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The first thing that entrepreneur should keep in mind is that a proprietorship has a different tax filing deadline. For example, proprietorships and their owners get to file taxes on June 15 which is a whole forty-five days passed the typical filing deadline for personal taxes in Canada, which is April 30. Outsourced accounting services says that that means that entrepreneurs can file their business and personal taxes at the same time. All an entrepreneur needs is to file a different form alongside their personal tax returns. This tax form is called a T2125.
When entrepreneurs are getting ready to file their taxes, it is best practices for entrepreneurs to have created two separate bank accounts. One for business, and one for personal. It is not a good idea for entrepreneurs to be running their business through their personal bank account, and it is typically worth the additional twenty dollars to have a separate account. This makes it a lot easier for an entrepreneur to see all of the business transactions whether they are revenue coming into the business, or expenses going out of the business. The reason why it is so important to keep track of, is because the literal accounting requirements are different as well.
Outsourced accounting services says that single entry accounting is what an entrepreneur needs to do is a proprietor, which means all they are doing is keeping a spreadsheet of every debit and every credit in their business. This is a lot less work and does not require accounting software like QuickBooks, but it is a lot more risky because it is much easier for entrepreneurs to make mistakes. Having a separate bank account can help businesses ensure the accuracy of this single entry accounting as well as give them a layer of audit protection. Regardless of anything else, entrepreneurs should understand that they also need to continue to keep receipts in their business, or at least keep copies of the original receipts. If they get audited, they will need to have them on hand for up to seven years.
Outsourced accounting services says that by learning how to keep proper accounting in their business, can help businesses that are proprietorships keep accurate record of their finances.
It is extremely important for entrepreneurs to learn how to keep the accounting in their business regardless of if they have a proprietorship or corporation says outsourced accounting services. However, there is many things that entrepreneurs who have proprietorships should keep in mind, because it is an unusual way from what typical businesses do. By learning these differences, can help entrepreneurs keep accurate records from the very beginning of their business, which can help them make great financial decisions in their business and grow their business.
The first thing that entrepreneurs need to keep in mind is that they do not need any special accounting software to do the accounting in their proprietorship. Accounting software like zero, Sage or QuickBooks is called double entry accounting, and it is a way for entrepreneurs to ensure that for every exit of money in their business there is a credit. They start out accounting by ensuring that their bank is balanced says outsourced accounting services, and they end that way too. Double entry accounting means that it is much easier for entrepreneurs to tell if there are mistakes, because nothing will balance at the end if there is been a mistake. However, single entry accounting is a lot easier to do, less work and as long as an entrepreneur is sure that there keeping extremely good records of their expenses and revenue especially by having a separate bank account, they can ensure that this is as accurate as possible as well.
Another thing that entrepreneurs should keep in mind is that even though they might not want to use an accountant regularly, outsourced accounting services recommends that entrepreneurs start by visiting an accountant in order to ask any questions they might have, find out what categories are most needed to track for their industry, and have an idea of what the high-level projections are for their business Says outsourced accounting services. By being able to start their business properly, with great advice, a business owner has a much greater chance of ending up with a great year and for their business.
When it comes to their year end, once an entrepreneur has learned how to do their single and accounting, have separate bank accounts and credit cards, and understand the tax filing deadlines, it is still a good idea for entrepreneurs to have an accountant help them file their proprietorship tax return says outsourced accounting services. The reason for that is because it will be one last check on everything that a business owner has done in order to minimize their risk. They can tell an entrepreneur if their expenses are reasonable, the expenses fit the CRA parameters, have they verified that all the information is accurate and complete and that nothing is missing, our expenses properly classified. If an entrepreneur makes a mistake and classifies all automotive expenses into the travel category, that could throw off their numbers. By allowing an accountant to help at the very end of their business, can ensure entrepreneurs have the best tax return possible for their proprietorship.
