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Accounting is one of the things that everyone needs to survive in life, but its one that is often overlooked. Luckily for those who don’t have the gift of math skills, there are numerous accounting firms they can hire to help them with their business accounting needs. While it is true that accounting plays a significant role in the world of business, very few people recognize its importance in our regular daily lives. What is accounting good for?
Reconciliation of Charges
Each month, your bills come to your doorstep reminding you to pay off what you owe the lender company. Whether it is paying for the goods or paying for services that they provide, it is essential to be sure that you are only paying them for what is right. It is part of basic accounting to know whether or not you’ve been charged too much or not. When was the last time you checked your bank account or perhaps even the electric bill? Did you notice any difference in the cost of what you’ve been charged with?
The role of the accountant is to make sure that the bank balances, as well as the flow of money in the company, are reconciled. The cost of how much you spend in a month as well as the amount of income that comes in. Keeping the household expenses together is much like maintaining the costs incurred in the business. Perhaps the only difference is that the extra income in the household goes to savings while the excess is business is considered profit.
What happens when you spend more than what you earn? Doing the math is simple. When you do spend more than what you make, you end up with debt. Sadly, when debt is not paid, it earns interest, and the debt you owe only goes higher. Overspending can sometimes be uncontrollable in the household, especially those with kids. However, overspending today is not going to help save for tomorrow.
Accountants emphasize the need to only spend within your means. Proper budgeting is also part of basic accounting. Knowing where to put your money and determining how much needs to be set aside for the bills should be what every household should learn. To prevent debt, it is best to learn to budget.
Planning for the Future
At a time when the economy seems unstable, it is common for people to worry about their future. The desire to have enough funds to send the kids through college, to buy that dream home and to have enough money to go on vacation will always be there. The first step is careful planning for your finances. The ultimate goal of everyone is to have a financially healthy future. The only way to do it is to ask an accountant on how it can be done.
Accountants will not only help you manage your finances, but they could give you advice on making investments that could bring financial stability in the future. Savings, investments, debt control are among the other things that can help financially plan for your future.
Accounting is a part of daily life. And unless you want to have financial problems in the future, it is best to learn the basics of it from only the best.
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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.
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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.