Accounting basics


Accounting from scratch.

Accounting is collecting & processing data and presenting it in various standardized reports.

Standard reports include:

Profit & Loss Statement

This report is used to determine how much money a company makes over a certain period of time.

Balance Sheet

This is what a company owns and what it owes.

Cashflow Statement

Shows the actual movement of cash

Building blocks of accounting

Accounting formula

Assets - Liabilities = Equity




Debits & credits

Journal entries

Accounting ledger

Now where to begin?

Point of accounting is to know how much $$$ you are making (profits) and how much money you owe the CRA (Canada Revenue Agency). Or how much money you are losing...

You generate profit by selling your agency services (Agency Sales) for more than it costs you to build out said services (Cost of Agency Sales or COS).

Probably some expenses not directly related to a specific client, but needed to run your agency.

This would be your agency's operating expenses (OPX).

After you subtract taxes (corporate taxes) from that you get your agency's Net Income.

And then bam, you know how to calculate your agency's net income after corp taxes.

All of this info would be found on the accounting statement known as the "Income Statement" aka "Profit and Loss Statement" aka how much money is my agency making over X period of time.

Ok great, so let's say this past year you invoiced $120,000 for social media management and you spent $45,000 on graphics and you started Jan 01, 2021 and your fiscal year end is Dec 31, 2021. And this is your first year of business.

$120,000 Sales

$45,000 COGS


$12,000 OPX


T (if you are incorporated, you'd fill out a T2 form and submit to CRA, this is due 6 months after your year end, they want the money within 3 months though)

NI This is how much money you get to take home... not quite

Depending on you would pay yourself, there are even more taxes.

If this stresses you out, stop stressing, Klnda can help you automate all your accounting needs and is supported by the friendly team flip 😀

More info.

The type of business dictates what expenses would be included in the cost of goods sold/ cost of service category/ grouping of expense accounts. If the expense can be directly linked to the specific product, project, or activity, it's a direct expense and should be included in the COS group on the P&L.

If the expense is less correlated to the company's sales, it would be included in the operating expenses or other expense below the GROSS PROFIT calculation.

What is included in cost of sale or cost of goods group > direct expense?

An example, you own a company that produces widgets.

All the direct manufacturing, supplies, and selling expenses to get the product in hands of consumer is a direct expense.

All functions of a business can use AI

accounting, marketing, operations, HR, legal, admin, etc...

AI using team > team alone

Apps like ChatGPT are allowing for people to learn and work faster and faster.

You can start using CHAT GPT today.

WHO is the gross profit & who cares?

WHAT can you do with GP?

WHERE do you use GP numbers?

WHEN is it calcuated and used?

WHY people care about gross profit?

WHO needs to incorporate?

Not everyone, depends on factors such as size, goals, risk tolerance, and tax situation.

WHAT are some benefits to incorporating

Tax advantage(s) and legal advantage(s).

WHERE can I get started?

Canada Revenue Agency:

WHEN can I do this?

Any time.

WHO went bankrupt?

Silicone Valley Bank & Signature

WHAT happened?

Could not pay all withdrawals

WHERE is this?

Mostly US operating bank

WHEN did the bank shut down?

Friday March 10th

WHY did bank fail?

Too many people trying to take out $$ at once.

WHO is the T1 for?

The T1 is for all Canadian residents.

WHAT is a T1?

A Canadian tax form for individuals to fill out. Looks like this, trust me, it's not that complicated, and most fields probably don't even apply to your situation.

WHERE do I file my T1?

Tax filing & payment due to CRA, file online @

WHEN do I have to file?

Every year before end of April.

WHY do I do this? (Submit and pay taxes?)

Because CRA collects money needed fund rest of the gov't.

The T1 General Income Tax and Benefit Return is a tax return form that individuals use to determine their annual tax liability and claim federal or provincial benefits, such as the GST/HST Credit.

The form summarizes the taxpayer's income, deductions, and tax payable, as computed on supporting forms and schedules, and calculates any refund or balance due.

The T1 form consists of five parts:

1) Identification

2) Total Income

3) Net Income

4) Taxable Income

5) Refund/ Balance owing

Online, In-person, mail, Tax professional

To ensure timely submission, the completed T1 form and any outstanding balances are due by April 30th of the following year (by June 15th for self-employed individuals or common-law partners). If these deadlines fall on a weekend or public holiday, the deadline is extended to the next business day.

Filing due dates

Because CRA

Business owners need to build a company track & stay on it.

Key Performance Indicators are common statistics & ratios a company would keep track of.

Pulled from business & financial reports

Always be keeping track of KPIs and perform variance calculations.

Ensure mone is being made.

WHO needs to know?

ROI important metric for business decision makers.


Rerturn on marketing spend is how much profit is made from a given number of marketing cost.

WHERE can you collect this data?


WHEN should you look at Marketing ROI?


WHY pay attention to marketing ROI?

Determine what is most profitable for business.

WHAT is a BS?

WHO uses BS?

WHERE do I find them?

WHEN do I use it?

WHY would someone care about BS?

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