Your small business success depends on the quality of service or products you offer to customers. Without applying best practices for your company’s bookkeeping, that success can suffer.
Doing what you love, and serving clients could be what helps you stay passionate about your business. However, many small business owners struggle when it comes to tracking finances and keeping up with the books.
Without a bookkeeper, navigating the numbers and paperwork on your own can ruin your hard work! Watch out for these seven common bookkeeping mistakes.
1. Not Saving All Receipts
Yes, we mean “all” receipts! That small receipt for coffee with a potential client might seem like a hassle to log as an expense, but those small amounts add up.
As you work through your taxes with a professional bookkeeper, you could miss valuable business expenses that can reduce your annual tax payment. To protect your business from a potential CRA audit, avoid estimating how much you spend on receipts under $75.
Track each receipt and keep a backup that supports all of your business expenses.
2. Mixing Business and Personal Spending Together
When your personal and business expenses blend together, it’s challenging to track the costs you can count toward deductions. Even if you are a sole proprietor without a lot of business expenses, it’s best to keep a separate record and account for your personal purchases.
Keeping good records helps your bookkeeper recognize the expenses that can benefit your business deductions. You’ll help them save time and improve the accuracy of your tax filings when personal expenses track to a separate account than your business purchases.
3. Applying the Wrong Category Codes
Categorizing your expenses correctly becomes a critical task when keeping track of your company’s finances and taxes. Using the wrong category for specific costs can change your tax payments and deductions. Too many items with the same category codes or descriptions can also cause red flags for the CRA.
Your bookkeeper can help you apply the right category codes and descriptions for types of expenses and deductions. Without their guidance, you could pay more (or not enough) annual business taxes.
While it can be tempting to put too many expenses into a blanket category, you could do more harm than good when working with your bookkeeper. Accurate coding for every expense helps protect your company and enables you to maximize business deductions.
4. Neglecting Reconciliation
Once a month, you probably balance your bank account or credit card receipts with your personal accounts. Checking your expenses against your receipts helps you find fraudulent charges or keep up with funds in your personal bank account.
Business owners need to reconcile bank account statements and receipts regularly. A professional bookkeeper can help when reading financial statements. Confirming expenses and monitoring cash flow helps business owners protect their businesses and stay up-to-date with costs versus income.
Keeping track of reconciliation on a monthly or quarterly basis also makes your bookkeeper’s job easier when it’s time to file business taxes. They can anticipate your deductions and simplify the filing process—saving you some time and money during tax season.
5. Not Applying Sales Tax
Sales tax can become confusing and frustrating without professional guidance. However, ignoring your responsibility to track and report sales tax isn’t worth it.
Every business owner must comply with local taxes for the products or services you sell every year. Your bookkeeper can help you understand the sales tax that applies to your business. Tax mistakes can trigger an IRS audit and expensive penalties that hurt your company’s income.
When reviewing and reporting sales tax:
Charge the correct amount of sales tax that applies to your business
Deduct the amount of taxes you collect from your sales when filing taxes
Pay the right amount of taxes
Using a professional bookkeeper helps you avoid sales tax mistakes! Let them guide you through how much to charge, track, and pay every year.
6. Failing To Track Petty Cash
Most businesses have a stash of petty cash for small expenses, quick payments, or the occasional employee thank-you treats. Keeping cash on hand is a good business practice—as long as you track and protect your cash.
Using petty cash qualifies as a business expense. Business owners should:
Always know how much cash in your petty stash
Store it in a locked drawer or safe
Restrict access to petty cash
Require receipts for all petty cash purchases
Use it sparingly
Petty cash isn’t a free stash of money to use for a quick run to the coffee shop or personal expenses. Make sure every use of this cash can be traced to a justifiable business expense that your bookkeeper can record and process during tax time.
7. Doing It Yourself
Your business is a success because you are good at what you do, Whether you offer a service or create a product to sell, focusing your time and expertise on serving customers is a priority.
