Accounting the flow of money in a business is one of the most critical aspects of its success. It should be of significant concern not only to big corporations but most especially for small-scale enterprises. It is essential to keep track of the bills, overhead expenses as well as receivables because the resources on hand are limited and must be used sparingly.
For a small business owner, it is important to know when resources can be used at a minimum. Whether it is grabbing the opportunity for a tax exemption or minimizing the curbing costs, business owners have to keep a tab of all of it. This is one of the most effective ways to keep track of the percentage of growth and profit margin as well. But how do you get through taking care of all these and running the business as a whole? Here are some tips to help lighten the load:
· Record All your Expenses
It is understandable that your hands can be quite full when it comes to running the business, but keeping a record of all your expenses is a must. It will help you stay right on track regarding expenditures and future planning.
· Keep Track of Changes in Tax Revenue Regulations
A key tip that most business owners should follow is the excellent way to save on business costs is knowing the potential changes in tax revenues and its regulations. Regularly monitor the updates of the government agency that handles this to keep you in the loop of what you are due to pay.
· Remember to Separate Personal Expenses from Business Expenses
Most established businesses already have a clear record of personal expenses ensuring that it does not mix with the record of business expenses. This will ensure that you can see the difference between the two. Also, it is clear which expenditure to cut if ever.
· Outsource Bookkeeping and Other Accounting Services
The best way to keep your business books updated is to have a professional accountant do the work for you. They can ensure that the books are always updated and that the recording is done as systematically as it should be.
At ATS Accounting Inc, we make sure that our team of dedicated individuals offer professional yet affordable rates. If you are looking for a great accounting team, book an appointment with us and expect nothing less than high-quality accounting services today and in the future.
Do you already have a bookkeeping system in place? If you don’t have one yet, your business accounting could be in big trouble. There is no better way to have a strong bookkeeping and accounting system in place than now. Not only will it make managing the accounts easier, but it will also help you pay your taxes on time and without delay. After all, poor bookkeeping means poor financial management and that’s not how you want to run your business, right?
How do you make sure you are doing your bookkeeping right? Here is a list of mistakes that you could be doing. If the current practice that you haven’t isn’t listed here, you are on the right track.
· First, are you shoebox bookkeeping? You know that you are if you are if you practice putting off all the listing of the finances like how you put all the paperwork in the shoebox. Although referred to as shoebox bookkeeping, this isn’t booking keeping at all.
· Second, are you still using the manual method of accounting? Although the manual process, including the simple use of the spreadsheet, allows you to make a list of the flow of money, it, however, fails to help you identify where the money comes from and goes to. The complicated process of tracking the movement of finances from multiple accounts can be quite tough. It is best to utilize a bookkeeping software that does the job for you.
· Third, not being involved in business processes including the financing could put you in deep trouble. Although it is natural to delegate tasks, it is not always a good practice to ask others to do your financial report and simply have to sign it be involved and learn the process. Even if a professional accountant is doing the work, it is best to learn from what they do to gain a better understanding of what it is you still need to be done.
· Fourth, refusing to reconcile accounts at regular intervals could spell out a financial disaster. Remember that it is best to match the statements in the general ledger to the official business accounts that you have. This may be a simple step, but it allows you to save yourself from bookkeeping mistakes that could cost you your investment.
· Lastly, sticking to the DIY attitude is not going to be helpful at all. Making errors in the accounting system of your company could have huge implication for the success or failure of your business. This may perhaps be considered the most significant mistake a business owner can make.
Save yourself from all the trouble and hire a professional accountant today!
They say the best kind of savings for the future is when you invest your money into something that will eventually earn you passive income. And for those who mean to retire young to enjoy the benefits of traveling the world, having a property that others pay for to rent is one of the best things life has to offer. The value of the property depends on various factors like its location. The real estate market in Edmonton is at its best, so if you are a landlord, you are in a pretty excellent and financially-stable position.
But every landlord must understand that tax involved in owning a property and having it rented out. The least that you want is to be charged more just because you weren’t paying right or you weren’t paying on time. Penalties and interest can mean losses for you. So before you lose all your passive income to nothing, here are three facts every landlord must-know:
Fact 1: Business Or Rental Income?
Most landlords forget about the difference between these two, but the Canada Revenue Agency defines the difference between the two. When you have your space rented out and only provide water, electricity, parking and laundry facilities, then you simply are a landlord. However, if you begin to offer more services that can be likened to that offered by the hotels, then the nature of your business and property changes altogether. There is no gray area between these two. The government requires you to pay different rates if you consider your business as a business and as a rental for income.
Fact 2: Form T776
This is the form you file to declare the income you get from the rental of your property. It is also referred to as the Statement of Real Estate Earnings Form. There is no one form for all the properties that you have for rent. Instead, you must file a form as such for every property that you have for rent. The form also requires you to solve for the net income as follows: calculate all the expenses incurred in the maintenance of the property including Capital Cost Allowance (CCA) and deduct it from the gross income from all the rent paid.
