Gregory, Harriman & Associates LLP Blog

Separate Bank Accounts: Ensure that you have separate personal and business bank accounts. For unincorporated business owners, opening a separate bank account to handle your business transactions is the most important step to keeping things organized. When the time comes to prepare your taxes, having personal and business transactions flowing through the same account can make it difficult to separate the income and expenses of your business from personal items. This can result in missed revenue and expenses being reported for your business. A separate business bank account can also help with budgeting for your business, as well as assist in maintaining support for deductible business expenses in the event of a future Canada Revenue Agency audit or review.

Reconcile on Monthly Basis: Reconciling your accounts monthly while transactions are still recent and fresh in your mind can help prevent some serious frustration at the end of the year. We recommend that you reconcile bank and credit cards monthly when statements are received. A few small errors here and there can add up to one big headache at the end of the year. Therefore, taking the time each month to reconcile your business bank and credit card accounts is always a worthwhile practice.

Set up Reminders: For any small business owner that handles their own bookkeeping, the number of items to stay on top of can be overwhelming and it is easy to occasionally forget a payment, deadline, or other important procedure. Setting reminders in your phone or calendar for recurring items such as invoicing, payroll remittances, and tax or GST installment payments can be a critical step in ensuring that these frequent deadlines are not missed, and costly penalties for missed payments are avoided.

Don’t Skip the Details: When completing posting for your business, you may remember at the time exactly what each transaction relates to, but when you go back months or even years down the road, you probably won’t be able to tell what is what just based on the date and amount of each transaction. This is why including details in your transaction descriptions and memos is a valuable practice. Not only will your accountant have fewer questions at year end (and your accounting fees will reflect this!), but having a detailed general ledger to refer to in the future can help save a ton of time and effort in tracking down relevant supporting documents as needed (i.e. for a Canada Revenue Agency audit or review).

Choose the Software That Works for You: There are many different bookkeeping software options out there, and choosing the one that makes the most sense for your specific business needs can go a long way to getting the most out of your software. The correct software can help you keep things organized, along with provide you with appropriate reports to assist you in making effective business decisions. QuickBooks and Sage are two programs that are popular and easy to use for most small businesses, but industry specific software such as AgExpert (for businesses in agriculture) can often provide more value in addressing industry specific needs. Before choosing your bookkeeping software, make sure you understand the options available and the specific features that each software offers.

Create a System for Filing: Staying on top of your posting is not an easy thing to do without also staying on top of your filing. There is no one system that works well for everyone, but keeping your receipts, invoices, and other supporting documents organized can help save valuable time when completing your posting, and in the event of a Canada Revenue Agency audit or review. If you find it difficult to manage all of your business’s paper documents, then you may want to consider taking the step to go paperless with most items and scanning your receipts and other documents to be saved electronically. There are also some apps for your phone that can be used to assist in this process. Similar to setting aside time to post, setting aside a regular time to scan in your receipts can be a great way of keeping all your support organized and easily accessible.