Bookkeeping Advice Before Opening Your New Business

September 29, 2020 | Written by: Sohail Afzal

Bookkeeping advice before opening a new business

To do the business bookkeeping yourself, it is essential to have a good knowledge of accounting and taxes. If you are planning to open up a small business, you can prepare and manage your accounting records yourself. You can use any recommended bookkeeping software that suits your business. But if you don’t have the required knowledge of bookkeeping and other accounting concepts, it is recommended that you seek an accountant’s assistance and he can certainly help you in setting up a proper chart of account and also do the monotonous job of bookkeeping for your business.

We have explained some of the key points for you to understand and it will help you if you are planning to do your business bookkeeping yourself for a new business venture. These points will let you stay organized and will keep your business’s cash flow healthy.

Be Aware of the Tax Regime

If you want to manage your business bookkeeping yourself, you must first educate yourself about the tax regime that you are operating in. The degree of difficulty in managing a company’s accounts depends directly on the income tax regime. You need to make correct entries for the HST calculation and file your taxes with the CRA without any error so that you can avoid facing any surprise in terms of penalties.

Get Trained in Business Bookkeeping

If you plan to manage your bookkeeping yourself, be sure you have the skills to do it right. If you’re in doubt, we would recommend that you enroll yourself in an accounting training program. If you don’t need the training to manage your accounting yourself, you can skip this step. You can do your part of bookkeeping yourself, such as recording financial transactions during the year and delegate the end-of-year work to a Chartered Professional Accountant. Thus, the professional will check your work’s conformity and be responsible for filing your annual taxes.

Choose the Right Accounting Software

To do your business bookkeeping yourself, you need to choose appropriate accounting software that must have the option to add certain plug-ins. Today, most entrepreneurs use online accounting applications that are accessible by subscription. Many accounting software applications are available, so it is not easy to choose the right application.

Depending on the application you choose and the options you benefit from, your bookkeeping will be more or less complicated. For example, you can simplify the management of your bookkeeping by selecting a software application that allows you:

  • Automatically generate your sales entries in accounting when you edit a sales invoice
  • Automatically integrate your banking transactions into accounting (you will only have to classify each transaction in the appropriate chart of accounts)

Since you want to do all your bookkeeping yourself, your software application must allow you:

  • To edit your annual accounts at the end of the financial year
  • To edit the obligatory accounting books (the general ledger and the ledger)

Besides, if you also manage your business’s taxation yourself, you must be able to record your business transactions with a tax point of view. To do this, you must check if your accounting application allows you to manage the tax package.

Keep Your Accounts up to Date

Bookkeeping, accounting, financial management, and taxes are the pillar of any business. All accounts must be updated in real-time. To not get lost in the accounting calculations, a company also provides regular updates at a very specific frequency on different critical account balances so that if there is any anomaly highlighted, it can be rectified without impacting the business.

Keep Your Business Account and Personal account Separate

When a company carries out the bookkeeping activity within the company, the manager and the partners need to separate their personal and private accounts. Business expenses must be paid through a business chequing account and through business credit cards. Otherwise, the personal expenses reported as business expenses will be exposed to heavy penalties. By keeping the personal and the business transaction apart from each other, it will also facilitate the accountant’s work since he will not have to seek each transaction. This will allow him to save time and focus on services with higher added value, such as tax planning and business consulting.

Get Advice From an Accountant

We highly recommend that you must find the right accountant; it is not compulsory, though. The accountant is the privileged partner of the company. Even if the company itself ensures the business bookkeeping, it can choose to be assisted by a Chartered Professional Accountant so that he can verify the accounts.

Using the service of a chartered accountant will also make it possible to:

  • Tax obligations of the company, especially at the time of filing year-end taxes and in case of the CRA’s audit.
  • Receive regular advice and updates

Plot in a nutshell, you need to make sure that you are doing the business booking right, error-free and accurate as the whole of your financial statements and tax filings are based heavily on the correctness of your bookkeeping. You need to implement some of the basic and important points that we mentioned earlier while you are doing business bookkeeping yourself for your new business.

Please contact GTA Accounting if you would like to speak to an Accountant regarding setting up your books, or to help relieve the burden of Bookkeeping and Accounting.

Sohail Afzal CPA Toronto

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.

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