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.
Federal or provincial? These are the two types of incorporation you choose from whenever you decide to incorporate your business. Perhaps it has crossed your mind a couple of times in the past. In fact, you must have thought of it the moment you decided to start your own business. Other people you have consulted regarding incorporating your business, in the beginning, must have discouraged you from going for it. And most expert accountants in Edmonton would only tell you that the decision is solely based on what you think.
Is business incorporation necessary? Law does not require it for all businesses, that’s why it is essential to know when the right time is for you to incorporate your business if you decide to. Although you may have apprehensions concerning it, incorporating a company comes with its own set of benefits, and that pertains to taxes.
Have you heard of small business tax deduction? The tax on businesses that fall under it is calculated at the rate of 17% of the first $500,000 income. When you incorporate your business, it means that you are distributing the shares of the business to the people that you trust. Most business owners who decide to incorporate the business declare their family members as shareholders of the company. Since the income doesn’t go to one person alone, the tax that you are charged with becomes smaller.
SBD or Small Business Tax Deduction may perhaps be the best form of tax exemption that you benefit from incorporating your business. Apart from that, you become more in control of when you will receive your share in the income earned by the business. This means that you can decide to distribute income when the tax rates are low. Such manipulation can be done best with the help of an expert accountant or an accounting firm in Edmonton.
Lastly, tax deferrals are also one way you can potentially save on tax payments in case you decide to incorporate your business. Ask an accountant in Edmonton for help to help you understand how your business can belong to the lower slab in case of tax rates.
Whether you decide to incorporate your business is really up to you. But to make a wise and sound decision, it is best to consult the expert on what to do. Only trusted accountants in Edmonton can honestly explain to you what comes with the choice and why it is best for your business today and in the future.
How do you put together a business plan that sells? More than being a benchmark for success and growth, a good business plan must be able to attract potential investors to come in. Acquiring funds for business is not limited to how much the company earned over a span of time. Money could also come from individuals or institutions who are interested in investing in your business project to help it in its expansion. More than any other endeavor, creating a business plan that will get you the money that you need to improve your business.
You’ve prepared yourself for the sales pitch, but before you present anything, potential investors will always look into your business plan first. You must make sure that the plan is clear, concise and complete. But how do you get it done right? Here are some tips to do it:
- It must highlight all the key factors that make your business a success. The growth of the business is not dependent on one factor alone. In fact, it may be a combination of a number of factors working together. However, it is important that you are able to visualize this for your target investors. When they see that these factors are actually tangible and controllable, they can easily realize what they can expect when they put their money in your business.
- Be positive in your tone when it comes to packaging your business. Load with a lot of positivity and enthusiasm. The goal is to compel your investors to put their money in your business immediately after reading your business plan. What goals have you set for your company? Include that alongside the mission and vision of the company.
- Clearly define the potential of the business to grow even more. The growth that it has had in the last few years since it started its operation isn’t enough to get investors to sign in. They have to see where their money is going and how far it will grow. Identify your market and let them see for themselves how knowledge of your clientele will help in growing the business.
- What is the business idea? Assuming that the investor already knows what the business is about is one of the biggest mistakes that you can do as a business owner. When you present the business plan, make sure you explain the jargons that you used. Make the presentation as simple as possible. Complicating it will not get you the investment that you need.
These tips will help you put together a business plan that will sell. Follow it religiously, and you’ll be surprised at how effective your business plan will be.
Do you own a small start-up business? Have you ever been told to get an accountant to help you with the books? Perhaps you have repeatedly been given this advice, but you thought you might not need one now as the business is just starting to pick up. In fact, you have thought about doing your bookkeeping in hopes that you will be able to save on costs. An accountant, after all, can be quite expensive.
Seeking help from public accounting firms in Edmonton is always something that you have second thoughts about doing, but you know it’s the right thing to do for your business. These professional accountants do not only look after your accounts now, but they also consider the stability of the company in the future. While it may seem as if you are saving money by not hiring a professional to do the books, the risk of whether you have done it right or not is always there.
Before you give in to the idea of doing your accounting on your own, here are some risks that you might run into when you do it on your own:
· It’s a Distraction
As the owner of the business, your goal should be focused on making it grow, to reach out to new markets and develop its potential for growth and collaboration. How do you develop and grow a business efficiently when you have other pressing matters like the accounting to look after? You don’t need the extra distractions at the moment, and that is what the company books are. Your divided attention will only make you commit mistakes that you shouldn’t. If you do your marketing and your accounting, you’ll have too much on your plate. Choose one. Delegate the other to those who know better. Accounting can be a distraction that you don’t need.
· It will Consume your Time
Did you think that doing your business accounting won’t be as time-consuming? Everyone who is just starting out thinks that they don’t have much to do considering that there is no steady cash flow yet. It’s easy to assume that until you have to do it. It will demand a lot of your time. And if you fail to provide it with the time it requires, your entries in the books will be all over the place. It will look out of order, and this could cause confusion that could mean losses for your business in the long run.