Fact 3: Deductible Expenses
Not all expenses that you have every month is considered deductible expenses. Instead, you will have to file the deductibles sheet on your property. Here is a quick list of those deductibles that are permitted by the government:
· Maintenance and repairs
· Property taxes
It is essential that you present documents such as receipts upon filing for a claim. These will serve as the proof of such expenses.
How do you get your rental taxes right? Keep these facts in mind. Or better yet, ask help from those who know better. It is always best to consult with an accountant you can trust. After all, these facts are general and that each landlord may have a different situation altogether.
There are a more than a handful of people who go into business every year. There are a significant number of start-up businesses that are launched each year too. Sadly, more than half of these start-up businesses close only after a few years of operation. Start-up businesses help the economy in more ways than one. They push the boundaries of technology and innovation. They can provide products and services that big businesses rarely go into. Small businesses can create a market for what they offer, and that’s how they find success.
And yet, in Canada alone, only a little over 50% of all the startup businesses survive for more than one year. A fewer of those usually end up closing down. This brings experts to question – Why do small businesses fail within the first five years of operation? What could be going wrong? Here are some ideas you might want to ponder upon.
· Poor Management Practices
Although most business owners think that bankruptcy is the culprit to the failure of their business, the root of the problem isn't that. They fail to see that it is the poor management practices that led to bankruptcy that is pulling them down. Most entrepreneurs don’t have experience in running a business, which entails managing and directing the people. So before it is too late, plan. Build a management structure early on and work well with others to improve it.
· Negligence In The Company Finances
Are you too focused on making a profit? If you are, then you should think twice about what you are doing. Remember that the goal of every business should not be the profit but how to capture the market. Start-up businesses depend on investors to generate more funding. It can be quite easy to lose control, but you should always be grounded. Know the financial situation of your company and work things out from there.
· Poor Marketing Efforts
No matter how good your business idea may be, remember that it cannot sell itself. Don’t expect it to market itself and generate sales. The worst thing that a business owner can do is to come up with marketing campaigns that are not good enough for the target consumers. Without the right marketing, your consumers won’t be aware of the product or services that you offer. This is the reason why you are not making the sales that you expect.
Running a business isn’t easy, and it becomes even more difficult to pass the five-year mark. But knowing what you’re doing wrong is the first step to making it right.
Are you looking into investing in a new business venture? Determining the capital needed for a new investment includes multi-step processes. No matter how good the new business may be, it is a must for you to determine how much you need to spend on that start-up project. In the long run, doing so will benefit you in a way that you’ll be able also to determine how much profit you can expect out of it.
Long-term financial planning should be one of the best steps that every new entrepreneur must take. Whether it is the purchase of new machinery, the money you put in advertising and marketing or a whole new start-up project to fund, it is a must that you know the tricks that could help you put money in it and make it grow. Here are a few tips to help you get around it:
· Tip 1: Consider the Opportunities that it Comes with
When you’re in business, it is essential that you carefully consider the investments you put your money into. Remember that the goal is not just to earn more, but to also grow more regarding the industry. A business cannot be stagnant as competition is increasing. One must always look into the opportunities that come with new investment. Capitalize on projects that can make the business grow and bring it closer to consumers.
· Tip 2: Make a Rough Estimate of all Possible Investment Costs
Once you have finalized the short list of projects that you’re interested in trying, it is time to look into the financial aspect of each one. Calculate the rough estimate of the cost of each investment project. Then, work out the possible profit that you can gain out of it. With information on hand, choosing which one to push forward would become so much more comfortable. If you plan to use more than one investment project, make sure to prioritize them based on the investment they require.
· Tip 3: Estimate the Payback Period as well as the Cash Flow
Now that you have gone through the details of the project, particularly its financial aspect, it is time to see the project in a bigger picture. Consider not only the profit but the benefits that it comes with for your investment and your organization. Once the project is complete, how will the company benefit from the investment? If it is new machinery, calculate the personnel time as well as the maintenance requirements it may have. At this point, you will need to see how the company can profit from each one.
Capital budgeting plays a critical role in the success of a business. Make sure to consult with accountants in West Edmonton. When it comes to your investments, you don’t want to make decisions too hasty you know you will regret later.
Did you know that almost 3 million of Canada’s population is self-employed? Whether it is online or a physical store, those who engage in a business relationship with clients who pay are self-employed. Compared to those who work for a company, individuals who are self-employed are in charge of when what and how the payer is going to pay for the goods or services that they offer. Such terms of business may involve incorporation while there are others who choose to be sole proprietors of their business.
Self-employed individuals are taxed by the government too. And although this fact is often overlooked, it is essential that they know the items that are taxed and those that may be exempted. How are the self-employed taxed?
It must first be stated that the nature of the job of a self-employed can be quite complicated. They can earn income in any number of ways and is not limited to just one. They may own a business, paid through the practice of profession, commission, fishing or even farming. When it comes to the definition of their business income, it can happen from some sources. Income is earned from any activity that is carried out with an expectation of payment, whether for output or services rendered.
