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 accounting or you are hiring a professional to do it for you. It’s best that you know the basics of how to tidy your bookkeeping. 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. Find out how your accounting and bookkeeping can help you accelerate your business.
You don’t want to lose invoices and get in trouble with your auditors. Proper safekeeping of your receipts and invoices makes you more compliant!
You might be an excel wizard or good at maintaining hard copies but as your business grows, Bookkeeping may get complicated and it may require more time having single transactions recorded in multiple accounts. There is various Free and paid accounting software that saves you from the hassle of keeping all your transactions recorded fast, easy, and reliable. Accounting software can be sync with your banks and will help you understand your real-time cash position. Accounting software can be sync with your banks and will help you understand your real-time cash position.
For small business owners, accounting is crucial and knowing the basic accounts of your business will lead you to better financial management. This is most especially when you are doing your own business accounting, it will help you maintain a systematic, accurate and complete record of all financial transactions of your business which you can use in the decision-making process. These are the 5 basic Accounts you should see on your records: Asset (resources owned by the business), Liability (legal financial debts or obligations that arise during the course of business operations), Revenue (income that a business generates from its normal business operation), Expense (cost incurred in an entity's efforts to generate revenue), Owner's equity (owner's investment in the business minus the owners draw or withdrawals).
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
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.