· It Requires Professional Knowledge that you don’t have
Are you an accountant yourself? If you are and you have the time, then go and take care of your books. But if you are not, it is best to delegate the task to someone who knows how to do it. Having a professional accountant in Edmonton who will focus on your books and calculate your taxes means getting all the help that you need. They will make sure that your company will abide by the rules of the government in terms and in processes to avoid delays in payment and mistakes in the methods of accounting.
Hire a professional accountant, and you will never go wrong. You can take care of the other aspects of the business that you are good at.
Starting your own business has always been your dream. Everyone who knew of your plans told you what a good move it was going to be – for yourself and your career. The road to success was not easy, but it taught you well. It gave you a sense of independence. Being your boss comes with its own set of responsibilities, and as they said, you have to do what you have to do to make things work. But how about your salary? How much should you get paid?
You have put in good money into this investment, and now the business is running smoothly, and there’s steady cash flow. That’s good news! Perhaps the only question left unanswered is whether or not you should get paid. If you are to be paid, how much should your salary be worth? Accountants in Edmonton have got a few tips you need to remember before getting your salary as the boss. This is to make sure you don’t overpay yourself and lose your business investments in the long run.
Tip 1: Only Take Part of the Profit
The payment that you get as the owner of the business depends on a lot of factors, including the nature of the business itself. If you are the sole proprietor of the business, you not considered as an employee of it. Thus you shouldn’t get a salary. Instead, you can draw from the company profits instead. The term distribution, on the other hand, should be used when the business has more than one owner. How much you draw should not be more than the company could afford at the moment. To determine this, you need to consult an accountant in Edmonton.
Tip 2: Get Salary Just Like any Other Employee
You are the boss. You are the owner of the business, but this doesn’t mean you can get as much money from it as you can. In fact, before you do get a salary, it is crucial that you establish a payroll account with Canada Revenue Agency. The salary you will get will be taxed like the other salaries your employees are getting. To develop a good payroll system, make sure you work closely with an accountant you can trust.
Tip 3: Consider the Taxability of the Salary you Ought to Receive
The nature of your business will help determine the amount of tax you ought to pay the government. When you are running your own business, worrying about the tax might not be one of your primary concerns. For this, you should have accountants Edmonton to do it. The amount you pay is based on the profit your company earns. Let the experts take care of it for you to avoid penalties and surcharges in the long run.
Managing your own business comes with duties and responsibilities, and it’s only right that you get paid for doing what you do. However, the amount you get should also abide by the rules you and the government have put in place. In all this, an accounting firm you can trust can help ensure that you are paid and that your business remains financially secure.
In the span of time that you have been running your business, have you ever asked yourself what you consider as its assets and liabilities? When it becomes a challenge to balance the sheets, it means that something is wrong. When defining the assets and liabilities of the business becomes challenging to identify, then you must seek the help of a professional accountant. Not only can they help you find balance in the sheets, but they can also help you identify what you should consider as assets and liabilities when you list them down in the books.
What do Assets Mean?
Assets are items that have become a property of the business. They can be both tangible and intangible. The tangible ones include all the items that can be seen as part of the business operations including the office tables, chairs, printers, machinery and the like. On the other hand, intangible items are those that you cannot see or touch but you know is part of the business like patents, investments, and even good customer relations. Assets are called such because they can be used to help the business gain more today and in the future.
What do Business Liabilities Mean?
Liabilities of the business include all the items that you use to make the product or provide the service that is yet to be fully paid. Whether it is a loan you took out from the bank or the salary of your employees that you are loaning for, they are considered business liabilities for they are not yet paid. Their cost will then be added to the company expenses, making you lose profit within a specified period or until the loan made has been fully paid.
How do You put Current Assets and Liabilities on Record?
Do you have assets that can be converted to cash within the fiscal year? These are the assets that will fall under current assets. These assets could include all forms of cash or cash equivalents, inventory, account receivables as well as other company liquid assets that can easily be converted to cash. Current assets play an important role in keeping the company afloat. They help ensure that the payables and dues are paid on time. Such assets help maintain the day-to-day operation of the smooth business sailing.
Current liabilities, on the other hand, are the bills that need to be paid every month, does that require a monthly or quarterly payment as well as short-term debts that need to be settled within the fiscal year. Every business must have working capital. Accountants suggest that companies have this fund to keep the day-to-day operation going without the need to incur debt.
The challenge to every business owner is to keep their assets higher and their liabilities to a minimum. Working closely with an accountant you trust will help your business achieve a positive working capital, allowing your business to be as efficient as you want it to be.
Have you recently updated your business cost sheet? Whether it is a list associated with production, administration or the distribution of a product, every company must have its cost sheet. The more important part of having a cost sheet is keeping it updated as often as possible. The sheet is in itself a reminder of how you should calculate the cost of the product to determine the margin of profit that you gain when each one is sold. Also, it will help ensure that you can set up prices of other products that you decide to sell in the future.
Did you know that the cost sheet should be prepared even before you begin business operations? If this is how important it is to keep track of the flow of money in the business, it is also best that you know what should be in it. When you prepare the sheet, make sure that you include all the details necessary. Not only will it be helpful today, but it will serve as your guide to adequately prepare cost sheets in the future whenever you decide to add more products to the list you already have.