Such activities may include products that are sold in retail in a physical store or through online. Consultation for professional services is also included in the many forms of businesses where income is expected. It does not matter whether it is for landscaping or repainting of a house, the consultation itself is paid and thus it is considered a source of income. But how does a self-employed report income?
The declaration of all income generated by a self-employed is made through the individual’s tax return form. This is different from those who are part of a corporation because the corporation must declare the income first before the individual does. The net income is calculated by subtracting all expenses from the gross income. The net income is then taxed at the marginal personal tax rate. This means that the income is divided over thresholds that are charged at a higher rate.
How do you know if the income that you earned is taxable? Or whether you are under-declaring? It is essential that you consult with tax accountants in Edmonton that you can trust. They can help you identify income and work it against ones that are taxable. There are some accounting firms in Edmonton, Alberta so finding one shouldn’t be that hard. Before you get charged for something you under declared and pay up higher fines, it is best to consult with the tax expert.
As you welcome the New Year, it is essential to engage in projects that can help shape a good year for your business. There is no better time to start with new projects that will not only increase business revenues but will assist in the promotion of its products and services too. What kind of projects should you engage in? Here are some ideas you can try:
· Go back to School
When was the last time you learned a new skill you can turn into a business opportunity? If you can no longer remember what it was or when it was, it’s a reminder that it may be the perfect time to go to school. The start of the years brings new opportunities for growth, and there is no better way to improve your business than to offer your clients something new. You can only do this when you submit yourself to new learning and training as well. Read a good book or attend a workshop on something you may be interested in. Who knows you might find a new business venture you’d find success in.
· It’s Time for a Sale!
You end each fiscal year with an inventory. You make a list of what you have and what you have spent in the last year. This is to make sure that you find balance in what needs to be purchased in the coming year. Now that the new year has started, it may be time to say goodbye to old goods to have space to welcome new ones. A garage sale would be a perfect avenue to liquidate the assets that you have. The money that you get out of it can be used for the other needs of the business. The slower moving items in your inventory should help you figure out the many ways you can improve your services to your clients.
· Find out What Brings in More Money
If you are in the business of handling more than a handful of goods and services, it may be time to distinguish the ones that bring in the profit. Breaking the numbers to find out the margins of the products that bring in money to the company against those that are in stock but are rather slow-moving should help you manage the company more. Knowing all these will help you make better decisions for the business to ensure that everything you are holding on to bring in profit.
Is the new year going to bring in more success? It is really up to you. Refresh your finances with these three activities and see the difference that these can make.
As an entrepreneur, when you run a business, there are various aspects you need to look into. From keeping track of business functions to keeping your employees happy, it takes a lot to maintain the smooth running of your business. One factor which highly affects the happiness of your employees is how well you manage their payroll. Apart from maintaining a basic record of the salary given to your employees, there is a comprehensive system that each business needs to have in place for a well-managed payroll. To help you know more about it, here are some common types of payroll systems listed by experts of payroll services in Edmonton.
1) Internally Managed Payroll Systems
An internally managed payroll system is a method which is feasible for a company which has a less number of employees. With limited employees, it is easier to maintain and manage payroll records without major discrepancies. Managing your payroll is something you can do by yourself, or you can hire a resource specifically for this purpose. The base requirement is the knowledge of maintaining payroll records and awareness about the various laws and taxes applicable.
2) Professionally Managed Payroll Systems
When we talk about professionally managed payroll systems, that’s where the bookkeepers and the certified public accountants (CPA) walk in. If you feel you lack the expert proficiency in managing your company’s payroll, you can opt for outsourcing it to a bookkeeper or CPA. You could also hire an expert on a contractual basis from a reputed accounting firm. Do keep in mind though, that these professionals will only help you manage your payroll records and may not complete the process of making transactions, bank deposits and deductions.
3) Payroll Services Managed by Payroll System Agencies
Another way of maintaining the accuracy of your payroll system is to hire a payroll services agency. These agencies manage the complete payroll responsibilities of your company along with making salary deposits and deductions for every month. Such payroll service agencies often give assurance of total accuracy and ensure that late payments are avoided.
4) Software Managed Payroll Systems
Software managed payroll systems are not widely in use but are gaining popularity slowly. Many software and online portals are now available for you to manage your payroll without going through the tedious process of calculating anything. You simply need to put in the details and these digital platforms record and maintain them for you.
When it comes to managing your payroll efficiently, you have multiple options. If you have a base knowledge of payroll management, you can manage it on your own or with the help a software. However, having a professional providing payroll services in Edmonton with the expertise of the field to work on your payroll is always advisable as it decreases the chances of inconsistencies considerably.
A general ledger is a collection of your account charts. A general ledger is a must to keep your business accountant in order. If you have a ledger, you can effectively have a view of how to spend and also help you in keeping your business on track. Though there are many softwares that are available, there are some small business that still go for the traditional general ledger. If you are eager to have a general ledger then there are a few things that you need to know when it comes to how to fill out a ledger book.
The date is that date on which the transactions take place. You can get the date from the accounting source documents. The date is important when you prepare a general ledger.
