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Edmonton Bookkeeping | Tax Payments On Financial Statements

in order for entrepreneurs to verify the accuracy of the interim financial statements as received from Edmonton bookkeeping, they should understand all the different component parts of those financial statements. Since paying taxes is a significant part of the finances of the business, verifying the corporate tax payable and tax expense section of the financial statements, can be very important in ensuring the accuracy of those statements.

Entrepreneurs should be very well versed in what the difference is between tax payable accounts and tax expense accounts as it appears on their financial statements. A very simply budget and tax payable account is the area on the financial statement that an entrepreneur will indicate where they have made a tax payment. Business owners should be extremely aware of how this looks because even though a business owner is making tax payments in installments, they are doing so proactively because they have not yet received their tax bill. Edmonton bookkeeping says that any time a business owner pays for liability before they receive the bill, it shows up on the financial statement as a negative number. The more they pay, the higher that negative number grows. Business owners should be aware of that so that they do not panic when they see a minus number on all of the taxes that they have been paying throughout the year.

Tax expense accounts is the area on the financial statement where a business owner will see the taxes that they owe. Edmonton bookkeeping says that it is extremely important for entrepreneurs to understand how this appears as well because it sends an entrepreneur will not get their tax bill until the end of the year, this account will set at 04 most of the year. If any amounts are input into this account any other time by anyone else, business owners will know that it is inaccurate. Once an accountant calculates the amount of taxes that a business owner owes, they alone will enter that amount into the tax expense account, which the balance that a business owner owes will be applied against all the amounts in the tax payable account that they have made, and bring those negative numbers back to zero.

it is extremely important that entrepreneurs understand the difference between those 2 accounts and how they will appear on the financial statements, in order to be able to catch mistakes. When business owners are able to catch the mistakes on their financial statements, they will be better able to use those financial statements as a tool to help guide their financial decisions that they need to make in their business. Whether the decisions are to hire new staff, pay themselves, purchase assets, or even see how effective their marketing strategies have been, the more accurate those financial statements are, the higher degree of probability that a business owner can make a decision that will positively impact their business instead of negatively. Getting into the habit of doing this on a regular basis can help entrepreneurs ensure that the financial statements are as accurate as they can be whenever they are needed.

Entrepreneurs who make significant financial decisions in their business without understanding their financial statements, or checking the accuracy of those financial statements and end up making poor decisions for their business says Edmonton bookkeeping. Whether they do not understand their financial statements do not look at them or their wrong, the results can end up being the same. Industry Canada says that half of all entrepreneurs fail before their 5th year in business, and 29% of them said that they failed because they ran out of money in their business. Business owners can significantly impact the chances of them avoiding that fate if they learn how to understand their financial statements and review them for accuracy in order to use them whenever they need to make financial decisions in their business.

Since tax payment is an extremely important part of the payments that a business owner makes in their business, they should be very aware of how those tax payments show up on their financial statements. Despite the fact that many businesses believe that tax payments are an expense and should show up in their expense accounts, or that they are a payment so they should show up in accounts payable, Edmonton bookkeeping says business owners should be aware that taxes are dealt with as their own entity in tax expense accounts and tax payable accounts. If the taxes appear anywhere else on the financial statement, business owners should be certain that these are errors.

For all of the various taxes that a business owner must pay in their business, there will be a separate tax accountant devoted to that amount. They will be federal and provincial tax accounts, a GST account that is separate from federal, and 2 different payroll accounts one for the payroll taxes that the business owner pays, the other for the payroll tax that the business owner withholds from their staff. Entrepreneurs should get familiar with all of these different tax payable accounts and how they appear on their financial statements in order to verify the accuracy of each of them according to Edmonton bookkeeping.

Once entrepreneurs are aware of how taxes are going to look once they are paid on their financial statement, they should know how the taxes that they owe look on their financial statements. Since the only time a business owner gets a tax bill is at the end of their fiscal year, as their accountant is preparing their year end financial statements, their tax expense account should show a balance of zero for the entire year until the accountant makes that entry. This makes it extremely easy to review for errors since if there is any entry that is made into that account ever, business owners know that that is a mistake. By ensuring that their financial statements are accurate, business owners can be certain that any time they need to review those financial statements to gain important financial information, though as accurate as possible.