Should I do my small business’ bookkeeping?
Typically, when starting out small business owners are trying to manage every aspect of their business to keep costs down including bookkeeping. Some owners have taken a course in accounting during their schooling, however for a lot them it has been a long time since those days.
Below are some key reasons why your books need to be taken care of properly:
· Your bookkeeping needs to be accurate and up to date in order to facilitate business decisions. For example, your interim records could be used in order to obtain a loan for your small business.
· If you have registered for sales tax reporting (HST here in Ontario) you need your records to be accurate when reporting to the Canada Revenue Agency (CRA). CRA needs to see your sales figures, HST collected from customers and HST paid to your suppliers. Your frequency of reporting is either annually, quarterly or monthly depending on your situation. If CRA thinks something looks funny on your HST return they can audit you.
· Inaccurate records can lead to many additional accounting entries made to your records by your accountant come tax time. This can lead to increased fees charged by your accountant or tax preparer. If the records are really bad an accountant can refuse to do the work until the bookkeeping is in better shape.
There are cloud accounting solutions (Xero and Wave) on the market that can help ease this burden, however the person doing the bookkeeping should be trained as to how use the program properly for their business. Hiring an accountant or a bookkeeper to perform the bookkeeping could eliminate this task entirely and allow you to focus on the aspects of your business that matter more to you.
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