Small business owners are responsible for many essential tasks, from marketing and sales to bookkeeping and accounting. But one of the most important – and often overlooked – aspects of owning a small business is how to keep receipts and good records. Records are essential for ensuring your business stays organized and efficient, and they can also help you avoid costly mistakes.
But what are the correct records to keep? And how do you choose the right recordkeeping system for your business? This guide will walk you through everything you need about recordkeeping for your small business. We’ll cover everything from essential records to store and what to do if the CRA audits you. So whether you’re just starting or running your business for years, this guide will help keep your records in order.
1. What are the different recordkeeping systems available to small business owners?
2. What are the benefits of keeping good records for your business?
3. What are some essential records that every small business should keep on file?
4. How can you ensure your business’s recordkeeping system is efficient and effective?
5. How often should you review your records, and what should you do if you find any discrepancies?
6. What happens if the CRA audits you?
7. How can a bookkeeper help you keep track of your small business records?
What are the different types of recordkeeping systems available to small business owners?
The most common recordkeeping system is a cloud-based system like QuickBooks Online. This system is easy to use and helps you stay organized by storing your records in the cloud. Other recordkeeping systems include manual systems (which involve keeping paper files) and software-based systems (which require purchasing and installing software on your computer).
The type of system best for your business depends on your needs and preferences. For example, most companies prefer cloud-based systems because they’re easy to use and can be accessed from anywhere, while others prefer software-based systems because they have more features and can be customized to fit their needs.
No matter which type of system you choose, it’s essential to ensure it’s efficient and effective for your business. The design should be easy to use and understand, and it should also be able to handle the volume of records you’re likely to produce.
What are the benefits of keeping good records for your business?
There are several benefits to keeping good records for your business. Some of the most important benefits include:
1. Organized Records: A well-organized recordkeeping system helps you stay organized and efficient, saving you time and money in the long run.
2. Easy Access: Good records are easy to access when you need them, which makes it easier to track finances, make decisions, and respond to audits or other inquiries from the CRA.
3. Timely Updates: By regularly keeping track of your business expenses and income, you can ensure that your financial reports are up-to-date and accurate. This can help you make better decisions about where to allocate your resources.
4. Tax Preparation: Good records help make tax preparation easier and less time-consuming, saving you money in taxes or penalties.
5. Track Business Progress: By tracking the progress of your business over time, you can identify trends and areas where improvements need to be made. This information can help make future business decisions.
Some essential records that every small business should keep on file include:
1. Business License and incorporation documents: You must have a copy of your business license and incorporation documents on file. This includes a copy of your shareholder registry.
2. Tax Returns: You should keep copies of all your tax returns and related documents, including T4s and T5s.
3. Employee Records: You should keep records of all your employees, including their contact information, wage information, and any benefits they receive.
4. Accounts Payable: You should keep a record of all your accounts payable, including the vendor name, invoice number, and date paid.
5. Accounts Receivable: You should keep a record of all your accounts receivable, including the customer name, invoice number, and date billed.
6. Receipts and invoices: You should keep a record of all your receipts and invoices, including the date, vendor name, and amount paid. This information can help you track your business expenses and income over time.
How can you ensure your business’s recordkeeping system is efficient and effective?
You can do a few things to ensure your recordkeeping system is efficient and effective for your business. First, make sure the system is easy to use and understand. If you struggle to use the system or don’t understand how it works, you’re likely to skip using it altogether, which can hurt your business in the long run because your books will become a mess!
Second, ensure the system can handle the volume of records you’re likely to produce. If you’re manually entering your transactions and spending a significant amount of time on that, the system isn’t working efficiently and could use an upgrade to a cloud-based version.
Finally, be sure to update your records daily/weekly or at least monthly. This will help ensure that your financial reports are accurate and up-to-date.
How often should you review your records, and what should you do if you find any discrepancies?
Ideally, you should review your records on a daily or weekly basis. This will help ensure that your financial reports are accurate and up-to-date. If you find any discrepancies, take the appropriate steps to correct them. This could include contacting the vendor, changing the invoice date, or adjusting the amount paid. The savvy business entrepreneur has a pulse on their numbers and knows exactly how profitable they are. You should too!
What happens if the CRA audits you?
If the CRA audits you, they will review your records to ensure they are accurate and up-to-date. If they find gaps in missing information, you may be subject to penalties or fines since you won’t be allowed to make tax deductions for expenses without a receipt. Therefore, it’s essential to ensure your records are accurate and up-to-date to avoid any penalties from the CRA.
How can a bookkeeper help you keep track of your small business records?
If you’re not experienced in bookkeeping and accounting, keeping track of your small business records can be challenging. A bookkeeper can help you stay organized and ensure that your documents are accurate and up-to-date. They can also help you prepare for tax season and ensure you’re taking full advantage of all the tax deductions available.
If you’re interested in hiring a bookkeeper to help you with your small business on how to keep receipts and records, shop around and compare prices. Ask for referrals from friends or family members who own businesses, or contact us!