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Running a business

Corporate accounting simplified: What every business owner must know

Starting a business in Canada has its challenges, especially with tracking income and expenses and managing money. Corporate accounting might seem complicated, but understanding it is key to your business doing well.

Read on to learn more about this type of accounting and how you can use it to ensure your business's success.

What is a corporate accountant?

It's important for business owners to know what a corporate accountant does. These accountants do a lot more than just work with numbers. They give advice to help the business grow, make sure the business follows the law, and help the owner make smart money decisions.

For example, a common task for a corporate accountant is checking the company's financial records to make sure all the money the business spent and earned is recorded correctly. This helps the business know exactly where it stands financially.

What does a corporate accountant do?

Daily accounting tasks form the backbone of a business's financial health. Three of the most common daily tasks in accounting for corporations include bookkeeping, managing invoices and bills, and processing payroll.

Every day, the accountant (or bookkeeper) keeps track of all the money coming in and going out of the company by recording daily transactions using an accounting system. It's like making sure every dollar the business earns or spends is written down in a big diary. This helps the business know exactly how much money it has at any time.

Another important daily task of the corporate accountant is making sure that bills from suppliers are paid on time and that customers are billed correctly for products or services they bought.

Businesses with employees need to ensure everyone gets paid the right amount at the right time. The accountant or payroll department, depending on how large the company is, calculates how much each employee should receive, considering things like hours worked and payroll taxes

Financial reporting: The heart of corporate financial accounting

Understanding financial statements is essential for every business owner. Financial reporting for a business is a bit like a student's report card, but for a company's money. It involves putting together different reports that show how the business is doing financially. There are three main reports: the income statement, the balance sheet, and the cash flow statement.

The income statement is a summary of the business's earnings and expenses over a certain period, like a month or a year. It shows how much money the business made from selling things or providing services, and how much it spent on things like supplies, salaries, and rent. The difference between these two is the business's profit or loss.

A balance sheet is a snapshot of the business's financial health at a specific point in time. It lists all the things the business owns (like cash, inventory, and equipment), called assets, and everything it owes (like loans or bills to pay), called liabilities. The difference between what the business owns and what it owes is the business's net worth.

The cash flow statement tracks how much cash comes in and goes out of the business. This statement focuses on actual cash instead of profit. For example, a business might sell a lot, but if customers haven't paid their bills yet, the cash isn't in the business's hands.

Putting together these reports helps the business owners and managers understand exactly where their money is, how they're doing, and what they might need to change. It's a crucial part of running a business because it helps with making big decisions, like whether they can afford to buy new equipment, hire more people, or expand their products or services.

Choosing your corporate financial accounting system

Choosing the right accounting system for any business is key. Will you use cash or accrual accounting? Which tools can help you streamline your processes?

When picking an accounting system, think about what your business needs. Do you want something simple or something with lots of features? A good system should be easy to use, keep your records safe, and give you reports that are easy to understand.

The right system helps you keep track of your money accurately and make better decisions for your business. It's like having a map that guides you to make sure you're going in the right direction financially.

Step confidently into the world of corporate accounting with QuickBooks by your side. Equip yourself with the knowledge and tools needed for financial success, and watch as your business reaches new heights. Begin your journey to financial mastery today with QuickBooks Canada!


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