If bookkeeping isn’t your passion (or one of your better skills), hire a professional bookkeeper to handle your company’s finances. Spending too much time tracking down receipts, filing expenses, and balancing your books can take away from what you do best: providing excellent customer service and products that help grow your business.
It’s tempting to want to save money and do as much as you can on your own when you have a small business. However, a professional bookkeeper is one of the best investments you can make for your business. Plus, a bookkeeper helps you maximize deductions and avoid mistakes that could happen when doing the bookkeeping on your own.
Avoid These Bookkeeping Mistakes
Your small business needs every advantage for success and growth! Hiring a professional helps you avoid expensive bookkeeping mistakes for your company.
Choosing Sync Bookkeeping means you have the professional bookkeeping services you need for your small business—without a full-time in-house staff person to do the job. Let us help! Contact us to learn more about our monthly bookkeeping services.
Are you looking to take back control of your business? Are you tired of trying to find different solutions for the same financial setbacks that you’re having? Maybe keeping track of money isn’t your biggest strong suit.
If so, then your business will thrive from hiring a bookkeeper. However, you shouldn’t simply hire the first one that you come across.
There are loads of valuable questions you can ask while hiring a bookkeeper in order to gauge which ones are right for you. Be sure to use these questions in order to find the right bookkeeper for your needs. Let them be a guide to finding the perfect fit.
1. How Long Has Your Company Been in Business?
You can tell the trustworthiness of a bookkeeping company as a whole by simply asking how long that they’ve been in business. The more years under the belt, the more advantages you’ll receive as a client.
No two methods of bookkeeping are the same. While one client might not require much of the bookkeeper other than tracking finances, another might need them to do a deeper dive into their financial situation.
At the end of the day, you want someone that’s going to keep track of your expenses and give thorough reports of your spending. That way, you can aim to correct some of the biggest expenditures in your business model.
2. What Certifications Do You Have?
The scariest part of bookkeeping is that anyone can technically give themselves the title without any mandatory certification. So it’s up to you to do your homework and make sure you’re hiring an experienced and certified bookkeeper.
As far as what type of certification you should look for… the answer is left completely up to you! For example, You can find someone that is a certified Quickbooks ProAdvisor if you use Quickbooks and are trying to have someone educate your staff.
But if you want to make sure they have certification just to give you peace of mind then you can search for those with Certified Professional Bookkeeper (CPB).
3. When Am I Able to Contact You?
If you decide to outsource your bookkeeping needs to a professional bookkeeping service, then communication is going to be a top priority. Be sure to ask what methods you can use to contact them and when.
There’s no “correct answer” for this, it all depends on what you’re looking for. If you want someone that’s there to answer your calls 24/7, then embrace that and don’t settle for anything less.
If you’re just looking for a service whose hours of operations are similar to yours, then that works too.
Whether you have previous bookkeeping experience or not, questions are always going to come up. It’s always best if you hire a professional service that’s willing to answer your questions night or day.
4. Have You Had Clients in My Industry Before?
No two industries are created equal. They all have their different needs for proper bookkeeping. Some have a higher need to focus on cash flow, expenses, overhead, and so much more.
Because of that, it’s always helpful (but not necessary) to find a bookkeeping service that already has/had a client in your industry. That experience will help them understand the needs that your company has.
Better yet, it allows you to ask even more questions about that previous client and how successful they were under the guise of the bookkeeping service. If you know the previous client, then you can reach out to them for more insight into the service itself.
5. Will I Be Working with a Team or One Particular Rep?
Many companies have different preferences on whether they’d rather work with an entire team of bookkeepers on rotation or just one specific rep.
The thought process for the team of bookkeepers is that there will be multiple hands overseeing your bookkeeping, thus helping it become full-proof. Then some prefer having one bookkeeping rep so that they’re constantly seeing the same info.