There should also be a brief description of the transaction that has been done. If you have doubts, put in all the details that you think are important and necessary. Just hold your horses when you do it, take your time. The description depends on how you want to make a general ledger.
You are at the liberty of choosing whatever reference with which you can identify the transaction. For example, some use the reference of the invoice numbers. You can write them so that you don't forget them. The best way which many suggest that you can cross reference between the cash booklet and the document. Reference is something you need to keep when you make a general ledger.
Income and Expenses
This column is the most important one when you work on how to fill out a ledger book. It is very simple. Just insert the values of the transaction in the right columns. Try making ‘Money IN’ and ‘Money OUT ‘ columns.
Now that you know what all u need when you make a general ledger, let's take a look at how it is filled.
The cash receipt journals are the one’s where we can track the transactions where the business receives the cash. But there is a thumb rule for it. All the entries that you put in here are to be the balanced one’s. It can be written down as follows-
Here, the cash account is credited by $4000, which shows the credited cash. The further columns show the break up of the cash received. The sales account got credited due to increase in the sales. The capital account is increased by another $2500 as the owner put in more cash. These entries are to be made when you make a general ledger.
The cash disbursement keeps track of the cash sent out. For example, you can refer to this
It is with the help of these points that you can get to know how to prepare a general ledger.
The above points will be of great use to you if you have questions on how to fill out a ledger book. ATS Accounting can be of great help when you make a general ledger.
A well-maintained account speaks for your company. But maintaining books from scratch can be a tiring and expensive job. Tiring, if you, the owner, are doing it yourself. Expensive, if you have an in-house, full-time accounting department to do everything for you. In both cases, hiring bookkeeping services in Edmonton, Alberta can prove to be a beneficial choice. Outsourcing bookkeeping services can help you effectively manage all your financial transactions, be it bank reconciliation, sales tax filings, payroll processing, financial reporting, etc.
There are various things to keep in mind when outsourcing accounting services. To hire bookkeeping services in Edmonton, Alberta, the first thing you need to know is – does the service provider have the skills to do the job? Check for the qualification of the employees – do they have well-trained and experienced ICB, ACCA, CIMA, AAT-qualified personnel. Also, check for the software they are using to maintain the books.
Once you have an outsourced bookkeeping service hired, it becomes essential for integrating your existing accounting department with them. Here are tips on how to integrate outsourced bookkeeping with existing accounting services.
Having Cloud-Based Accounting Applications
Working in the cloud not only gives you access to your accounts anytime but also helps the outsourced bookkeeper to get the data needed for creating the books without wasting time in asking for various data they need form you.
For example, your accounting team puts an entry of a bill in the excel sheet that is on the cloud, the bookkeeping services can access that in no time and hence, include the entry in your books. All the other details are shared on an instant basis, aiding in a smooth and uninterrupted workflow.
Using Same Software as the Bookkeeper
Using the same software as the bookkeeping services in Edmonton, Alberta ensures that there will be no software compatibility error when you try to access the data. This helps prevent confusion between your accounting department and the bookkeepers. Also, you will be using the best and trusted software on the market.
Sharing of Financial Documents
There are various documents you need to share with the bookkeeping services in Edmonton Alberta. These include – bank and credit statements, payroll details, bills, receipts, tax documents and more. All these details, if shared on time, help the bookkeeper create your company’s books in an efficient and timely manner. One can share a file using various options available in the market, like – Google Drive, Dropbox, RapidShare, MediaFire and many others to add to the list. All kinds of formats can be shared using these applications, making it easier for both the company and the bookkeeper to access the files.
Once your bookkeeping services and your accounting department are integrated, the workflow becomes smooth and easy. The accounting department can now focus more on the other accounting work and help increase the productivity of your company. To learn more about how bookkeeping services in Edmonton, Alberta can benefit your company, get in touch with an all-in-one accounting solution company.
Hiring an accountant for your business is no longer just about finding someone good at number-crunching and getting the maximum returns come tax-filing time. A good one can save you time and help your business grow; a bad one could cost you much needed money. Yet with thousands to choose from, it can be a daunting call to make. So when you have to choose an accountant for taxes, what are the questions every business owner should ask so as to make the most informed choice?
1) Get Referrals
Most of the experts say that the most of the businessmen get 90 per cent of their clients through word of mouth. Word of mouth plays a crucial role when you choose an accountant for your small business.
2) Check Online Reviews
Check if the business has an online precense and check for reviews. Platforms like Google+ allow customers to give reviews and add ratings.
3) Ask for the Price
Usually, the more complex your return is, the more likely it is that you will be charged by the hour. This can make it extremely difficult to price-shop accounting services but most will give you a ballpark figure and count on paying much more than that. That is why, price is another factor you should think about when you choose an accountant for taxes.
4) Check for the Compatibility
Compatibility is an important criteria when you choose an accountant for your small business. Is your accountant familiar with and able to work with your accounting system? Are you the type that expects your accountant to work with you online, possibly giving them access to your Quickbooks accounts, or are you more like that person that sends in the shoebox of receipts and a check register and asks them to work their magic?
