Here's where we have a little fun, and try to explain in simple terms some of the more common accounting terms. We invite our clients and associates to send in their favorite tips and techniques for streamlining the endless flow of paperwork. If we use your idea, we'll include a link to your website.

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Bookkeeper's Blog

What is a debit? What is a credit?

Double entry bookkeeping always describes both sides of a transaction: where the money went to, and where it came from. At The Balance Sheet, we have an easy way of describing debits and credits:

"A debit is the side of the transaction that shows where the money went to.

"A credit is the side that shows where the money came from."

The reason this was so confusing in the past, is that we were used to being told what debits and credits were by banks. Their perspective is the opposite of yours. From the point of view of your business, money deposited to a bank is a debit, because it went to the bank.

Tip of the week

November 20, 2010

Changes to the Canada Pension Plan: there are several changes on the way, some in January 2011, some coming into effect later. For example:

"Starting in 2012, the work cessation test will no longer apply. This means that you will be able to take your CPP retirement pension as early as age 60 without having to stop working or reduce your earnings."

November 18, 2010

Here's another jem from Rodney Dickens: Could the US economy be starting to heal itself? Even though I just made a link to his site (see below), his latest blog is noteworthy. There are a couple of excellent links to other commentators as well.

November 14, 2010

Interesting Times indeed. As small business owners, we need to stay attuned to the economic pulse of our community, and the larger global picture. Rodney Dickens, of Strategic Risk Analysis, has the best analysis of global forces I've seen. He's located in New Zealand, and most of his blogs pertain to New Zealand, but a few like this one "Lurching from crisis to crisis", is food for thought for us all.

November 8, 2010

If you give your customers credit, you need a good collections policy. In uncertain times it is more important than ever. Stick to it, and follow up with your customers as a courtesy call. Make sure they have received your invoice and are happy with the product or service they received. If your customers don't pay you promptly, you can be in a cash flow crunch very quickly.

October 27, 2010

Of all the papers you handle, your invoice that you send to your customers is the most important. And the most important item on that invoice is whether it has been paid! Send out your invoices promptly, and keep track of the payments coming in. Your cash flow depends on it.

Further on that note, if you mail your invoices out, write the date of mailing on your copy. Keep it in a binder, and when it's paid, stamp it "paid" and include the date. By noting the date of mailing, it draws attention to the possible delay between when the invoice was ready to go, and when it actually was sent. It's a great way to remind yourself to make sure they are sent promptly.

After you receive payment, you might want to consider leaving your invoices all in the binder, organized by customer. This becomes a valuable record of all your sales, and you might find yourself referring to it more easily and more often than looking something up on the computer.

October 18, 2010

It's official! Dianne is proud to announce she has been made the new treasurer of the Comox Valley Home Based Business Association and is honoured by the trust in her shown by the other board members.

October 12, 2010

Dianne will be giving a presentation at the Comox Valley Home Based Business Association's annual trade show, Sunday October 17th at the Crown Isle Golf Resort. The topic is "Start Like You Mean It - Improve the odds of long-term business viability." She will focus on what sort of tools a new business needs to plan for success, and will give an example of a cash flow projection.

Business Plan FastTrack Workshop

Small Business BC is hosting a workshop on business plans, in Vancouver,

November 1-5.

"The backbone of every successful business is a solid business plan. The Business Planning Fast Track Workshop is designed for the entrepreneur who has an established business idea and is ready to fast track their business plan. This program covers the following key steps:"

  1. "Introduction to the business plan and executive summary
  2. "Business Viability including a break even analysis of your product or service
  3. "Business Risk and Operations
  4. "Market Research & Strategies
  5. "Financial Planning and Strategies"
The cost is $495.

October 4, 2010

Why are you a business owner? It never hurts to look at the reasons why we are in business, anyway. I found an interesting article on tips for avoiding common pitfalls that describes common attributes of successful business people. This is from The Seven Pitfalls of Business Failure, by Patricia Schaefer:

  • "You have a passion and love for what you'll be doing, and strongly believe -- based on educated study and investigation -- that your product or service would fulfill a real need in the marketplace.
  • "You are physically fit and possess the needed mental stamina to withstand potential challenges. Often overlooked, less-than-robust health has been responsible for more than a few bankruptcies.
  • "You have drive, determination, patience and a positive attitude. When others throw in the towel, you are more determined than ever."
  • "Failures don't defeat you. You learn from your mistakes, and use these lessons to succeed the next time around. Head, SBA economist, noted that studies of successful business owners showed they attributed much of their success to "building on earlier failures;" on using failures as a "learning process".
  • "You thrive on independence, and are skilled at taking charge when a creative or intelligent solution is needed. This is especially important when under strict time constraints.
  • "You like -- if not love -- your fellow man, and show this in your honesty, integrity, and interactions with others. You get along with and can deal with all different types of individuals."

