Not all entrepreneurs understand the language of accounting well enough to keep their own books. In fact, many of them outsource this task to an accounting firm . This is indeed a fundamental obligation. Let’s see why.
The corporate black box
bookkeeping services consists of recording all entries and exits from the company’s accounts, including credit and debit. It includes the details of all the company’s operations, with customers as well as with suppliers, employees and tax authorities. In short, it lists all financial activities!
What is bookkeeping?
First, the Bookkeeping Services in Melbourne charge observes the invoices for sales of goods and services to customers that have been compile, then records the implications of these transactions for the company in the accounting items of the General Ledger.
When an item is sold, it is important to subtract its value from cost, and equally important to note the increase in value from the payment receive. We must also point out the GST and the QST, which will have to be remit to the governments.
The same applies to transactions between the company and its suppliers, which must be well document. With an accounting firm that indicates the value of its bank account and specifies the value of federal and provincial taxes, the company will be able to make claims when filing its tax return.
In addition, the company must note the details of the wages it pays, including the amounts deduct for the QPP, the QPIP, the HSF, federal employment insurance and taxes. This obviously includes the salary of the business owner.
Why should it be done?
Keeping accounting books is above all a legal obligation. The law requires companies to report to the tax authorities in order to verify whether they are indeed paying the taxes and duties as they are require to.
Thanks to the keeping of accounting books, shareholders and entrepreneurs can also take the pulse of the company. For example, they can check whether it is achieving its objectives, whether its economic growth is progressing or regressing, or whether it is sufficiently profitable.
Keeping accounting books is an essential task in accounting. If you own a business and aren’t sure you have it under control or have the time, get an accounting firm to take care of it for you!
What is bookkeeping services for small businesses?
Both a legal obligation and a business management tool, Small Business Bookkeeping Services must be carries out rigorously, whether by an accountant or someone from the company. But what exactly does this mean for small businesses?
In Quebec, each company must keep up-to-date records in paper or electronic form and keep them available to the competent authorities for six years. At any time, they may be request by Revenue Québec for verification and must be made available to them within a reasonable time.
If the form of the books is not impose, the information contain there in must make it possible to verify:
- the company’s income and expenses, to be reconcile with receipts and disbursements;
- amounts collect for GST and QST;
- amounts of taxes paid, requests for credits or refunds of input tax;
- useful information use to calculate source deductions and employer contributions.
At the same time, supporting documents must also be kept for six years. It’s about :
- daily turnover statements, invoices, cash register tapes and daily statements from bank card payment terminals;
- daily expense reports, checks, cancel checks, credit card statements and receipts;
- mileage statements for each motorist combining professional use and personal use with the same vehicle;
- travel documents;
- supporting documents relating to fix assets;
- the register of employees, with an indication of their salary and the deductions made for each;
- documents relating to taxes collect or paid.
The different accounting systems
There are several accounting systems which are to be assess according to the needs of the company.
- Single-entry accounting or cash accounting: transactions are record only once, either as expenses or as income. For the sake of clarity, the entries are group into a table on one page, call the income log, and the outputs on another, call the expense log.
- Double-entry accounting or accrual accounting: transactions are record twice, once in credit and once in debit.
Whatever type of bookkeeping services is chosen, the system must be reliable, accurate, consistent, easy to use and understand, in order to allow easy access to the necessary information at any time. Procedures for controlling accounting entries must be put in place, and first of all bank reconciliation, which makes it possible to compare the bank’s entries with those record in the accounts. It is done at least once a month upon receipt of the bank statement.
The accounts can be kept in the form of spreadsheets, but this system is relatively cumbersome, the functionalities are limit and some of the errors are only detectable at the end of the year, i.e. at the time to issue the financial statements. Conversely, accounting software can save time, limit errors, automatically calculate taxes and make accurate financial forecasts. Today, most are available online and many are free or inexpensive.
Good bookkeeping services certainly makes it possible to meet legal obligations, but it is also an essential management tool. By rigorously following his accounts, we know the performance of his business in detail and in real time. It is thus possible to compare them with the results of past periods, to make forecasts and make inform decisions.