Why is it important to keep records? This is because it helps you identify the sources of your income and help you in deciding whether you should apply for a GST/HST.
Whether you are doing your own bookkeeping or you are having a professional do it for you. It’s best that you know the basics on how to tidy your record keeping. Most business owners get overwhelmed with invoices, receipts and statements which leads to a bad habit of not recording accurately. As everyone in the business is looking for growth, learning and understanding how to correctly record transactions gives integrity to your books which will help you figure out if the business is profitable. Make sure your books are all neat and tidy! Here’s 5 EASY and UNCOMPLICATED tips to guide you with your bookkeeping approach: Know the Basic Accounts for your Business.
This are the resources owned by the business. Examples are: cash, investments, accounts receivable, inventory, supplies, land, buildings, equipment, and vehicles.
It’s the legal financial debts or obligations that arise during the course of business operations. Examples are: Loans, accounts payable, mortgages, deferred revenues, earned premiums, unearned premiums, and accrued expenses.
This represents the owner's investment in the business minus the owner's draws or withdrawals.
is the income that a business has from its normal business activities. It is normally the sale of goods or services.
It’s the money spent or cost incurred in an entity's efforts to generate revenue.
Have a close look at your accounts and find out which ones are tidy and what accounts are messy so you can start putting an effort to clean it up. Determine the state of your financial affairs. Do you have a steady flow of income? Or is your cash balance growing? Then that means your financial health is in good condition. If it’s the other way around, you can cut on expenses, create a budget you can stick to so you can pay down your debts.
You don’t want to lose invoices and get in trouble with your auditors. Proper safe keeping of your receipts and invoices makes you more compliant!
You might be an excel wizard or good in maintaining hard copies but as your business grow, Bookkeeping may get complicated and it may require more time having single transaction recorded in multiple accounts. There are various Free and paid accounting software that saves you from the hassle of keeping all your transactions recorded fast, easy and reliable.
All business owners can take charge of their taxes without knowing that it could be cheaper if they hire a professional to do it. Tax professionals or accountants definitely know the ever-changing tax law. They can tell you which deductions you can claim and how you can lower your tax rates without breaking the rules.
Bookkeeping is your business’s best friend. It will tell you not just the good sides of the business but it will also show the worst part of it. It also helps you which part of the business needs more effort and which ones are no longer needed. Bookkeeping tells you everything you need to know about your business to give you a good overview of your financial standing and a wide angle of the business’s strengths and weaknesses so you can plan for a better and bigger business.