiring a new one. Make sure when you hire a new one, outsource it from reputable accounting firms in Edmonton to ensure the quality of work that you will get.
The amount of money that you have to fund expenses in the business falls under the category of capital budgeting. At the beginning of the business, the money that is put into establishing it is considered an investment. The types of machinery, rental as well as the purchase of materials and hiring of people are all considered part of the capital budget. How do you determine whether an investment is worthwhile or not? The process of capital budgeting needs to be done as efficiently as possible. Here are some of the significant points that you have to consider:
- It requires a large amount of money. Capital budgeting involves a considerable amount of money put underinvestment. This is one of the reasons why the process needs to be done by the books. Every decision made should be thoughtful and wise to ensure that it will grow in value once it is put out on the market. Only knowledgeable and correct investments will bring back the money; otherwise, the company will incur losses even before it earns anything.
- The decision where to put the money for investment is irreversible. It means if you have decided to purchase machinery and later realize that it is of no use, selling it won’t bring back the investment. It already means a loss for the company. The market value of used machinery (whether or not it has been used once, twice or many times) is practically lower than its cost if it were bought brand new.
- Putting together a capital fund for the start-up of a business requires a huge amount of money. This amount can be further subdivided into particular areas of the company that needs to be covered, including purchases and rental payment that need to be paid. Making one wrong decision could mean a massive loss of the start-up business as well, that’s why it is important always to make wise choices on where to put your money.
- Your budget today is not limited to what you spend on today. It always involves the future of the company. When proper capital budgeting is done right, it can help you plan for future business developments. Therefore, before you execute any business decision, whether it is a purchase or an investment, make sure to think about where you plan your business to be in the future. In the process, it is best to include an accountant in the planning. Not only will they serve as a financial advisor, but they can help you foresee possible implications your investments may have on the tax you need to pay for.
While you are in the middle of capital planning, this checklist will serve as your guide to keep you on the right track. Before final decisions are made, especially those that have implications on the investment, make sure to consult an accountant you trust.
If you are running your own business, you should assign somebody else to maintain your finances for you Doing both can be a bit overwhelming. You have to make sure you have certified accountants in Edmonton to look after your business finances. Although some business owners may think that it is best to do their accounting, not to mention that they believe it would be so much cheaper, it comes with its own set of disadvantages as well. When juggling too many responsibilities, there’s no doubt that mistakes will happen.
Sadly, such mistakes in the financial books of could create much more significant problems during the audit of your company’s financial statement. Whether it is an annual audit or a random audit of your firm within the fiscal year, it is essential that you know what to prepare. Not only will this make the review easier and faster, but it will prove it more efficient. Before the accounting firm in Edmonton comes in to do the audit, here are the things you must get prepared:
- Keep the Books Updated, Daily if Possible
If you want to save yourself from doing all the tallying days before the accountant arrives to do the audit, make sure you got all the books updated to date. In businesses when monetary transactions are formed on a day to day basis, it is suggested that you keep the books updated every day. Maintaining the books updated will help you not to forget essential transactions later. After all, the tally of the books will be the first thing that the auditor will look for. It is best that it is ready.
- Keep the Receipts Organized
Whether the audit will happen today or tomorrow, you have to make sure that the receipts are ready and are piled up accordingly. Whether it is incomes or expenses, everything must be arranged according to date. The chronological arrangements of the receipts will help keep the time spent double-checking book entries to a minimum. When the revenues are readily accessible to the accountant, it will make the auditing so much easier.
- Keep yourself Ready and Open to Questions
It is certain that the auditors will have their questions to ask. Ost of them to clarify the details of the expenses. Significant changes, whether it is the rise of fall in expenditures, will bring them to ask you some questions to help clarify and justify the changes. The other problems may concern the accuracy of the entries in the books. And then there are issues about tax compliance of the company. Be prepared to answer all the questions. After all, they are there to help you clear the books and get the balance that you need.
With so many things that need to be done to keep the business running, it is best to ask the experts to prepare all the necessary documents, including the books, for the audit. The audit is aimed at ensuring that you know the flow of cash in the business.
No business owner can ever tell what’s in store for the business in the coming months. Although most of them would be hopeful that they’d be able to grow their business and bring in more profit, not one of them could say that one strategy will make it work for them today and in the future. Half of the year has passed, what have you done for your business? The next six months will be crucial. It will present both opportunities for growth and risks for failure, that’s why you should always be ready for what will come your way.
Overcome the risks and take advantage of the growth opportunities when they come your way. Be prepared to sit down and make a financial plan for how it can be done. It is essential to know what you need to be financially prepared for in the next six months for the lack of it will have a direct impact on the success of your business. What do you need to do? This is where you begin:
- Keep Yourself Updated
- Make a List of Possible Expenses
- Update your Knowledge Regarding Taxes
Whether it is the beginning of the financial year or in the middle of it, there’s no denying how important it is to plan, especially when it concerns your business finances. In the midst of all these, you can count on an accountant in Edmonton to help you through it. All you need is to ask for help, and it will come.
Every start-up business owner will agree that doing things on your own is the best way to save on costs. There is always that strong urge to do everything requires of the business to ensure that you are on top of everything. However, when you ask business experts, this practice isn’t the best one after all. It is critical that you consider hiring people who are experts in their field to do the job – especially when it comes to business accounting. Even if you are an accountant yourself, it is still best to have someone do the accounting of your business for you.
At this point, you might be wondering when the right time to hire one is? Do I need to hire an accountant now? Here are situations that will help you realize that hiring an accountant now may be the best decision you’ll ever make for your business:
- When the recording of all the expenses becomes time-consuming. Whether you are starting up or are in the process of growing your business, keeping up with the cash flow can be quite tough. There is that constant need to put the figures in the books, achieve a balance in the sheet, not to mention the computation of taxes. If you have an accountant, you are buying yourself not just expert work, but some free time as well. When it feels all too overwhelming to balance the books, hire an expert accountant in Edmonton and get yourself some time to focus on growing your business like you always wanted to.
- When you are new to handling business or know very little about accounting, then hire an accountant now. Just like any other skill, accounting takes a lot of time to learn and master. It requires a whole lot of practice not to mention the exposure to various sheets that will show you all the possible ways you can save on business costs and taxes. Rather than wasting your time on a minor part of your business, you should focus more on marketing it to grow as an empire. Leave the accounting to someone who knows it all too well.
- How much of the tax regulating your business do you understand? Dealing with such and the changes that it comes with can be quite tricky, that’s why it is best to leave it to the expert accountant who can be on top of it. Not only are they knowledgeable of the regulation, but they can also decipher the meanings of such laws – which is very important in keeping the business afloat.
When you ask yourself if you should hire an accountant to do the job for you, you wonder if it is worth it. ATS accounting will be of great help.