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How a Bookkeeper Helps Clients Stay on the Right Side of the Tax Man

By: Ronda Payne

Published On: February 19, 2018

Small business people are busy doing what they do best – running their business – and that often means other tasks get neglected, like keeping the books up-to-date and staying ahead of the requirements of the Canada Revenue Agency (CRA). One of the great aspects of being a bookkeeper is the joy that can be found in making client’s lives easier by allowing them to continue doing what they love without the worry of missing the tax man’s deadlines.


That being said, there are some tips for small business people, and for bookkeepers to share with clients, to make business lives (and the relationship between small business person and bookkeeper) run smoothly. No matter what size a business is, bookkeeping is essential for both the taxman’s needs (who cometh every year) and to know where the business is at financially.

We’ve all heard about the business receipts crammed into a shoebox. Sure, it’s great that the receipts were saved, but making sense of that every year isn’t just daunting, in this day and age it’s completely unnecessary given the tools available online. In addition to keeping receipts better organized, those with bookkeeping certification can share other tips with clients to keep things clean and easy when it comes to taxes and better business financial practices.

Here are the top 10 tips recommended to those who take bookkeeping courses (including part time bookkeeping courses) to share with business clients for both better taxes and a better financial picture:

1. Keep records organized and keep business and personal finances separate.

One of the first things learned in both in person and online bookkeeping certificate courses is that a business must run separately from an individual. Even in a sole proprietorship, it’s advisable to have separate business and personal accounts and to keep all documentation separate, but well-organized. Quickbooks course and bookkeeping courses BC. are great tools to help learn how to scan and/or file documentation regularly to avoid the scramble.

2. Consider making use of cloud-based bookkeeping software.

Bookkeeping courses are available online so why not make the actual bookkeeping process online as well? This allows both business owners and bookkeepers to see what’s happening in the business in real time.

3. Keep tabs on inventories.

While small businesses may not have the ability to purchase large or robust inventory systems, they can set up relatively simple systems that are scheduled and maintained to ensure inventories are tracked and monitored on a regular basis.

4. Ensure percentage of use is clear.

Some items, like cell phones, are used for both business and personal purposes. Those who take bookkeeping courses online or in person learn to assess the percentage of use of various items as personal and business. The CRA knows that unless a cell phone is devoted 100% to business (and the individual has a personal cell phone to back this claim up), there will be split uses. Bookkeepers can allocate a percentage of each bill to the business to avoid over-claiming and potential issues down the road.

5. Regularly reconcile your bank statements.

This can be done by the business and/or bookkeeper. Go over entered expenses and match them to the bank statement monthly. Doing so monthly prevents buildup of the task (no one wants to do six months in one sitting) and it keeps financial awareness higher. For example, a missed entry in the expenses or entering $5,000 instead of $500 can make a world of difference to how the month’s finances appear. Bookkeeping courses will provide training in the tools and software to keep that reconciliation up to date and ensure accurate information when it comes to the financial picture.

6. Resolve any errors ASAP.

When the reconciliation is done, if errors are spotted, they need to be corrected immediately and everyone involved needs to be updated. If the business owner is headed to the bank for an advance or new lending discussion, they need accurate information – even if it comes from the bookkeeper at the last minute.

7. Separate accounts – especially differing cash accounts.

Sure a loan provides cash availability as does payment from a customer, but they are very, very different in terms of the financial picture of a business. Bookkeeping courses teach the importance of separating the different types of cash flow along with the way they appear on financial statements and reflect the financial health of a business. Cash availability is one thing, but where that cash comes from is entirely different.

8. If selling on credit, ensure payment on terms is adhered to.

No one wants to be paid late. After the rush of excitement from the sale has passed, and passed and passed, the question of payment creates discomfort and potentially cash flow issues. You must convert those credit sales into payment in order to stay on top of things.

9. Pay the tax man.

As mentioned above, the tax man cometh Every. Single. Year. You must be prepared. A large, unsaved-for tax bill can wipe out cash flow or worse. Ensure money is put aside each and every month based on tax collected on behalf of the government (GST and provincial sales tax) and based on revenues. A bookkeeper can help ensure regular savings are allocated and that the right amount is put aside based on gross income.

10. Keep receipts, go online and use credit cards where possible.

The goals is to create a paper trail of expenditures wherever possible to avoid issues with the government when they review taxes, submissions and statements. You want to have records that can be accessed easily to provide proof of expenses.

Perhaps the best advice not mentioned in this list is to develop a strong relationship with a qualified, certified bookkeeper. Whether on staff or on contract, someone able to help manage and interpret the financial well-being of a business as well as keep things in order is essential. Don’t treat this as a once-a-year type of relationship. You want to establish regular communications all year long in order to ensure everyone is aware of how the business operates, what’s important and how to help advise on the best course of action when it comes to financial aspects of the business.


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