It is very important to realize the importance of bookkeeping, especially if you are a small business owner or entrepreneur. First, good record keeping is necessary for you to accurately file your income tax return with the CRA. It also lets you know:
If you are making a profit
Cash in, out, and on hand
Changes to make like product lines or employees
If you are growing, shrinking, or staying put
Bookkeeping is not especially difficult, particularly with the variety of applications and programs available. But it is a task that many prefer to avoid or to outsource.
Keeping your records up to date lets you know where you stand at any point in time. It is a picture of the health of your company. It will let you plan on how much money you will need for sales tax and income taxes, as well as how much you have to pay employees, order supplies, and overhead. You can also see who owes you how much. Good cash management means you know when you can make early payments to capitalize on discounts.
Deposits are equally important to track. Money comes into the business from sales, loans, and even your own personal savings. Correctly allocating each deposit gives you an advantage at tax time and will help avoid paying taxes on money that came into the business not through generated income.
If you do choose to do your own bookkeeping, there are some things to keep in mind.
Separate accounts – Be sure to keep your personal accounts separate from business. This includes checking and credit cards. If you don’t it will become a nightmare at tax time or when you pursue outside financing.
Transactions – You need to know how transactions are categorized. This will let you take full advantage of tax deductions as well as pinpoint how the money is spent.
Self realization – You know whether you enjoy working with numbers and the detail it takes to maintain a set of books. Another issue is time. Will you have sufficient hours in the day or week to keep up with the entries? Will you procrastinate in favor of providing the product or service you are selling? Saying yes to either of these last two questions will leave you in almost as difficult position as not keeping books at all. Are you adept at learning the programs or apps available?
Mistakes – Are you willing to take on the responsibility of mistakes due to distraction, misinformation. or simple lack of experience and knowledge?
So, at this point you have either decided that you are up to the task of keeping your own books, or are considering some help. While it will be considerably less expensive to maintain your own records, hiring a CPA in Brampton or Mississauga
has definite advantages. They also can provide valuable advice for planning and tax advantages. Additionally they are available to help you make the best decisions regarding your business and how it interrelates to your personal finances.
If you have any questions about this topic, or finances in general, we are happy to consult with you about your particular circumstances and how we can be of assistance.
Contact your Accountants today click on this link —> https://capexcpa.com/contact
- The Capex Team