October 1, 2010

Use last year's invoices to help you plan this year's customer calling schedule. If you have customers whose needs change with the time of year, a quick look at previous year's invoices will tell you when they will be needing your services again this year. Give them (and yourself) some lead time. If there is a new person in charge of procuring that service, they will appreciate the heads-up!

See previous tips

Courses Offered

Start dates to be announced

Dianne Goodacre will be offering courses in basic double-entry bookkeeping, and cash flow projections.

Some Accounting Terms Explained

Here are more explanations of some of the accounting terms used on The Balance Sheet's website:

What is an asset? Just like in ordinary language, an asset is something you own that adds value to your business. Fixed assets are things you wouldn't normally sell, like buildings or equipment. Current assets include cash, accounts receivable and things you normally use up or sell.
What are Accounts Receivable? This is a list where you keep track of which customers owe you money, how much they owe, and how long since you earned the income. This is one of the most important assets of your business. It must be monitored regularly, to make sure you collect on what are really interest-free loans to your customers.
What are Accounts Payable? This is where you keep track of which suppliers you owe money to, how much you owe, and when they must be paid. This is one of the most important liabilities of your business. It must be monitored regularly also, with regard to being able to pay on time.
What is a Balance Sheet? The top of your balance sheet shows you the assets owned by your business. The lower portion shows (in broad terms) where the money came from to buy those assets: either from you (equity); or borrowed (liabilities). One reason it is called a balance sheet, is because the total value of the assets always equals the total of equity and liabilities.
What is a Business Plan? A business plan is a report that summarizes the research and planning you have done in order to answer this question: will you be able to sell your products and/or services, and make a living at it? Going through the process of preparing a business plan will make you face the hard questions every successful business deals with. They aren't easy to do, but they are worth it. Existing businesses can benefit from a solid business plan, but an inexperienced manager of a new business really needs one.
There are many free internet resources to help you prepare a business plan, usually taking the form of questions that you answer one at a time. These questions include describing your cash flow requirements and your marketing strategy. Where The Balance Sheet can help is in working with you to prepare a cash flow projection.
An excerpt from The Balance Sheet's own business plan may be found on the "About" page.
What is Double-Entry Bookkeeping? Unlike using a cheque-book to keep track of a single bank account, double-entry bookkeeping lets you keep track of many accounts, and maps the transactions between them almost effortlessly. If you have a business with more than one bank account, including a credit card or line of credit, double-entry bookkeeping is more efficient.
What is cash flow? Cash flow is the day to day ebb and flow of money in and out of your business. Even if orders are coming in fast, you may find you are short of cash to pay your bills. Up-to-date invoicing, and collecting on those invoices, are critical for a healthy cash flow.
What is a Cash Flow Projection? A cash flow projection, or cashflow analysis, is extremely useful on its own, or as part of a business plan. It is generally prepared using spreadsheet software. It will have columns of monthly (or weekly) estimates of income, investment and expense amounts, the more detailed the better. For example, if you know you will have to pay $2,000 in rent each month, there will be a row just for rent. It will also include large one-time costs, such as equipment purchases. The benefit of a cash flow projection is that it shows you when you will be short of cash, and gives you time to prepare. Even poor estimates are much better than none, and they can be improved as time goes by. One of the most common ways growing businesses run short of cash unexpectedly, is when they are waiting for previous customers to pay up while materials must be purchased for new orders.
What is a SWOT Analysis? A SWOT analysis is where you bare your soul and honestly admit to yourself, what are my business's Strengths, Weaknesses, Opportunities, and Threats. An example can be found on the "About" page, and is an excerpt from The Balance Sheet's own business plan.

Previous Tips of the Week

September 27, 2010

Ever wish you could see those cheques you just deposited? Make it a habit to scan the cheques as part of your deposit routine. Label the file with the date, for example "Deposit 100927_01.jpg". Then if you ever need to review what was on a cheque, look up the date it was deposited, and you can find it easily.

Contact Us

Dianne Goodacre bookkeeper comox valley bc vancouver island

At The Balance Sheet, we have the experience to know what works. Dianne Goodacre provides honest, reliable bookkeeping services to small businesses in the Comox Valley.

Whether you are setting up a new small business, need a business plan, or need some tips for smoothing out the endless flow of paper, Dianne can tailor a double-entry bookkeeping system to suit your needs. Please contact Dianne at 250 650-SAVE[7283] for more details.

bookkeeper courtenay comox