As per existing records, almost 99.8% of businesses in Canada are SMEs. This is why small business accounting firms are in high demand.
But what is SME bookkeeping? Let us find out.
What Do You Mean By SME Accounting?
Small business accounting involves managing a company’s money and financial records. It involves the following procedures:
- Finance Tracking
- Finance Analysis
- Financial Data Recording
Doing so is vital for small businesses since it helps them maintain their cash flow and ensures financial compliance.
It involves many steps, which we have mentioned below.
What Is The Process of Small Business Accounting
The process of small business accounting involves the following steps:
● Recording financial transactions
This step involves recording all financial transactions such as sales receipts, credit card invoices, and debit card bills.
● Organizing or sorting financial transactions
As part of this step, accountants divide their transactions into different categories, namely:
- Balance Sheet
- Cash Flow Statement
- Income Statement
● Managing the accounts receivable
This step involves listing down the payments that customers owe to your business.
● Checking the accounts payable
The list details company payments to suppliers.
● Expense tracking
In small business accounting, it refers to keeping track of the financial expenditure of the company.
It includes:
- Operational expenses
- Cost of Goods.
● Tax compliance and filling
As your Vancouver Accountant will advise you, this is an important step. It involves obeying the tax regulations and laws.
It mainly involves:
- Tax filing
- Deductions and Credits
Filing your taxes is important since it helps your business maintain proper records. This helps it establish legitimacy.
Deductions and credits refer to identifying the eligible tax deductions.
● Budgeting and forecasting
When your accountant creates an expense sheet for the company, it is known as budgeting and forecasting in small business accounting.
● Using proper accounting software
Using automated software makes the accounting process easy. The software automates processes such as expense tracking, payroll management, etc.
● Financial compliance
This step involves checking whether your business obeys the financial laws and regulations of its operational area.
● Financial analysis and decision-making
As part of this step, your Vancouver Accountant studies the company’s profit margins, ROI, etc. This helps you wisely invest your wealth for the business’s success.
Let us now discuss the types of small business bookkeeping below.
What Are The Types of Small Business Accounting?
Here, we shall be exploring the different types of small business accounting. They include:
● Bookkeeping
Bookkeeping involves tracking a company’s financial transactions by recording them digitally or physically. This helps in making key financial decisions.
Recording all financial transactions is important as it involves summarizing and differentiating the business’s accounts.
This is why your Vancouver Accountant relies on these records.
● Strategic finance management
In a nutshell, this refers to tactically managing a company’s expenses or finances.
This is carried out in the following ways:
- Improving the financial processes
- Managing the financial forecast process
- Holding financial review meetings
- Making better hiring decisions
Additionally, it also involves CFO-level decisions that include:
- Building financial models
- Fundraising, etc.
● Tax accounting
In small business accounting, it refers to following the relevant tax rules. These rules change as per your area of operations.
Let us now explore the need for small business bookkeeping.
What is the Need for Small Business Accounting?
Small business accounting is useful for the following reasons:
1. Helps businesses make the correct financial decisions.
Accurately mapping a company’s financials helps its accountants prepare better financial forecast charts.
2. Establish cost-benefit estimates
This involves mapping the approximate expenditures involved in creating a new product
3. Help determine the release date of new products
Your Vancouver accountant uses bookkeeping to pinpoint the optimal time to release your products for more sales. For example, how films are often launched on weekends for increased box office revenue, etc.
4. Proper budget planning
Accurately mapping your company’s expenses helps you prepare your budget more accurately.
5. Financial viability
Accurately maintaining your company’s books helps your business gain legitimacy in the market. It shows that you’re a responsible company.
Let’s now consider the factors you should consider when looking to hire the best small business accounting in Vancouver below.
Factors To Consider When Looking for Small Business Accounting Firms in Vancouver
You should consider the following factors when you’re looking for small business accounting firms:
- Their services
- Their portfolio of work
- Financial security measures
- The pricing and fees
- Their licenses and certifications
Key Takeaways
● Small business accounting is all about managing a company’s money and financial records. It involves the following procedures:
- Finance Tracking
- Finance Analysis
- Financial Data Recording
● Small business bookkeeping involves the following:
- Bookkeeping
- Strategic finance management
- Tax accounting.
● The process of small business bookkeeping helps businesses:
1. Make accurate financial decisions
2. Determine product cost and release date
3. Plan their budget,
4. Gain financial credibility.
● The following factors will help you decide which small business accounting firm in Vancouver to hire:
- Their services
- Their portfolio of work
- Financial security measures
- The pricing and fees
- Their licenses and certifications
