{"id":142,"date":"2016-05-29T16:45:50","date_gmt":"2016-05-29T20:45:50","guid":{"rendered":"https:\/\/www.onlinebusinessguide.ca\/?page_id=142"},"modified":"2016-09-22T23:02:02","modified_gmt":"2016-09-23T03:02:02","slug":"online-business-accounting-101","status":"publish","type":"page","link":"https:\/\/www.onlinebusinessguide.ca\/online-business-accounting-101\/","title":{"rendered":"Online Business Accounting 101"},"content":{"rendered":"
Are you completely lost when it comes to bookkeeping and accounting?<\/p>\n
Starting an online small business can be both exciting and daunting. Becoming your own boss with a product or service you created, along with unlimited income potential, is a place many people would like to be in. That said, you will have an ever increasing to-do list to launch your business, and one of the first things you will need to take care of is setting up your accounting method<\/b>. Keeping track of your finances will help you run your business more effectively.<\/u><\/p>\n
In this beginner accounting guide, we will teach you just that – how to set up accounting for your online small business.
\n
\n<\/p>\n
Businesses can use one of two types of accounting methods, and the only difference between the two is the way in which incoming and outgoing cash are recorded.<\/p>\n
With cash-basis accounting<\/b>, you only record financial transactions when you actually receive or make a payment, and it is reflected in your business bank account.<\/p>\n
On the other hand, if you use accrual accounting<\/b>, you keep a record of financial transactions even though you still have not received a payment for your work or your business bank account has not been credited for payments, and will only be later.<\/p>\n
Deciding which method to use will depend on how your business is set up. If you are a sole proprietor or an independent contractor, then using cash-basis accounting may be the best option because it is easy to keep track of the money without having to use an accounting firm. You have no choice but to use the accrual accounting method if your business needs to comply to the generally accepted accounting principles (GAAP).<\/p>\n
After you establish your business, you will need to set up a business checking account. This is required if you have a Corporation or Partnership, but if you are a sole proprietor, you do not necessarily have to have a business checking account, but it is still highly recommended. This account should only be used for business transactions to make it easier for you to keep track of your business finances and for setting aside a percentage of the money in the account to pay taxes.<\/p>\n
If you have a Corporation or Partnership, you should not to mix your personal assets with your business assets. Many entrepreneurs run into tax or financial problems when they use their business funds to pay for personal items and vice versa. If you need help paying for business expenses, then look into getting a business loan, a business line of credit, or a business credit card so that you can establish business credit that is separate from your personal credit.<\/p>\n
<\/a> Now that you have established your business, decided on an accounting method, and set up a business bank account, you should pick and start using a cloud accounting service. Many online bookkeeping services are on the market. Most are easy to use for both sole proprietors and corporations. One of them is a Canadian online accounting services that we recommend; FreshBooks<\/b><\/a>. It is perfectly designed to meet the needs of small and mid-sized online businesses.<\/p>\n