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e-ccounting
March 2009

in this issue

Business Scenario
- Taxes for the Self-Employed

Answer

Accounting Tip

Did You Know ?

Definition

Sandy's Recommendations

Next Issue - Preventing (accounting) Fraud


 

about e-ccounting

e-ccounting is a monthly newsletter focusing on accounting tips and solutions. Our mission is to educate our clients, students and readers by offering these resources in response to your ongoing questions.

It is our objective to gather information and provide easy access for your current and future needs.
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These tips are not complete answers to complex questions. We therefore recommend, when in doubt, contact the professionals or government agency.

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Sandy's Question Corner

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Workshops:

accountrain is now offering a series of three workshops. Take one, two or all three and save as you learn. The informative and interactive format guarantees a comfortable and fun learning environment.

Details on the accountrain.com website.

The Topics:

1. Understanding How to Read Financial Statements
  • Who's interested in your reports and why
  • Why there's more to the Income Statement than just the "bottom line"
  • What's so important about the Balance Sheet, and
  • Key accounts, definitions, ratios and samples to review.

    Next Session: April 21st - 6PM


2. Accounting 101 - for new and small business
  • Review of common questions, including GST, incorporating and many more
  • Choices for maintaining bookkeeping
  • Understanding government requirements
  • Shortcuts, tips and organizing all that paper!

    Next Session: May 13th - 6 pm


3. Year-end Prep & New Year Planning
  • It's never too late to get organized
  • Understand what's different including: depreciation, accruals, deferred revenue and prepaids
  • How to choose accounting help
  • Preparing for an audit, and how about avoiding an audit!
  • Learn to streamline your bookkeeping methods to save time and money.

    Next Session: Fall 2009, or as requested.


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  • Business Scenario
    - Business Banking

  • I'm self-employed, do I need a separate bank account for my business transactions or can I use my personal account?

    We will also address ordering company cheques, as this is another thing we are often asked about.

  • Answer

  • To answer the first part of the question, as a self-employed proprietor you do not need a separate bank account to enable you to capture all your business transactions however it is highly recommend.

    It is much easier to follow your business cash flow when it isn't nestled in between all your personal items.

    Other advantages for having a separate business chequing account are, it eases the bookkeeping process and it establishes a professional image.

    Disadvantages for not having a business account would be it is impossible to do a true bank reconciliation and a bank account will not be shown on your Balance Sheet (the activity would be through your draw account).

    The only reason to not have a separate account is to keep costs down.

    To address part two, information on ordering company cheques. (I discuss where to order them in the Recommendations section.)

    There are several things to consider when ordering cheques, here's a list to consider to ensure you get it right the first time:

    • Manual versus computerized cheques (they will have proper cheques for all the popular accounting software packages including: Simply, QuickBooks, etc.)
    • Colour
    • Signature lines (one, two or more)
    • Logo (optional)
    • Starting number (not necessarily 001)
    • Type - I recommend 3 part, which includes the cheque portion and two stubs, one to send and one to keep for your records.
    • New security features and date specifications (ensure your supplier is on top of these new criteria).


  • Accounting Tip
  • Although I do not encourage it, if you choose not to use a bank account I would like to suggest how to ensure all the business activity is recognized, recorded and obvious to an outsider (ie. auditor).

    Once you've received your personal bank statement, photocopy it and highlight the items relating to your business.

    Ensure all these transactions are entered into your accounting system and that all the back-up is attached and filed.

  • Did You Know ?

  • At month end, once the bank statement has arrived, although (you may feel) all transactions are entered, the bank account should be reconciled against your accounting system to ensure everything has been recorded.

    This would be the ideal time to ensure all bank charges, automatic payments and items purchased via debit are accounted for.

    As well, this will ensure the amounts match.

    It is at this time you can also make precautions against fraud (this will be discussed further in the April issue of e-ccounting.)

    For more Did You Knows?
  • Definition
  • It was difficult to come up with a word you may need defined relating to banking.

    Instead in this issue I thought I would address other banking options for business, other than just a chequing account.

    Additional options for funds that are not needed right away would be:

    • Savings account
    • US funds (or other currencies) account
    • Investments: Short or Long term (ie. GIC's)

    And on the opposite side of things, when funds are needed:
    • Line of Credit
    • Loan: Short or Long term


    For more definitions ...
  • Sandy's Recommendations
  • Business cheques can be ordered at various suppliers. However there are two reputable sources that I highly recommend, they are:

    • Through your bank institution - which is through Davis and Henderson.
    • NEBS - a stationery supplier, who I use for all my client's cheques, and other (computerized) stationery needs (1-800-465-2888).
  • Next Issue - Preventing (accounting) Fraud
  • Desperate times lead to desperate measures - some easy steps to prevent fraud within your accounting department.

    Learn:

    • Three easy steps to preform at month-end
    • Random checks to put in place
    • Division of tasks.
    • Astounding statistics that will make you think twice
    • Who can help and how, you'll be amazed at the comfort level you can obtain in a short period of time for such a low fee.

    613-789-2623



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