5) Talk About Technology
Spreadsheets and other accounting paperwork are giving way to computers and digital filing. Also, asking the accountant how computer literate he or she is, whether the firm has a website, and if they use social networks such as Facebook and Twitter. A techno savvy accountant can be of great help when you choose an accountant for taxes.
6) Ask to be in the Loop
Some accountants use blogs and newsletters to keep.their clients informed. Try to choose an accountant for your small business who will provide you with information when he comes across an idea, concept, article, etc. that could be of interest or benefit to you. Additionally, you the accountant you respond to your emails, messages and phone calls quickly and not keep you waiting.
The above points are some guidelines which you can consider when you choose an accountant for your small business, but ATS Accounting can be of great help when you choose an accountant for taxes.
Depreciation is an accounting principle defined as the reduction of recorded cost of any tangible or fixed asset over a period in a systematic manner until the value of the asset decreases to zero or becomes negligible. A tangible asset can be anything that a business might utilize for their daily operations. Some of the common tangible or fixed assets include land, buildings, furniture, office equipment, machinery, etc. There are three methods of calculating depreciation over a period that all public accounting firms in Edmonton use - straight-line method, unit of production method and double-declining balance method. In this article, we will put light on the first method.
Straight-line depreciation, also known as the fixed or equal-installment depreciation, is the simplest and thus, the most common method used to calculate depreciation. Organizations estimate the residual or salvage value of the asset at the end of the period during which it will be used. The organizations then charge the same amount to depreciate each year over that period, until the value shown for the asset has reduced from the original purchase cost to the salvage value. As mentioned in the definition of depreciation, this residual or salvage value can be zero or negligible. Since depreciation value charged in the balance sheet each year is the same, the amount of the asset declines in a straight line in the sheet.
How to Calculate Straight Line Depreciation
The process that most public accounting firms in Edmonton follow to calculate the straight-line depreciation includes five steps. They are:
You buy a machine worth $50,000 which can be used for five years. At the end of the five years, the machine can be sold for $5,000. The annual depreciation can be calculated using the following formulae:
Depreciation Rate = (1/the useful life in years)*100 = ⅕*100 = 20%
Annual depreciation = (depreciation rate * difference of machine’s cost and salvage cost) = 20% * ($50,000 – $5,000) = $9,000
At the end of five years, the carrying value would be $9,000 on the balance sheet, the depreciation expense would be completed under the straight-line depreciation method.
This method is straightforward, easy to understand and simple to use. Straight-line depreciation is suitable for assets that operate uniformly and consistently over their useful years. Calculate the depreciation value of your business assets with the help of public accounting firms in Edmonton to make sure there aren’t any errors.
Often growing small and medium businesses would notice they are facing difficulty in recording number of transactions they make. This could either be a result of rapid business growth, or the incapacity of the existing accountant to manage transactions. The solution might seem pretty simple, recruit more employees and expand your accounting team? This, however, does not account for the increased costs of a full-scale accounts department that would drastically affect productivity. There is another alternative, one that would delegate the accounting responsibilities to an accounting firm. Let us explore the merits of such a move.
Increased Focus on Business
Needless to say, you delegating responsibilities away from yourself to an accounting service in Alberta would give you the opportunity to focus on your core operations instead. All the time that you earlier spent going through each transaction, double-checking each transaction could better be used to set your long-awaited expansion plan in motion.
It surprises many that hiring an accounting firm is more cost-effective than a team of accountants. One accountant would not suffice in an eventuality that there is further business growth that drives their workload beyond the brink. The accounting firm that you hire would surely be cheaper than maintaining employees that have their own shortcomings.
Assured Quality of Services
The accounting firm that you choose to hire would provide quality services since this is their area of expertise. Gone are the days when an accounting error would be a major cause of concern. A professional accounting service in Alberta tasked with managing your accounts would be far more reliable than just a couple of employees (regardless of how hard they try).
Accounting firms provide their clients with consultancy services alongside their standard accounting services. The accounting service in Alberta that you hire would help your business with tips to reduce your tax burden, help your business with an expansion plan, and even keep you posted with relevant regulatory changes.
The frequencies with which companies are outsourcing their payroll responsibilities suggest payroll maintenance is a dreaded activity. An accounting firm always ensures that payroll management is done correctly and that payment is released on time.
Companies have a mixed relationship with their bookkeeping responsibilities. It is time-consuming, it needs attention to detail, it is mundane and it is a relatively low-skilled job, but at the same time it is so very important to make the correct entries and there is no margin for error since the consequences of making a mistake are unpredictable. It would be better for a specialist to handle your bookkeeping duties instead.
The finest accounting services in Alberta such as ATS Accounting offer comprehensive accounting, employee payroll, and bookkeeping solutions. ATS Accounting is a team of accountants that specialize in what they do, and seem suitable for handling your accounting duties.
The process of payroll can be defined as the distribution and calculation of salary, wages, and taxes for your employees. When you run a business, you are responsible for making timely salary payments to your employees. In Canada, the same is not possible without complying with the requirements of the Canada Revenue Agency (CRA). Also, by managing your payroll without the help of professional payroll services in Edmonton can cause you to make some mistake. The common payroll mistakes you may probably make include the following.