Which one do you prefer? Get with your team of executives (or those you trust) to talk through which would be best for your company.
Once you have that figured out, go out and find the service that can meet that request for you. Let them give you details on which method they use and why they’ve modeled their bookkeeping service that way.
6. Where Will You Be Working From?
One of the biggest advantages of outsourcing your bookkeeping is gaining access to an expert bookkeeper. It allows you to turn your company’s weakness into a strength without hiring an in-house employee.
Still, you might prefer to have them in-house as much as possible. If that’s the case, be sure to ask where they’ll be performing the bookkeeping work from.
Some services will send a rep to your office each day that they work on it. Others are entirely remote and won’t require a bookkeeper to be in your workspace. Be sure to ask each service which way they conduct business so that you’re on the same page.
It’s Time to Start Hiring a Bookkeeper
Now that you’ve seen several qualifying questions to ask when hiring a bookkeeper, it’s time for you to start that process.
Be sure to read this article about hiring a bookkeeper or accountant. There you’ll get more info on how to tell when you need to hire one.
For more inquiries, please be sure to reach out via our contact us page and we’ll be happy to assist you further!
The accounting cycle is the process of recording your business’s financial activities. The accounting cycle looks back in time at the end of a designated period. The cycle includes several steps, starting when a transaction occurs. The cycle ends when you record the transaction as part of your financial statements.
The accounting cycle makes accounting easier, breaking your bookkeeping down into smaller tasks. It helps you see what you need to accomplish next.
You can improve consistency and accuracy by following the accounting cycle. Start and end dates allow you to manage time and set goals. You can compare one cycle to another, and reconcile bank statements.
If you use accounting software, you can program dates for your accounting cycle. The software will generate reports based on the dates you select.
Accounting cycle steps
Full cycle accounting can be broken down into several steps. Depending on how you do your accounting, you may be able to modify or skip some of the steps.
Many steps in the accounting cycle are meant for accrual accounting. The double-entry accounting system allows you to cross reference entries for accuracy. If you use accrual accounting, you can follow all the steps in the accounting cycle.
If you use a single-entry accounting system (cash-basis), you can still use the accounting cycle. You will begin the accounting period on a certain date, record entries, and close your books at the end of the period. You do not need to follow the steps that require you to check entries for debits and credits.
How many steps are in the accounting cycle?
Usually, there are eight steps in accounting cycle processes. However, you can add or subtract certain steps when necessary. Use the steps that help you stay organized and maintain accurate records.
What are the steps of the accounting cycle?
The following accounting cycle steps can help you keep financial records.
1. Identify transactions
First, separate your business transactions from all of the transactions you made. You only want to include transactions related to your company in your financial records. For example, you won’t record your grocery bill as a business expense in your books.
Use source documents to identify business transactions, such as receipts and invoices. Save these kinds of financial documents to support your records. As you identify business transactions, decide which account they fall under.
2. Record transactions in your journal
The journal is where you initially record business transactions. It is a running list of financial activities, like a checkbook. Track transactions in your journal chronologically as they happen.
If you use double-entry bookkeeping, record two entries for each transaction. Enter a debit for one account and a credit for another. The debit and credit should be equal.
3. Post entries to the general ledger
The general ledger is also known as the book of final entry. General ledger entries are changes made to each account in your books. Using your journal, organize transactions into different accounts. For example, if a customer paid for a product with cash, enter the transaction under the cash account in your books.
4. Unadjusted trial balance
For your books to be accurate, the debit and credit entries must be equal. Use an unadjusted trial balance to test if your debits and credits match.
Make a note of each account balance. Add all the debit balances together and all the credit balances together. If the two totals are not the same, you might have an error in your books. Or, you might need to make adjusting entries.
5. Adjusting entries
At the end of an accounting period, you might have incurred expenses but not paid for them yet. And, you might have earned income but not collected it yet. Use adjusting entries to recognize transactions that have occurred but not been recorded.
