Helpful Tips from a Bookkeeping Expert
Accounting and bookkeeping can be an overwhelming and stressful part of operating a business.
During a series of the ODEY project workshops, Carolyn Barker Brown offered general knowledge and advice on how to manage “the books” when starting and maintaining a business. Here we share some helpful tips from Carolyn during the bookkeeping workshop. Having the knowledge and insight from a bookkeeping expert could help ease your mind while tackling your business finances.
What are records?
Carolyn first went over what bookkeeping records are and noted that they include:
- Ledgers, journals, books, charts
- Sales invoices & purchase receipts
- Bank statements
- Cancelled cheques
- HST returns, income tax returns
- Financial statements
These records are important to keep track of in the case of an audit and they also allow you to more effectively keep track of your finances. Keeping financial records organized enables you to make sure there’s a paper trail. Well-organized records can also provide you with peace of mind in having a designated spot to see everything is in order. One tip from Carolyn was to write your future-self notes about complicated transactions to ensure you can accurately respond to an audit.
- Keep all correspondence that supports transactions.
- To claim an expense, keep the purchase receipt not just the debit/credit receipt.
- If you file an income tax return late, keep the records for 6 years.
- Keep separate records for each business. In fact, one bookkeeping tip is to separate the bank accounts and credit cards for businesses to make it easier to keep track and claim your interest from your business vs. personal assets.
- If the CRA wants you to keep your records for more than 6 years, a CRA official will let you know either in person or by mail.
- Internet-based transactions are included in your records.
- Behind every good business is a great bookkeeper.
Should you charge HST/GST?
One important question that was shared during the first workshop was whether or not you should be charging HST/GST on your goods and services. Carolyn explained that the CRA has a rule that if the business’ gross income is more than $30,000 in your business’ fiscal year, then you need to charge HST/GST.
Ultimately, bookkeeping is a process to determine what is happening financially in your business. Keeping track of your finances can allow you to track what is working in your business and what can be changed to control costs. For ODEY participants, one-on-one financial counselling is available is provided from CFDC to gain more bookkeeping advice that is more relevant to each specific business.