In order for any business or individual, here
in Ottawa as with everywhere else, to succeed on any financial level some form
of money tracking is needed. This makes bookkeeping, the most basic task for
everyone who has a job and earns money. Businesses measure their financial
health by how well the bookkeeping journals and ledgers, balance out at the end
of their fiscal year.
On an individual level, we all do the same
thing by balancing our checking accounts. This is bookkeeping. All Businesses,
in Ottawa and elsewhere, offer one of two things a service or a product/s.
These items are priced, along with the materials utilized in the manufacture of
the product/s and those used as part of the service rendered. Additionally, a
business has money earned, borrowed, and spent on running the business just as
a family or an individual does with living expenses.
Every action taken with the money an Ottawa
business earns, borrows, and spends must be accounted for when it come to
paying taxes. If you, as an individual, ever itemized your tax return, you
would be familiar with how corporate taxes function. Everything is accounted
for.
Without a form of tracking, nothing will ever
get accounted for. This brings us to the importance of bookkeeping. The purpose
is to illustrate ‘cash flow’. This translates into a road map, as it were, of
where the money comes from and where it goes to in the form of earnings,
liabilities.
In bookkeeping lingo, the journals and ledgers
show debits and credits or account payable and account receivable.
Nevertheless, the main point here is that at tax time without any concrete
record of a business’s financial records there would be an unclear view of how
well the business actually may have performed during a given period in Ottawa.
However, even when a business has, what they feel is an accurate record, there
still may be some areas that become neglected for one reason or another.
This brings us to a term that not many fancy,
even here in Ottawa, the term is Audit. In order for bookkeeping to run
correctly, a business should have an internal means to check how well their
books meet with their projections, or goals. This is an audit. Nonetheless, if
a business’s tax comes under question by the CRA. The same kind of audit may occur,
however, this audit may end up becoming expensive in light of having to pay
penalties and fines or even cause the business to close.
This brings up another point, which is that
bookkeeping is only as accurate as the information provided. This additionally
accentuates the overall importance of accurate record keeping. If a business’s
books are wrong, then their taxes are incorrect as well as their earnings
reports and every other financial report that is generated as a result of what
the journals and ledgers have in them.
Surely now you are aware of how important both
bookkeeping and periodic internal audits, (audits performed by the business
itself), are for maintaining proper accountability of the resources for
earnings as well as how they are distributed. Every business, here in Ottawa as
well as all over the world, needs to have a bookkeeper. This means having one
on staff, or as an outside source, which works out well because of the lower expense.
Looking for a Bookkeeping Service for your Business? Consult with Ottawa Bookkeeping Expert Envolta for outsourcing bookkeeping of your business.