· First, your cost sheet must contain a list of all the products that your business is selling. Alongside these items should be a list of how much they cost when you procured them. On the column beside it, make sure to list down the price rate that you are selling it for. Whether it is a product or a service that you are offering, it is essential to put them on a list. Once you get a list of the total cost of the item, add the percentage of profit to help you arrive at the expense of each item or service.
· Second, be sure to include the source of the items that you are selling. If it comes with a shipping fee, then make sure to cover all the expenses incurred to get the item to you. All these should be shouldered by the cost of the item to make sure that you don’t lose money on your investment. The goal of every business is to earn; thus, you have to make sure that you include all expenses and have put them on a list.
· Third, the cost sheet must also include the details of the supplier as well as the details on the partner shipment company. These details will help you during the evaluation of the services and products you have been provided with. When it seems as if the relationship with these providers are no longer as productive as they used to be, it is best to rethink if keeping the relationship with them is still right for your business. When you decide to reconsider, the cost sheet will help you during the evaluation.
Preparing the cost sheet may be something that’s easy to overlook. However, it is the document that can be extremely beneficial for your business in the future. When its preparation becomes a challenge, it is best to ask a professional accountant to help you. They can prepare the cost sheet as well as explain the implications of the potential increase in cost and decrease in sales. All you need is a certified accountant to get the job done right.
The auditing process conducted on a business institution looks into possible errors that may have been entered in the books. When accounting professionals find the mistakes, they immediately work to correct the data to avoid the wrong data from being used further into the recording. It may result in an unbalanced book or worse to make the financial statements unreliable. Mistakes that may be due to the wrong input of data or a typing error must be corrected immediately. But experts say that correcting the data is as important as understanding how it was committed.
There is no doubt that a seemingly simple accounting error impacts the overall financial status of the company. The cash flow, capital, profit and even the tax that your business ought to pay are affected by simple errors inputting the data in the system. A variety of things may cause the errors, but here is a list of the most common accounting errors committed by businesses.
· Imbalance in the Financial Statement
There are two types of balances that most companies have to keep a record of – the revenue account and the expense account. Both of which contains a list of when the money came into the company’s account and when it left. It practically shows business owners the cash flow. The revenue account must contain the cash inflow showing the actual credit balance of the company. On the other hand, the expense account must incur the debit balances. When the wrong data is put in the wrong balance sheet, the differences may result in an error altogether.
· Input of Data in the Wrong Year
Each year, the accountants tally the books in hope to achieve a balance in the ins and outs of cash to show whether the company earned or not. More than the simple recording of expenses, the books also ensure potential investors that they are putting their money on something useful. However, most businesses fail to keep their book closed for the fiscal year. When the books have been closed, remember not to go back to change any of the details. It is best to keep it that way. Unless it is a transaction that needs to be input in the records, it is best to have a professional accountant do it for you.
· Opting not to Include Particular Expenses or Details
Omitting data from the records may seem like nothing, but it can affect bookkeeping altogether. When you choose to delete data that should have been recorded, it can be the primary reason why your sheets are not balanced.
What’s the best way to keep you from committing these mistakes? Assign a professional accountant to take care of your business accounts. They are accurate, and they can make the process less consuming for you. Having the right audit firm will save you time and money in the long run, not to mention keeping your business from having an untrue financial statement.
Hiring a professional accountant may be one of the best decisions you could ever do for your business. Not only does it mean professionalizing the books, but it means putting your finances on the right track. When it comes to business, it is essential to know the flow of money to ensure that your business is earning as much as you want it to. After all, managing your own business is not a walk in the park. It requires skills, time and focus. With an accountant working with you, your business is in good hands.
But finding the right accountant can be a challenge too. Don’t fret. These tips will help you find the right person or team for the job:
· Tip 1: Ask them if they are Available
With a shortlist of accountants on hand, it is relatively easy to pick one. The first thing to ask is whether they are available to do the work for you. When they say that they are, the next thing to ask is how often they are available to consult with you regarding your financial concerns for the business. Their available will allow you to open doors for communication – the basic foundation of a good relationship with an accountant. When you agree with their availability, then you are off to a good start.
· Tip 2: Talk About Their Rates
Assuming that they already know how much budget that you have to pay for their services won’t do you any good. The best way to hire an accountant is to be straightforward with them, especially when it comes to your budget. Some accountants might bill you for every service that they provide. Others will charge you for the period that they have worked for you. Choose to work with someone whose rates fit your budget.
· Tip 3: Ask your Friends About it
Asking for referrals is one of the most effective ways to hire professionals for your business. These referrals come from satisfied clients, which means that the person they are recommending for the job has provided them with satisfactory work. Don’t be afraid to ask personal and professional connections for referrals. After all, a good word put in for an accountant by a client means a lot. They might be so good.
Looking for an experienced, reputable and affordable accountant for your business may not be that easy. But with these tips in mind, you know you can never go wrong.