Misclassification of Employees
When you have a business and manage a payroll system, you are entitled to a payroll tax based on the number of employees you are paying wages or salaries. Often business owners make a mistake of classifying their employees as contractors instead of employees. Never make this mistake as the money paid to contractors is not taxable. This will eventually cost you more as you will have to pay the tax along with the penalty for misclassifying an employee as a contractor.
Forgetting Payroll Tax
One of the biggest mistakes is to completely forget about payroll taxes. When you have a payroll system in your business, you need to pay taxes for the same. Based on your federation, state and local taxes, there are different types of taxes which may apply to you. Make sure to find out which payroll taxes apply to your business and file them on time to avoid being penalized.
Not Planning Your Payroll Schedule
Every business has a different payroll schedule based on the owner’s convenience. You could be paying wages or salaries to your employees on a weekly, biweekly or monthly basis. This payroll schedule has a direct impact on your monetary operations, the profit earned and the cash flow. If you do not plan your payroll schedule and simply keep changing the duration in which you pay your employees, it will directly impact the capital you have at the end of the month. As a result, your budget planning for future investments in the business could be hindered.
Wrong Calculation of Overtime
With constant work and deadlines in business, overtimes are bound to happen. What you need to worry about as a business owner is to make sure you keep an eye on your employee’s overtime. According to The Fair Labor Standards Act (FLSA), it is mandatory for you to pay more for the overtime done by your employee. Making this overtime payment can be complex as you may have to follow the hourly wage laws of the state. To make it easy, find out beforehand how you plan to pay your employees for overtime.
Not Maintaining Payroll Records
Often experts emphasize the need to maintain proper record when running a business. Not just your accounting records, make sure to maintain your payroll records as well. The time of audit is when these records will be of great help. Remember for any company, maintaining at least three years of payroll records is a must.
Managing Payroll Alone
Having a business to run and simultaneously managing various aspects of a business can be too much for one person. With a lot to do alone, mistakes tend to happen. When dealing with the matters of your business accounting, finances, and payroll, you cannot afford such mistakes. Mistakes in your payroll could have a direct impact on your employees. To avoid this, make use of payroll services in Edmonton. Having a professional to work on your payroll system will reduce the chances of discrepancies.
When you have a well-planned payroll system, making timely salary payments to your employees becomes easy. So make sure to work on your payroll better with the help of the finest payroll services in Edmonton.
Accounting principles are the rules and guidelines which companies need to follow while reporting financial data. Business owners may not be able to handle their accounting because it’s easy to miscalculate the expenses and taxes owed. As a firm that offers Edmonton bookkeeping services, we find that accounting your business financial transactions is vital because:
Hiring a professional payroll firm offers numerous benefits as they save your time, take care of all the payroll efforts, and provide payroll compliance with taxes as well. Hence, many small businesses and startups are turning to hire payroll firms that provide several payroll services Edmonton. If you are also planning to hire a firm to ease your entire process, here are a few things that you should look for when hiring.
Various Payroll Services They Provide
The first and foremost thing to look for is the services these firms provide. You should first decide what you expect from a payroll firm and start your search by finding the companies that provide those services. Ideally, a good firm should run payroll as per the schedule, remit payroll deductions, deduct payments for wages, calculate taxes, file all payroll tax forms, and send year-end tax forms to employees and contractors. You can also look for additional payroll services Edmonton that may differ from firm to firm.
Use of Technology
The knowledge of the local rules and regulations affecting payroll is important. But nowadays, many businesses look for payroll firms that use software to manage the payroll system. Today, most payroll firms make use of various platforms and software to complete the task faster and be more accurate. The firm you are considering should have a working knowledge and experience of standard platforms, like Excel and Office, and also be proficient with latest payroll software like QuickBooks or Sage.
Cost of Payroll Services Edmonton
For a small business or a startup, every penny matters a lot. Hence, you must find out how much do the payroll services Edmonton cost. Compare the pricing structures of each payroll firm and understand if they are worth it. Some firms may charge a monthly fee, whereas some payroll companies may bill based on each employee. Some companies may also charge you for generating tax forms. Ask yourself whether the cost is worth paying considering the services they provide and their way of functioning. If the cost fits your budget, you can hire the firm.
Kind of Customer Support
It is crucial for any good payroll firm to offer strong support when you have problems, doubts or questions. Find out if you will be able to get help when you need. See if the people on the other end of the phone, chat, or email is prompt and available to solve your problems and doubts. Make sure that the payroll firm you select provides prompt and helpful customer support.
Outsourcing the payroll management operations to a professional firm is a great way to manage your payroll system and focus on your core operations. Just make sure you know what you are exactly expecting from an outside firm. Hire a payroll firm that matches your expectations and provide all the latest payroll services Edmonton to make sure your taxes are filed on time and help you save time for your other business responsibilities.
Public accounting firms Edmonton hire Certified Public Accountants (CPAs) who look after the accounting process, the finances of a company, the auditing, and the tax filing process. Several small businesses, startups, and public companies hire these professionals to look after their accounting and bookkeeping.
