The law does not require individuals to keep financial records (but businesses do), but failing to do so can be costly from a tax and financial perspective. Knowing how your money is spent is essential. You may not discover that your credit card and bank statements are wrong until it is too late to correct them. Forgetting to pay a bill can harm your credit score. Investing and saving income may not be on your radar. Some expenses may also not be on your radar.
Do It Yourself Or Hire An Accounting Firm in Toronto?
Although it isn't difficult to record your income and expenses (you don't have to be an accountant or good with numbers), it requires some time and effort. There is no right or wrong way to record your finances. A professional accounting firm or accountant can take care of it all for you, or you can do it yourself with an expert guiding you occasionally.
Option 1: Approach an Expert Individual or Firm
The term "personal accountant" is often used loosely to describe everyone from a bookkeeper to a CPA to a tax preparer to an advisor. A professional can help you if you don't have the time or feel the value of your time exceeds the cost of professional help. But who can you turn to? Choose the professional who best meets your needs:
In addition to paying your bills, balancing your cheque book, and looking over your credit card statements, this individual may also provide concierge services for your personal finances. A bookkeeper may or may not have specific training in financial management. They can obtain a certification or QuickBooks certification online by completing training. Usually, bookkeepers charge an hourly rate. It varies based on where you are and what services you need. An accountant may be necessary for you if you have a lot of accounts to manage and if your taxes are complicated to file.
An accountant is someone with training (and probably a degree) in accounting who handles bookkeeping tasks. The hourly rate, which again depends on location, job description, and expertise, can be small or large. Basically, it all depends on what you need.
Certified Public Accountant
A certified public accountant (with a college degree and possibly a master's degree in accounting) is someone who has received certification from the CPA Canada. In some cases, a CPA can assist with bookkeeping, but this specialist may be too expensive.
Do Your Taxes and Finances Yourself
There is no longer a need to keep paper ledgers. Consumers and professionals alike have access to user-friendly software and cloud solutions today. Personal finance solutions include:
Using this software, you can manage your finances and create a monthly budget. It is possible to automate your payments using a bill-paying system for a monthly fee to ensure that you are always on time and paying the correct amount.
Additionally, you can pay your bills online and track your personal finances with this free cloud-based platform. All your personal finances are synced with your bank account. These are not the only options. Other software can help you do your taxes and accounts yourself.
Option 3: Combine Your Efforts
Getting started with your personal accounting can be made easier by working with a bookkeeper. Find a bookkeeper who is familiar with the program you plan to use. The bookkeeper can store your information by setting up accounts (similar to folders). You can simplify tax return preparation (whether you do it yourself or hire a professional) by creating accounts that are similar to tax categories. In addition to periodically reviewing your work (e.g., quarterly), the bookkeeper can examine your balance sheet and bank statement to ensure you're reconciling them properly.
Regardless of how you manage your personal accounting, be sure to keep it separate from the accounting for your business. Make sure you budget for the costs of your personal accounting. For more information, you could contact our accounting firm in Toronto, and we can have our experts help you out and guide you through the process.