Imagine you are a small business owner and it’s the tax filing season in Canada. You remember there are no financial reports, bank statements, or income tracking, and Jack (one of your employees) is asking why he’s not paid yet. Sounds chaotic?
All of this happens when you do not have proper bookkeeping for small businesses financial data. Professional bookkeeping services in Mississauga, Ontario come to your rescue and save you from a traumatic tax filing experience. Let’s explore what bookkeeping is and how it benefits your small business.
What Is Bookkeeping?
Bookkeeping is the act of keeping track of all the financial data of your business. No matter how large or small-scale your business is, bookkeeping always keeps you at a better edge.
A bookkeeper usually records the day-to-day purchases, cash credit, and other business-related finances. Transactions include purchases, sales, receipts, and payments by an individual person, organization, or corporation.
Standard Methods Of Bookkeeping:
There are 2 standard methods of bookkeeping.
- Single entry:
This method of bookkeeping records every business transaction at a single time.
- Double entry:
It is an accounting system where every transaction is recorded in two accounts, a debit to one account and a credit to another.
For instance, if a business takes out a $5,000 loan, the cash (asset) account is debited to $5,000 and the outstanding debt (liability) account is credited $5000.
Benefits Of Bookkeeping For Small Businesses:
Bookkeeping is counted as the back office of your business while acting as its backbone. Here are the top 7 benefits of small business bookkeeping services in Mississauga:
- Accessible financial data:
Bookkeeping helps you access organized and up-to-date financial data anytime you need it. It includes monitoring cash flow, transaction records, revenue stream, payroll management, etc.
It helps business owners access readily available data and saves time for investing somewhere else fruitful.
- Better decision-making:
One of the major benefits of bookkeeping is that it assists you in understanding your business’s strengths and weak points.
You can use these to make better strategic and informed decisions. For instance, you keep records of your investment and revenue for 3 months. You realize that your investment is much more than the revenue where the desirable result would be the opposite of it.
However, being aware of these statistics will help you tweak upcoming major decisions for the growth of your business.
- Better cash flow management:
If you are a small business owner, bookkeeping will help you analyze your income cash flows, and outflows. It will make you understand the period where the cash flow is high and where it’s low.
Moreover, it helps you keep track of whether the vendors or late-paying clients have paid you yet. So that you do timely follow-ups.
- Effective budgeting:
Another major benefit of bookkeeping is effective budgeting and forecasting. Bookkeeping records provide insight into previous revenue patterns, cost trends, and cash flow variances, establishing the foundation for accurate budget projections.
- Law compliance:
Effective bookkeeping is always legally compliant. A bookkeeper holds himself/herself accountable for every financial data that is input with their service. That’s why being a reliable bookkeeper, it is kept legally compliant with all the updated rules and regulations.
- Better tax prediction:
As a small business owner, if you’ve done effective bookkeeping of your business finances, it will be easy to predict the amount of tax you owe to the Canada Revenue Agency (CRA).
That’s how you can also stay ahead of the business trends of your sector and plan strategically according to them.
- Easy audits:
Effective bookkeeping helps you get a detailed analysis of your financial activity with balanced sheets and statements. It will help a lot in the audit process for the auditor you employ. Not only it will make the process even faster, but it will help them go through all the statements and sheets and make the final reports easily.
On the other hand, if your financial data is messy and disorganized, it will make things difficult for you and your company as well.
Cost Of Bookkeeping Services:
On average, the bookkeeping cost may range between $40 – $80 in Canada. While the cost of bookkeeping services for small businesses may vary, you always have the option to choose a bookkeeper that is best in your budget and quality requirements.
KEY TAKEAWAYS:
Bookkeeping is the most effective strategy to keep your financial data organized and ready for evaluation when needed.
Not only does it help you track your financial activities, but it also ensures you stay ahead of tax filing season requirements.
If you’ve ever found yourself searching for “Accounting and bookkeeping services near Mississauga Ontario,” schedule your first consultation with Numeracy Accounting Solutions and experience the difference.
For more insights, check out our blog on How to Register Your Business in Canada and learn about the Expected Future Trends in the Canadian Accounting & Finance Industry 2024.