However, if you do not want wish to hire a professional accountant, then there are firms who provide accounting services. Choosing a reliable and certified accounting firm is very important to handle your business accounts accurately. If you are planning to hire a reliable public accounting firm, you must consider the following things.
1) Operating Specialties
Several public accounting firms specialize in specific accounting areas in order to offer clients specialized service. These firms specialize in tasks such as tax filing, management consulting, and bookkeeping. Many public accounting firms Edmonton also provide financial advice and help you in setting business goals. Evaluate your business needs and accordingly select a firm that specializes in your required accounting services.
2) Level of Service
Some public accounting firms Edmonton provide full-time accounting services and handle day-to-day transactions and accounting tasks. While other firms only provide part-time or seasonal services depending on when you need them. For example, some accounting firms provide accounting services once a year during the end of the financial year. Depending on your business needs, you can select a part-time or full-time service accounting firm.
You will see that the accounting fees vary from one accounting firm to another. The fees are generally based on the services provided by the firm, the level of expertise, and the amount of experience in the accounting industry. Some firms also charge on an hourly basis. Take a look at your budget and decide which public accounting firm will be the most appropriate for your business.
4) Level of Experience
Before hiring a public accounting firm, you must first find the years of experience they have in providing accounting services. Public accounting firms Edmonton with more years of experience know how to deal with accounting-related problems and also understand the guidelines of Canadian accounting laws better. Also, try to find if they have catered to similar businesses like yours. Getting this information will give you an idea whether they will understand the basics of your business and will be able to manage and balance your books of account effectively.
These are a few things you need to consider before selecting an accounting partner for your business. Therefore, keep these factors in mind while hiring public accounting firms Edmonton and you will be able to find the best-suited accounting firm to carry out your accounting process smoothly.
Running a business and maintaining your financial accounts on a regular basis can be a difficult task. Doing your own accounting has its own pros and cons. With too many responsibilities in your hands, mistakes are bound to happen. Such mistakes create a problem for you during an annual audit. Here is an audit preparation checklist you should keep in mind when there’s an audit for your small business accounting Edmonton.
Update Your Books Daily
You do not want to sit down to tally all your accounts before the visit of an auditor. In any business, monetary transactions happen on a daily basis. Make sure to keep a record of the same in your books of account on a regular basis. If you keep this for later, you might end up forgetting some transactions. Also, make sure your balance sheet and trial balance are tallied as that is the first thing an auditor will ask for.
Check for Compliances
Before an auditor comes and has a look at your books of account, make sure you are following proper compliances. Identify your company under which legal statutory compliance it falls and ensures that you follow them duly. This will make it easier for the auditor to check your accounts and there will be less scope of any incorrect rates applied to your business transactions.
Organize Your Receipts
When an auditor checks your books of account, they may ask for receipts of incomes and expenses to cross-check the entries. Make sure you have an organized folder in which all your receipts are arranged chronologically for the auditor to go through. If you have a software system to track your receipts, make it easily accessible to the auditor.
Be Ready to Answer All Questions
There are certain questions that an auditor will ask. When going through your books of account, the auditor may look at some significant changes that have taken place compared to previous year’s data and may ask you questions regarding the same. The other question may be if all the entries are accurate and if these entries have tangible proofs such as receipts. Next, he might ask about your tax compliance. Be ready with all the answers to such questions.
Perform Regular Reconciliations
A reconciliation of an account refers to documenting that the account balance is correct. It makes use of two sets of entries to ensure that the figure tallies. Basically, it justifies that money removed from the account matches the amount that has been spent. Do not wait for the end of the year to reconcile your accounts. Try to do it at least on a monthly basis as it gives you a better understanding of the items to be reconciled
With so many things to keep in mind, it is common for people to miss out on a thing or two. To avoid this, you could take professional help to conduct an internal financial statement audit to avoid discrepancies. Having an internal audit conducted makes your books of account ready for the final audit. Take professional help wherever necessary. To get assistance in maintaining your books of accounts, reach out to the small business accounting Edmonton professionals.
It is good to have your own business. It gives you a sense of independence. It is good to be the boss. But what about your salary? You have put in a good amount of capital investment, and your business has started running. The question on your mind now is how to pay yourself. Accountants Edmonton recommends a few tips to help business owners to pay for themselves.
Draw v/s Distribution
When paying yourself, there are various ways and factors to consider based on the nature of your of business. A sole proprietor generally takes a "draw" from the company revenue. As a sole proprietor, you cannot be considered as an employee of the company, so you do not get a salary. What you take is a part of the profits from the business known as a draw. The term "distribution" is used when the company has more than one owner.
Dividends are what shareholders earn from the business in relation to how much ownership they have in the business. A Return Program Account (RZ) with the CRA (Canada Revenue Agency) must be setup in order to pay the dividend.
Salary is what a sole proprietor can earn like any other employee. To get the salary, you need to set up a payroll account with the CRA. A deduction from the net income of the business takes place when you pay salary. This will be taxed as a part of your personal tax when it becomes your salary. To simplify the payroll process, you could outsource it to a payroll service providing firm.
