Edmonton Bookkeeping | Better Decisions With Accurate Financial Statements
The more accurate the interim financial statements are in the business, Edmonton bookkeeping says the better tool they are for business owners to use when making decisions in their business. Often business owners need to take decisions about purchasing assets, hiring staff, or checking to see how effective their marketing strategies are. If there are errors in the financial statements, business owners may not be able to make most prudent financial decisions because of it. If they think they have more money at their disposal than they do, business owners purchase that assets, they may run into financial problems that could have been avoided if they had more accurate financial statements. Since half of all entrepreneurs close their business within 5 years, and 29% of those entrepreneurs say the reason why their business failed was because they ran out of money, helping entrepreneurs make the best decisions in their business as possible can be a significant help in avoiding this problem.
This is owners should understand where errors are more common in their financial statements, and check those areas first because fixing easily found mistakes can be a fast way business owners ensure the accuracy of their statements. Edmonton bookkeeping says that one area that business owners can verify accuracy in is in the accounts payable section. Sometimes, accounting software mistakenly puts tax payments into the accounts payable. Business owners should ensure that all tax payments go into the appropriate tax payable account. By verifying the accuracy here, business owners can be more sure of the accuracy of their financial statements.
Another way business owners can check their financial statements is by looking directly at their tax payable accounts. There are five tax payable accounts and all, for each of the various taxes that business owners pay. By familiarizing themselves with each of the various tax payment accounts that there are, business owners can check to see if payments are being made to often, or not often enough in order to help verify accuracy. There is the federal tax payable account, where all federal taxes are paid except for GST which gets its own category. There is a provincial tax payable account, Edmonton bookkeeping says that this is unique to Alberta so business owners need to be very aware that a provincial tack needs to be posted in a separate account. And there are 2 different payroll tax accounts, one is the withholding accounts where business owner indicates all the taxes that they have taken off their employees checks for source deductions, and the employer contribution payroll component. Where the amount of taxes that the employer pays for CPP is indicated.
Edmonton bookkeeping says that by reviewing each of the tax payable accounts, business owners can easily verify accuracy. If business owners making GST payments monthly or quarterly, they can check to ensure that there GST tax payable account has the right number of entries into that accountants. They can check to ensure that it is not accidentally posted to the federal tax, and the various payroll tax accounts have the right amount of payments entered as often as payroll is run. Edmonton bookkeeping says that by verifying these accounts, business owners can ensure the accuracy of their financial statements.
With the amount of taxes that business owners have to pay in their corporation according to Edmonton bookkeeping, keeping all of the various taxes straight and their financial statements is important. Common errors have been on these sections that can easily be checked. By keeping these sections error-free, business owners can help those financial statements be as accurate as possible if they ever need to use them in order to make decisions in their business. Since half of all entrepreneurs fail before being in business 5 years, and only 11% of those entrepreneurs ever seek help, business owners should be aware of all the areas that they can fix in their financial statement to ensure that the information they have on an interim basis is as accurate as possible.
Business owners should understand what the tax payable and tax expense accounts are on their financial statements. According to Edmonton bookkeeping, the tax payable accounts are the areas in the financial statements that a business owner uses to indicate all of the various tax instalment payments that they make. As they make a payment, it will be indicated on one of the 5 various tax payable accounts. The tax expense account is one account, where all the tax that a business owner owes is indicated. Since entrepreneurs do not get their tax bill until the end of the year, this account should day free of any entries until the accountant is working on the corporate year-end puts in the tax amount owed.
It is very important that they entrepreneurs that are reviewing their financial statements understand how these accounts look on interim basis in order to verify the accuracy. Despite the fact that a business owner is going to be making interim tax payments on all of the various accounts that they have, these will show up on their financial statement as a negative number. The reason for this, is because a business owner will yet have their tax bill, and any time a business owner rate pays a liability, it shows up as a negative on the financial statements. By understanding this, business owners can ensure the accuracy of their financial statements. Edmonton bookkeeping says that many entrepreneurs panic when they see tax payments that they have made show up as a negative number on their account.
Business owners should also understand all of the 5 different tax payable accounts that exist, so that they can verify all the right amounts are being posted to the right sections. There is a federal tax Edmonton bookkeeping says the 5 tax payable accounts are: federal, provincial, GST and to for payroll. Business owners should ensure that all tax payments get posted to each of those accounts and not on their profit and loss statement. Despite the fact that making a tax payment may feel some business owners may feel belongs on a profit and loss statement, they should be aware of the fact that it should not, and if there tax payments and being indicated there, it is an easy way to fix the error.