For example, you earned interest on a bank account balance. You have not recorded the interest in your books, but it appears on your bank statement. Use an adjusted entry to recognize the interest in your books.
6. Adjusted trial balance
Do an adjusted trial balance after making adjusting entries and before creating financial statements. This step tests to see if the debits and credits match after making adjusting entries.
7. Create financial statements
Once your accounts are up-to-date, create statements. The following are common financial statements for small business:
Income statements compare your profits and losses for the period.
Balance sheets determine progress by detailing assets, liabilities, and equity.
Cash flow statements show money coming into and out of the business.
Use your financial statements to measure performance, make improvements, and set goals. You can also use statements to talk with lenders and negotiate terms with vendors.
8. Close your books
The final step in the accounting cycle is to close your accounting books. Closing your books wraps up financial activities for the period. Do tasks like updating accounts payable, reconciling accounts, reviewing your petty cash fund, and counting inventory.
When you close your books, you should get your accounting set up for the next period. Decide which processes are moving your business forward. Create a calendar for completing future tasks. File any financial documents from the last period and get rid of old documents that are no longer useful.
Flow chart of the accounting cycle
The accounting cycle can help you keep your books organized. Use this flow chart of the accounting cycle as a reference for completing your books.
Receipt Bank is a platform used to manage the receipts, invoices, and other documents that businesses depend on to keep accurate, secure financial records.
You can capture and upload your bills and receipts using:
The camera on your mobile phone
Email
Scans on your computer
Automatically fetching them from online platforms
After you’ve sent in a document, Receipt Bank’s automated extraction engine will read all of the key information and display it in an easily manageable format, perfect for downloading or processing with connected accounting software.
An image of the document and its associated data will be kept on file for a minimum of 10 years. Feel free to throw away that receipt; Receipt Bank will always have you covered for compliance and keep your financial documents securely stored online, where they can be shared with your colleagues, accountant or bookkeeper. Learn more about the products Receipt Bank offers for small businesses here.
If you’re an accountant or bookkeeper, use Receipt Bank to manage the finances of multiple businesses from a single dashboard. Learn more about the products Receipt Bank offers for accountants and bookkeepers here.
If you’re interested in adding Receipt Bank to your business, please contact your Account Manager at Sync Bookkeeping
On January 15, 2021, the Ontario government opened applications for the new Ontario Small Business Support Grant, which helps small businesses that are required to close or significantly restrict services under the Provincewide Shutdown effective December 26, 2020.
Starting at $10,000 for all eligible businesses, the grant provides businesses with funding to a maximum of $20,000 to help cover decreased revenue expected as a result of the Provincewide Shutdown.
Eligibility Requirements and Application can be found here: 🔗👉🏻Government of Ontario: Small Business Support Grant
The business must demonstrate they experienced a revenue decline of at least 20 percent when comparing monthly revenue in April 2019 and April 2020. This time period was selected as it reflects the impact of the public health measures in spring 2020, and as such provides a representation of the possible impact of these latest measures on small businesses.
New businesses established since April 2019 are also eligible provided, they meet the other eligibility criteria. Businesses will be able to use the support in whatever way makes the most sense for them. For example, some businesses could use the support to pay employee wages, while others may need support maintaining their inventory.
Anyone who’s done their own taxes before will tell you that it takes a lot of time. Not only is it time-consuming, but it can be complicated and cause major headaches if you aren’t sure what you’re doing.
Hiring professional tax services to do your personal taxes can make the whole process much quicker and easier. Let’s weigh the options and look at all the reasons to go the professional tax service route instead of doing it on your own.
The Benefits of Hiring Professional Tax Services
The obvious reason to use professional tax preparation services is the amount of time and stress it will save you. Time is definitely a valuable asset, and doing your own personal taxes can take up to 20 hours each year.
However, there are more benefits to letting the professionals handle filing your personal taxes.
