Bookkeeping is an essential task for business owners, as it helps them keep track of their financial transactions and make informed decisions. It is a process of recording, organizing, and analyzing financial data in order to make sure that the books are accurate and up-to-date.
Bookkeeping service can help small business owners have a better understanding of their finances and make informed decisions on how to allocate resources.
It can also help them stay compliant with tax laws and regulations. With bookkeeping, small business owners can gain insights into their financial performance, identify areas for improvement, and plan for the future.
When it comes to crucial services such as accounting services in Calgary, AB and bookkeeping, expertise is important. Bank on Brown Boys Accounting for your bookkeeping service and accounting service! We have a team of skilled accounters and ensure that we look after your bookkeeping service and accounting service seamlessly.
Here are a few tips for bookkeeping and accounting that will make your accounts more organized
- Know the general lingo of bookkeeping
You need not be a finance graduate to actually bookkeep professionally. Knowing some basic terminologies and the lingo used is however a must. Here are a few common bookkeeping and accounting terms that you need to know.
- Bookkeeping: Bookkeeping service is the process of recording transactions, keeping track of what you have and what you owe. It’s very similar to accounting but typically more detailed and time-consuming
- Assets: Assets are items that have monetary value and they belong to a company. Common examples include machines, inventory, real estate, accounts receivable, and cash on hand. Assets can be placed in one of three categories: current assets (cash or cash equivalents), fixed assets (a physical asset that no longer requires money to maintain), or intangible assets (something with value that cannot be easily valued in monetary terms).
- Asset register: An asset register is a record of a company’s assets and the value of each asset. It may include details such as when the assets were purchased, how much money was spent on it, and what its current condition is.
- Liabilities: Liabilities are amounts owed by one person to another. Common examples include accounts payable, accounts receivable, and mortgage loans. Liabilities can also be placed into one of three categories: current liabilities (money owed to creditors), fixed liabilities (debts that are not expected to change for the foreseeable future
- Have the Right Documents in Place
Creating the right documents is key to achieving financial success. When starting a small business and running it, having the right documentation could be a make or break factor. Hence, it’s crucial for small businesses to employ skilled professionals for bookkeeping service and accounting service. It is highly important to maintain documents to have financial clarity among the organization and to know exactly how the business’s funds are being used.
- A balance sheet
A balance sheet is a highly essential document for the smooth functioning of a business. A balance sheet is a financial statement that provides a snapshot of a company’s financial position at a specific point in time. It shows the company’s assets, liabilities, and equity. The balance sheet is used to assess a company’s liquidity, solvency, and overall financial health.
- A profit and loss statement
A Profit and Loss (P&L) statement, also known as an income statement, is a financial statement that shows a company’s revenues, expenses, and profits over a specific period of time. This statement provides a clear picture of a company’s financial performance and is used to assess its profitability.
- Cash Flow Statement
A cash flow statement is a financial statement that provides a snapshot of a company’s cash inflows and outflows over a specific period of time, such as a month or a year. It is used to assess a company’s liquidity, which is its ability to meet its short-term obligations.
- Segregate Business Related and Personal Expenses
Separating business and personal expenses is an important aspect of managing your finances, whether you own a small business or are self-employed. Keeping these expenses separate can make it easier to track your income and expenses, prepare your taxes, and make sound financial decisions for your business.
One of the main benefits of separating business and personal expenses is that it makes it easier to track your business income and expenses. When you have a clear picture of your business finances, you can make informed decisions about how to allocate resources, such as investing in new equipment or hiring new employees.
- Make Note of Every Important Bookkeeping record
One of the most important aspects of bookkeeping is making note of every important record. This includes all income, expenses, and payments, as well as any other financial transactions that take place. By keeping track of all financial transactions, a business can accurately assess its financial position and make informed decisions about how to allocate resources.
Important documents include all forms of transactions, credit receipts, inflow of cash, tax receipts etc.
You can either store bookkeeping records manually or in digital forms. However we recommend you to store them digitally, Storing digital copies of bookkeeping records in a secure and password-protected location, such as a computer file, is an effective way to keep them organized and easily accessible. An alternative method would be to keep physical copies in a file box, stored in a safe and secure location in your office. The key is to ensure that your chosen storage method is secure and protected from any potential damage.
- Always Stay Prepared for Sudden Expendituress
Major expenses are an inevitable part of running a business and can include things like equipment purchases, property repairs, or unexpected emergencies. Being prepared for major expenses is crucial for maintaining the financial stability of your business.
One way to be prepared for major expenses is by creating a budget and setting aside money each month to cover unexpected costs. This can help to ensure that you have the funds available when a major expense arises.
Another way to be prepared for major expenses is by having an emergency fund. This fund should be separate from your operating funds and should be used only for unexpected expenses. The amount of money you should have in your emergency fund will depend on your business and the type of expenses that are likely to arise.
- Have Your Tax Documentation in Order
Although taxes might be the most annoying part of running a small business, defying taxes could definitely put you behind bars. Here are a few major taxes that you need to stay prepared for
- Income tax: One of the major tax policies in almost every country is the income tax. Every businessman must pay a share of his income to the government in the form of taxes. The percentage of income tax however differs from jurisdiction to jurisdiction.
- Payroll tax: If you employ people in your business, you are required to pay a payroll tax. New businesses are usually required to deposit taxes on a monthly basis and report them quarterly. However, some businesses may be required to deposit taxes semi-weekly. It’s important to understand the tax deposit schedule that applies to your business and to make sure that you are making the required deposits and reporting them in a timely manner.
- Sales tax: Collecting sales tax can be a tricky process for businesses that sell products, as the tax rate varies by state, county, and city. This becomes even more complex if your company sells products in multiple locations or online. It’s essential to understand the sales tax laws in each location where your business operates and to make sure that you are collecting the correct amount of tax from each customer
Bookkeeping service and accounting service isn’t the job of a neophyte. Performing accounting service and bookkeeping service with precision is highly important since it involves the recording of transactions. When it comes to money, mistakes cannot be afforded. Hence we recommend you to hire the experts of bookkeeping service and accounting service. We at BrownBoysAccounting are the pioneers of bookkeeping service. We understand accounting and bookkeeping and provide the best service in Calgary, AB. Have any queries? Reach out to us today!