Everything you Need to Learn About Effective Bookkeeping

Managing your personal finances may not require a lot of effort. You will have a minimum of one savings and checking account, an account post-retirement, investment accounts, an account meant for monthly payments and a file to maintain receipts for the tax paid.

However, the equation and divisions are much more complex and convoluted when it comes to bookkeeping and accounting for business-related use. The bookkeeper or the bookkeeping application needs to consider various parameters such as employees’ salary, customers’ data, corporate tax filing, corporation tax return, stakes and much more. For error-free bookkeeping, companies hire bookkeeping and accounting service providers to manage the financial data for small and medium-sized businesses.

Most bookkeeping experts will agree that to progress wisely, every business (no matter the size) should abide by the following bookkeeping practices.

Your Personal and Private Bookkeeping Should be Separate

The best way to go about bookkeeping and accounting is to ensure neat segregation of your personal finance and business funds. If your funds are not correctly allocated, it will lead to cash flow issues, as well as auditing complications and tax filing. In severe cases, companies even suffer legal consequences where they lose their “limited liability” by commingling business and personal expenses.

If you are managing a small business, then you may be the sole handler of all the purchases and dues. Even though you are the only person assembling the funds, it is best to keep your personal and business expenses separate.

Establish Internal Controls

To minimize cash flow errors in bookkeeping, the unsaid rule is to establish internal controls in your company’s bookkeeping diary. This is also done to reduce the risk of fraud. Internal control includes dual control of processes concerned with making and receiving payments of any kind. For example, it is best to hire an employee or a bookkeeping service provider to write the check and reconcile the bank account. Another employee or agency can authorize the payment with a third and final sign. In this way, you are looping in a third party to keep a close eye on the circulation of funds.

Decide your Accounting Method

There are two preferred systems of accounting: Accrual Accounting and Cash Basis Accounting.

Cash accounting tracks transactions during immediate cash exchange and is usually only practised in business spheres, especially where the transaction is done through cash.

Accrual Accounting uses the matching principle to keep track of revenues and expenses in the duration they occur, irrespective of the time of payment. The accrual method of accounting can be a bit convoluted but is the best choice for any business which handles the invoicing of clients.

Use Beneficial Softwares for Accounting and Bookkeeping

Maintaining a thorough record of all your business expenditures is highly suggested. You can do this either monthly or weekly, if not daily. However, after a certain point, the management gets tough without a concrete accounting software system or an agency of accounting experts. Having a team of accounting and bookkeeping specialists makes it easy to calculate everyday expenditure without wasting the company’s time. This also ensures an error-free and unbiased calculation of spending.

Keep track of Your Employees’ Time

To save time and to avoid human error, instead of manually entering information into the timesheet, you can automate the process. With automated time tracking, you can track and understand the project-related costs of each employee. Later, based on the procured information, you can easily add this into your bookkeeping system.

Optimization of your Chart Of Accounts

Most businesses operate on a simple alphabetical chart of accounts to keep track of expenses for corporate tax filing and corporate tax returns. However, it is best to use your chart of funds as the backbone of a management accounting tool. This helps keep track of your customer acquisition costs, your investment in expenses and your break-even point.

Grouping your marketing and sales accounts will help you determine the overall cost. Bifurcating your General and Administrative (G&A) expenses will assist you in seeing what it costs to stay cautious. The Product or Industry-specific expenses will highlight the discretionary costs you can assess and chalk out in a downturn.

Strictly Maintain your AP and AR

You can make the most of your in-hand cash by wisely managing your AP and AR. To avoid paying late fees, pay the correct amount and gain the advantage of early payment discounts. Strictly manage your company’s APs (Account Payables) and ARs (Account Receivable) to send prompt invoices and quickly follow up on past-due accounts.

Keep a Clean Record

To manage your taxes and compliance carefully, you need to be watchful of what you keep and what you discard. After filing your taxes for the month of the year, you cannot throw out the old company records to start a new year. Canada laws have strict guidelines to deter tax fraud and can ask businesses to maintain copies of their tax exchanges and records. This includes copies of expense receipts, payroll, records of employees, applicant information, and relevant operational records.

Talk to Bookkeeping Consultants Regularly

It would be wise to prepare a list of back-office questions and discuss it with your accounting or bookkeeping employee or company regularly. It is vital to do this regularly and not just at tax time to be tax-ready towards the end of the year. Doing so will also prevent you from facing major money pitfalls along the journey.

Plan your Taxes Throughout the Year

The best way to plan your taxes is to keep in constant touch with your accountant to ensure you are doing everything to maintain tax records and expenses and there is no leakage or mismanagement in this maintenance. When the time comes to pull out your yearly tracks, you will have everything organized already. Staying tagged with tax records saves you from tax frauds and stressful last-minute calculations.

Corporate tax filing can be made more accessible by hiring bookkeeping and accounting experts who are well-versed with revenue management and will happily take the burden off your shoulders.

Hire the Best Bookkeeping Service Providers in Canada

Bookkeeping and accounting is a job that requires undivided attention and an eye for detail. You always want a very reliable bookkeeping agency to work with you and be dedicated to their work seamlessly. Apex Accounting is committed to providing efficient bookkeeping and tax handling for businesses in Canada. We will maintain your books as our own and provide you with complete clarity of your company’s financial condition. You can trust our experts working tirelessly not just to bookkeep but also to offer payroll services in Canada. You can call us at (647) 979-7728 or mail us at info@apexaccounting.ca. We will be happy to assist you!