Allan Madan is an experienced professional accountant and tax expert in Milton, Ontario, Canada. Below, he shares his top 5 extremely helpful accounting tips for your small business.
1. Keep accurate records, says Chartered Accountant Milton
Accurate books and records are essential for any business. By having an accurate set of books and records you can:
- Produce reliable financial statements to help you evaluate the performance of your business
- Provide evidence to support expense deductions in the event of an audit by the Canada Revenue Agency
- Prepare accurate corporate tax returns
Having been in this field for many years, Allan (accountant Milton, Canada) recommends that you hire a bookkeeper to make sure that your company’s accounting data is accurately recorded into an accounting software package, such as QuickBooks.
Please see Financial Statement Preparation Services offered by Madan Chartered Accountant in Milton.
2. Review financial statements frequently
As a business owner, you should review your company’s financial statements regularly. By doing so, you’ll be able to:
- Keep costs under control
- Compare your actual results against your objectives
- Recognize changes in revenues and gross profits and take appropriate action
- Identify trends in costs and sales
Having expertise in this field, Allan (accountant Milton), recommends that you review your company’s financial statements at least every quarter.
3. Have separate credit cards
You should apply for a company credit card and make a habit of paying your business expenses with that company credit card. This will make it easier for you to track your business expenses and will also make it easier for your accountant to prepare your company’s financial statements.
If you charge your personal and business expenses on the same credit card, then it’s very difficult and time consuming to separate the business expenses from the personal expenses. In addition, the Canada Revenue Agency may be more likely to conclude that you are incorrectly deducting personal expenses.
Allan (accountant Milton) urgently recommends that you apply for a company credit card as soon as possible if you don’t already have one.
4. Prepare a budget
A budget is a projection of your company’s expected revenues and expenses in the future. It provides you with a financial roadmap, helps you allocate company resources and also provides you with concrete financial objectives.
You should prepare a budget at least every quarter. If there are major variances between your company’s actual results and the budget, then you should investigate the reasons for the variances and take corrective action immediately.
You should speak with your accountant about preparing quarterly budgets for your business.
5. Financial Goals
At the beginning of each year, you should set financial goals for your company. By setting financial goals, you will have a benchmark to compare your company’s performance against.
Financial goals can include:
- % increase in revenue ([Revenue 2009 – Revenue 2008] / Revenue 2008 x 100%)
- % increase in gross profit ([Gross Profit 2009 – Gross Profit 2008] / Gross Profit 2008 x 100%)
- % increase in net income ([Net Income 2009 – Net Income 2008] / Net Income 2008 x 100%)
- Return on assets (Net Income 2009 / Assets 2009 x 100%)
- Inventory turnover (Average 2009 Inventory / Cost of Sales 2009 x 100%)
You should speak with your accountant about the appropriate financial objectives for your business.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.