You might avoid using tax services because of the fee they charge, but in the long run, you can actually save money by going with the pros. Most fees are very reasonable, and tax professionals can get you more savings on your tax return.
They’re aware of the latest tax rules and changes, so they can identify deductions and credits that you may not know about. Along with the extra savings, they can use their expertise to avoid costly errors on your tax return. An error-free return reduces the risk of filing delays or being audited in the future.
Finally, if you’re self-employed, using professional income tax services can help you avoid confusion. If you own a small business, you can use the same service to handle your business taxes to keep it all organized.
A professional can identify all of your business expenses so you get the most credit. They can also help you set up systems to track your expenses throughout the year and make quarterly payments.
Working with a Tax Professional
Another reason people love working with a professional tax service is that they are there to answer any questions you have throughout the process. When you file personal taxes on your own, you have to figure everything out for yourself or deal with calling a revenue agency directly.
Tax professionals aren’t just there for you during tax season. The best tax service can assist you year-round with tax planning that can save you money when it is time to file.
In some cases, tax professionals can also look at past returns and make any needed amendments if you made a mistake, which could net you even more savings.
Overall, hiring professional income tax services has many benefits, but the best part is the peace of mind it gives you throughout the entire process.
File Your Taxes with Confidence
Take the stress and questioning out of filing your taxes and use a professional tax service instead. Not only will they save you time, but you’ll also save money and complications down the road.
To work with Sync Bookkeeping Inc. in Ilderton, Ontario, contact us today.
Digital Main Street is an initiative of the Ontario government which is focused on helping
small businesses to adopt digital technologies and grow their online presence. It provides grants and services to help small business owners take advantage of digital tools and engage with customers online. This initiative has helped thousands of businesses across Ontario stay connected to their customers during challenging times.
Digital Main Street also offers a range of other services, such as free technical support, courses on digital marketing and e-commerce, funding for website development, and access to mentors who can offer advice on topics related to marketing, customer relations, and more. With the help of Digital Main Street, small business owners in Ontario can expand their reach even further by leveraging the power of technology.
Teaching your child about money is one of the most important things you can do to set them up for success in life. Money management is a life skill that will serve them well whether they are earning a salary, running a business, or retired.
There are a number of ways you can teach your child about money. Here are 7 of the most important money management skills you should teach your child:
1. The value of a dollar
2. The different types of money
3. Savings and spending
4. Earnings and gifts
5. Needs vs. wants
6. Planning and budgeting
7. Charitable giving
By teaching your child these money management skills, you will help them build a strong foundation for financial success in the future.
1. The Value of a Dollar Teaching your child the value of a dollar is a crucial part of their money management education. To make it easier, start by giving them small chores for money. Explain to them that they will have to earn money through work too. This will help them understand that money doesn’t come for free, and they will learn to appreciate it more. Next, show them how to distinguish between prices and ask them to compare prices of different products within the same category. You can also explain how sometimes, products can have a higher price just because of the brand label. It’s a good opportunity to teach the child that sometimes, the most expensive option may not always be the most necessary or valuable.
2. The Different Types of Money It’s important to educate your child on the different forms of money. They should know that money comes in the form of cash, checks, credit cards and debit cards. Dust off your old chequebook and show them how to write a check correctly. You can also discuss the advantages and disadvantages of using different forms of payment. For example, there may be a reward for using a credit card for a purchase, but that can increase debt levels.
3. Savings and Spending One of the most important money management skills to teach your child is the concept of saving and spending. Teach your child the importance of saving their money for the future. A good way to demonstrate this is by using a piggy bank or a savings account. As they grow older, they can learn about the basics of saving for college or a down payment for a big purchase.
4. Earnings and Gifts When your child receives money as a gift, help them make choices on their spending by offering various options on how to allocate that money. This helps show them that money can be used wisely, but it also brings appreciation towards the gift itself as they realize the effort people go through to make the gift possible.
