Accounting is not just about crunching numbers. It is also about ensuring the accuracy of financial documents, evaluating financial operations, conducting risk analysis assessments and more. While running a business is itself a full-time job, handling accounts amidst a busy schedule can seem daunting. Thus, most owners hire experienced accountants to handle this department. Whether you hire a professional or decide to do it on your own, it is crucial to know what the basic accounting tasks are in a business. So, let’s begin.
The duties of an accountant vary depending on the organization and position they work in. But, there are some basic duties that all accountants must do, irrespective of the industry.
Here are the accounting tasks that help you operate your business efficiently and within a specific budget.
Businesses conduct several transactions daily. Accountants keep track of each transaction to evaluate valuable financial factors. They then manage taxes, provide business advice and prepare financial statements based on the transaction records.
There are different types of accounting records. The common ones are journals, general ledgers, financial statements and trial balances. The records help owners track their business’ spending, plan business upgrades, improve taxes and project potential earnings.
In other words, you have a clear idea of how much money is coming in and going out of your business in a specific time frame.
According to experienced accountants in Alberta, tax season is easy to manage when businesses have specific categories for each of their expenses. You should record and categorize every expense that’s deductible on a tax return and is necessary for your business.
Common examples of deductible expenses include office rent, utilities, travel costs included in business trips, etc. Any expenditure that’s related to launching and running the business is an allowable expense. However, exceptions include interest on business loans and taxes.
You shouldn’t wait for your clients to pay you after they have purchased your product or service. Send them the invoice immediately after the purchase and proceed with further only if the payment is completed. This helps you keep track of all orders, their associated transactions and all receivables.
As far as your invoices are concerned, pay them before the deadline. Whether you have to pay your supplier or vendor, do so on time. Late payments lead to late payment charges and bring down the accuracy of business financial statements.
“To err is to be human.” So, check the accuracy of your business accounts before using them to make decisions. Cross-check every transaction you have entered with bank records and credit card statements. There shouldn’t be any room for errors or discrepancies in the accounts.
The best way to ensure the accuracy of accounts is to update them on a daily basis. Review the financial statements every month and resolve the discrepancies, if any. Evaluate your balance sheet to look for issues like incomplete information, increasing debt-to-credit ratios or misapplied payments.
You should have all the necessary financial records of your business compiled at the end of the year. Now use this information to generate the year-end financial statements. There are different types of financial statements such as profit and loss statements, balance sheets and cash flow statements.
Each statement serves a unique purpose. The profit and loss statement, for instance, reflects your revenue and expenses. These numbers help business leaders understand the current financial health of the company and forecast the potential for better revenue in the future.
Accounting tasks are time-consuming, boring and most importantly, prone to manual error. Thus, most business owners prefer to hire experienced accountants in Alberta, Ontario, Manitoba and Saskatchewan. They can focus on running and growing the business while the professionals handle the accounts. However, if you are planning to do it on your own, learn the state and federal regulations that you must abide by while preparing the accounts.