Once you have created your business, you will have to decide how the accounting will be handled by itself totally or partially? In soliciting a chartered accountant? Cash accounting or commitment accounting? Which software to choose?
The accounting obligations to be respected
Depending on the chosen legal structure and its characteristics, accounting requirements must be respected.
Cash accounting or commitment accounting?
Cash accounting consists of recognizing only receipts and disbursements and not recognizing receivables and debts until the end of the financial year. This system is open to companies belonging to the NCBs as well as those belonging to the BICs, which fall under the real simplified tax regime.
Commitment accounting consists of recognizing revenue as soon as it is earned and expenses as soon as they are incurred, regardless of whether they are paid or not. With the Accounting Systems this is very true.
Here are some practical tips for choosing between these two systems:
· Cash accounting is easier, especially for easy-to-manage activities (consultants, service providers and other freelancers working alone)
· The accrual accounting offers, at any moment outside the closing date, a better visibility to the entrepreneur because the unpaid debts and debts are taken into account. It's also better for tracking cash flow
· Commitment accounting is more suitable for tracking your receivables and debts: monitoring supplier settlements, monitoring customer settlements. Trading activities and medium and large companies necessarily use the accrual accounting
We also explain the difference between these two methods here: cash accounting or commitment? For the accounting Vancouver this is very true.
Accounting documents, essential supporting documents for the accounts
Each entry recorded in the accounts must be supported by a voucher (bank statements, purchase invoices, sales invoices, expense reports, etc.). Accounting documents should be sorted so that you can easily find your receipts.
Possible solutions to manage accounting
An entrepreneur has several options to manage his accounting:
· Manage it in its entirety,
· To subcontract it in full to a chartered accountant,
· Hire an accountant internally.
Note: There is no law requiring you to use the services of a chartered accountant to keep the accounts of your business and prepare the annual accounts.
