Accounting, Taxes & Bookkeeping Tips for Entrepreneurs

 

Small Business and Entrepreneur Advice from The TaxForce:

What records should I be keeping?

Small businesses should keep all records, receipts, and document it all. Simple programs like Dext can be helpful. You can take a picture of your receipt and it will categorize it for you (https://dext.com/) and at year end we can put it all in a spreadsheet.

For more complex bookkeeping you can use Quickbooks Online (https://quickbooks.intuit.com/ca/)

If you have a receipt that doesn't say your business name on it, it is a good practice to make note of what the purchase was for. The CRA doesn't like if your name and purpose of the purchase isn't on receipts. Any purchases for clients, or lunches should have notes on them.

 

How long do I need to keep records for?

The CRA says 7 years. Audits can go back 4 years, but if things get really complicated, then they can go back 7 years.

What are some best practices for tracking and P&Ls?

Keep track of your books as you go along; do NOT let things build up and get out of control, as that can lead to big headaches and disorganization. Weekly and monthly tracking is a great idea, and go through everything with Excel spreadsheets, Dext, Quickbooks Online, etc.

As a business owner, it's important to keep track of your numbers throughout the year. This helps you make informed decisions about where to allocate your resources and how to grow your business.

 Tracking your numbers also allows you to spot trends and opportunities, and to identify areas that need improvement. Additionally, keeping tabs on your business numbers helps you stay compliant with government regulations and tax laws. By tracking your numbers, you can ensure that your business is on the path to success.

 For any business, large or small, knowing your profit and loss is essential to making informed decisions about where to allocate your resources. A profit and loss statement (P&L) gives you a clear picture of your income and expenses over a certain period of time, so you can see at a glance whether your business is in the black or the red.

 This financial information can be invaluable in helping you to set prices, manage inventory, and make other strategic decisions about the direction of your business. Additionally, by tracking your P&L on a regular basis, you can quickly identify any potential problems and take steps to address them before they become serious. In short, regular profit and loss statements are an essential tool for any business owner who wants

Best practises for bookkeeping

When it comes to managing finances, most small business owners wear many hats. In addition to handling day-to-day operations, they also have to keep track of income and expenses, pay bills, and file taxes. For many business owners, this can be a full-time job in itself. As a result, many business owners choose to outsource their bookkeeping to a professional.

 

There are several upsides to hiring a bookkeeper. It frees up your time so that you can focus on running your business. A bookkeeper can provide good advice on financial management and help you save money in the long run. And a bookkeeper can take care of all the paperwork and filing requirements.

 On the other hand, having a bookkeeper could mean you may lose control over your books, because you may become disconnected from daily, weekly, monthly and yearly spending.

 Doing your own books can mean really having a solid understanding of your spending, leading to better decision-making. If you do bookkeeping yourself, you can save money by knowing exactly where you are spending. You can see areas where you're overspending, or you can see if you're not charging enough.

 If you hate doing your own books and know you will put them off and that it'll be a pain for you, then hiring a bookkeeper is more likely the best course of action for you.

 

What are some of the top mistakes entrepreneurs make around tax time?

Not tracking throughout the year can lead to things getting missed. Being organized and consistently tracking will save a ton of headaches. You'll miss out on tax deductions and end up paying more in tax when you fail to track.

 Waiting until the last minute to get things done. This isn't good for either you or your accountant. Coming in with countless receipts several days before the due date is chaotic, and the probability of issues or errors occurring rises. Plan to have things completed and submitted in a timely fashion instead.

 

Not preparing for a tax bill. Look at your average tax rate (say 20%) and take 20% of every dollar and put it in an account you can't access, so when the CRA bill comes you have the funds waiting.

 And if you owe less than you anticipated you'll have extra cash in there that's been set aside. Without saving up to pay the tax bills, business owners may find themselves owing a sizable amount, with no money to pay it with, and having to pay CRA interest, which isn't tax deductible.

What is the due date to file your taxes?

The due date to file taxes as a small business is June 15th, 2022, but if you owe money the due date is April 30th, 2022.