Limits to How Much You Take
The other major challenge when deciding a salary for yourself is determining how much to pay yourself. You are the owner of the business, so you have the liberty to pay as much as you want. However, a wise entrepreneur calculates before using up the money for his personal needs. To make things easier, stick to paying a fixed salary to yourself from the revenue earned. If you have any expansion plans, then you may consider saving more. Therefore, based on your future plans, you need to consider the limit to how much you take.
Know the Taxability of Your Pay
It is difficult to determine how much tax you owe to the government when you run your own business. Self-employment tax is applicable in such cases. It is equivalent to a Federal Insurance Contribution Act (FICA) tax. The amount payable is based on the profits.
Understand how much is more and how much is less. It is difficult running a business. Managing finances on your own could add to your worries. To manage your finances better, without any worries, get in touch with the seasoned accountants Edmonton.
The decision to start your own business is a big decision. You have to plan every aspect of your startup and manage your business finances. For a new entrepreneur, managing the cash flow properly can be a big worry.
Cash flow refers to the inflow and the outflow of money within your business. Managing cash flows is a big problem for startups. Here are a few tips to manage your cash flow.
Focus on the Cash Flow Stringently
While you might be busy focusing on business activities, do not ignore the cash flow. It is crucial that you keep an eye on the incoming and outgoing cash. It is necessary to maintain regular records of your cash flow in your bookkeeping. Missing out on one entry could lead to miscalculation of the funds available.
Maintain Emergency Reserve
Make sure you have kept aside a reserve of the cash for emergency expenses. There is no business which does not face a cash emergency at any point. It could be a small or big emergency. Having a reserve of cash will give you peace of mind in case you have to make immediate payments.
This is an important tip to consider. Accounts payable refers to the money you owe to others, and similarly, accounts receivable refers to the money others owe you. Keep a tab of the pending receivables and make sure you collect them on a timely basis. You could offer a discount to your clients in order to receive the money a little earlier which is also known as a rebate. Paying your pending payables on time saves you from the extra cost of attracting a penalty or interest rates.
Practice Smart Hiring
This does not directly affect your cash flow but has an indirect effect on it. Hiring manpower unnecessarily increases the number of employees you have to pay salary to. When the current manpower is sufficient to run your business, refrain from hiring more.
Do Not Over-stock
Before you plan on ordering raw materials, do an inventory control check. Make sure you need what you are ordering. If you already have stock of raw materials, do not order unnecessarily. A majority of your cash will be blocked in the stocks if you are unable to sell them quickly. Also, additional stocks will increase your warehousing costs, and there is always a possibility of wastage. Hence, you need to have a proper inventory control system in place to avoid any cash flow issues.
Take Technical Assistance
Maintaining your accounting ledgers has become much easier with the growing technology. Make use of technical accounting tools to ensure zero discrepancies. There are various free as well as paid tools available at your disposal. This will help you to keep a track on all your upcoming expenses and incomes. Thus, you can make the necessary arrangement of funds as and when the need arises without facing liquidity problem.
Taking tough yet smart decisions when it comes to managing your finance is the key. Making use of these easy tips, you can manage your cash flow better. To ensure smooth functioning of your business finance, maintaining proper records of your financial accounts is a must. To get assistance in managing your accounts, consider availing Edmonton bookkeeping services from a professional accountant.
Many small business owners get confused whether they should manage bookkeeping on their own or seek help from public accounting firms Edmonton. If you are also one of them, here are a few pros and cons of doing your own accounting that can help you in making the right decision.
Pros of Doing Your Own Accounting
While conducting your own accounting, you are saving the fees that you would’ve paid to the accountant. The cost of hiring an accountant can be saved and used for other business purposes.
When you do your own accounting, you know what is happening with your business. You have an in-depth knowledge of all the income and expenses of your organization. You don’t have to rely on anyone to know the important numbers of accounts of your business.
Make Better Plans
By knowing the accounts of your organization yourself, you can try and cut down on various unnecessary expenses, plan your business strategies, and make the best use of company’s resources. You are able to make informed decisions sooner than later when you have access to your business accounts.
Cons of Doing Your Own Accounting
Doing your own accounting or bookkeeping can be a time-consuming process. It demands a lot of your valuable time. Furthermore. if you fail to provide enough time to accounting, your balance sheets will look out of order, and several mistakes and confusing entries may occur.
Distraction From Work
When you are a business owner, your primary focus should be running and growing your business efficiently. However, if you take up accounting in your own hands, your attention will be divided, and you will also have to focus on managing your books of account. This way, accounting on your own is a big distraction.
Lack of Knowledge
There are chances that you may not be aware of all the codes, laws, terms, processes, and method of accounts. If you do not have accounting knowledge, you can make a serious mess of your business accounts.
It is always recommended that you hire a professional accountant to take the best care and manage your business accounts. There are several public accounting firms Edmonton that offer transparent accounting assistance that can help you in understanding your business accounts and make decisions faster.