Many entrepreneurs feel intimidated by the financial side of their business. This can sometimes result in procrastinating over it, resulting in unnecessary fines and penalties.
Alternatively, the business owner may try to do the bookkeeping and accounting themselves. That may work while your business is just starting up – in fact every business owner should have a basic knowledge of accounting in order to understand their financial statements – but this is a dangerous area to make mistakes in.
Outsourcing it to a professional gives you access to regular, accurate reports which you can use as a tool to plan and grow your business.
Whether you decide to hire a bookkeeper or do it yourself, there are some basic organizational rules that will increase efficiency and keep your costs low.
- Keep all your sales invoices together preferably in date order whether they’re on paper or soft copy. If they’ve been paid, note the date and payment method.
- If you deposit more than one cheque to the bank at a time, make sure there’s a breakdown of the total. It can be very time consuming trying to figure out which cheques add up to a total!
- Organize your paid bills and expense receipts according to how they were paid e.g. credit card, from bank or cash. Organizing them by item purchased doesn’t help when you’re doing bank reconciliations.
- Make sure bank, credit card and loan statements are reconciled regularly. Not doing so means you could be missing payments or deposits and your financial statements and tax returns may be inaccurate
- Use cash as little as possible – it’s hard to track
- Try not to pay personal expenses with your company card. It’s time consuming and expensive to sort through a pile of irrelevant receipts.
- Keep a simple desktop filing box handy with folders labeled, Bank Expenses, Credit Card Expenses, Deposits, Cash…taking a few moments to drop things into the right folder can make sure all your eligible expenses are captured, thereby reducing your taxes paid.
These simple steps will make your accounting fees a lot lower than if you were to turn up once a year with the proverbial “shoe box!”
Guest post from Elaine Morgan from www.balancesheets.ca Ottawa Bookkeeper
These are timely tips and valuable year round.
Thank you Elaine.