Bookkeeping is one of the difficult tasks that a small business owner would never want to do themselves. It is important to have an insight into your bookkeeping complexities. When you do the business bookkeeping yourself, you will not find it so interesting but when you want someone to do it for you, the fear of sharing bank statements with others worries you. We have highlighted 5 best bookkeeping tips for small business owners that will certainly help them managing issues of bookkeeping.
Open a Separate Business Bank Account
If you are a small business owner and you have a plan to do your business bookkeeping yourself, you need to first create a separate business bank account so that you can keep your personal transactions away from the business transactions. It can be tempting to use your personal credit card for business expenses and vice versa. But if you want to comply with the CRA tax laws, it is essential to draw the line between the personal and business expenses immediately. Here are some tips to help ensure that your business and personal expenses never intersect:
- Open a corporate bank account;
- Apply for a business credit card;
- Keep your business receipts in a separate area, away from your personal expenses;
- Track and record your business & home vehicle expenses separately;
Get the Right Software
Getting the right accounting software isn’t just about ensuring accurate numbers on your financials. It will also help you achieve your overall business goals. There are many software solutions available in the market like QuickBooks, Sage, and Xero, etc. that you can use to make your life easier. You can even integrate your POS system and can also set up bank feeds in your accounting software with your business bank account. By integrating the best accounting software into your business, you will be able to effortlessly manage your cash flow and know the financial health of your business at all times. You can track unpaid bills, invoices, and keep control of your customers’ payments effectively.
Keep Your Receipts
The CRA requires that you keep all of your business records, including receipts, invoices, and other financial records for a minimum of 06 years. You will need to provide all records during the audit period. You cannot be too careful in managing your company’s financial accounts; it is therefore recommended to keep a hard copy of your documents and also create digital copies that can be backed up to a cloud server. This practice also allows you to review historical data which can help you better manage your finances and forecast trends.
Know Your Tax Obligations
When you file your personal or corporate income tax returns, the Canada Revenue Agency (CRA) may ask you for more information on some of the line items included in your submitted tax returns. It is essential to provide all the necessary information to the CRA’s examiner during the whole assessment process. When you are not fully aware of your tax obligations, it would not be possible for you to furnish relevant documents for the successful completion of your assessment with the CRA.
Knowing your tax obligations is essential to avoid the financial penalties of the CRA. If you are unsure then it is best to seek expert help.
Dedicate Part of Your Time to Bookkeeping
It is important to dedicate some of your time each week to bookkeeping to monitor your business performance and how numbers continue to come in and out on some of the critical accounts. If your time is better spent working on something else for your business, you can hire a professional bookkeeper to take care of your accounting heads. This can be a great way to increase the productivity of your business.
GTA Accounting is a Professional Accounting Firm in Toronto, and also has offices in Oakville and Mississauga.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.