5. Needs vs. Wants Teaching your child the difference between needs and wants is an essential part of money management. They should understand that some expenditures are essential (food, shelter, medication) while others are not (toys, games, eating out). This way, they can learn to make better decisions about their finances.
6. Planning and Budgeting
Planning and budgeting are significant life skills that your child will benefit from. Teach your child how to budget their money efficiently and make a plan for their savings. Sit down and help them develop a budget worksheet to track expenses in the short term but also to anticipate future costs like birthday presents, holidays or gifts. As they become better at planning and budgeting, you can introduce them to more complex concepts.
7. Charitable Giving Teaching your child charitable giving helps them develop compassion and empathy. When they see that they can share what they have with others who are less fortunate, they will learn the importance of generosity. Give them appropriate opportunities where they can make donations to non-profits or engage in volunteer work. In conclusion, teaching your child about money management through these seven methods is critical for their financial success later in life. Start teaching them early on and at a pace that is appropriate for their age. The lessons learned now will shape their financial habits for the rest of their life, so be sure to create ample opportunities for them to practice these skills.
Resources:
https://www.canada.ca/en/financial-consumer-agency/services/teaching-children-money/begin-teaching-children.html
For the average taxpayer, financial records can be challenging to organize even in the best circumstances. Looking at the year we’ve just had, taxes may be more complicated than usual. Here are a few tips to make things more convenient while you’re working from home and more of the unexpected twists and turns of 2020 when preparing your taxes!
CERB is Taxable Income
When you received the Canada Emergency Response Benefit (CERB) in 2020, you should know that the Government will tax it as income. Unlike income from labour, where income tax is deducted automatically, the tax on the CERB was not deducted before the funds were transferred. Don’t worry about figuring this out: the Government will issue T4A slips, indicating the total amount of CERB a person has received. The amount on the slips is the amount you must declare as income when filing your 2020 income tax return.
In response to how lockouts and physical isolation affected work, the Federal Government has released other benefits: the Canada Recovery Benefit (CRB), for self-employed and Canada Recovery Sickness Benefit (CRSB), and the Canada Recovery Caregiving Benefit (CRCB).
However, depending on your marginal tax rate, recipients still owe the difference based on your total taxable income in 2020. With CRB, for example, if their net income exceeded $38,000 in 2020, you may have to repay some of it.
Work From Home
Workers would offset some of the tax if the pandemic and government restrictions forced them to work from home, including spending on the home office and household connections such as electricity, heat and water. We do not yet know how the Canadian Tax Authority will investigate and investigate these allegations. All workers should keep track of when they started working at a distance, how often and for how long.
An employee can claim expenses for the home office if they use the room for at least half of the total working time. This rule covers the whole year, but since many people work only part of the year from home, the rating agency will assess the cases individually. The rating agency bases its rating on the office’s size based on the house’s total square footage.
The employer’s documents must use the T2200 form: the explanation of the terms of employment. Any expenses provided or reimbursed by the employer, such as office supplies or home Internet access, cannot be claimed.
Taxes are due on the same dates as every other year.
Individual tax returns and payments are due on 30 April, and self-employed people on 15 June. The rating agency could order an extension of the deadline but has not announced it. Make sure you are still completing your taxes and making all payments due on time.
Consider getting your taxes done professionally.
Everyone can file their taxes, but this year will be different from any we’ve seen before. Taxpayers will have to deal with new issues and factors, especially if they have moved into a home office or own a small business. Auditors are here to make sure their clients don’t miss any documents or records.
Like any other company, auditors and tax collection services must follow security procedures connected with COVID-19. We are working to help customers complete their returns without having to sit down in person. If you are unsure about the tax season this year, contact us today!
Consider the Size of Your Business.
When choosing a bookkeeping and accounting service, it’s important to consider the size of your business. Small businesses may not need a full-service company or someone on staff, but larger companies with more complex financial tasks may need an in-house team or an outsourced provider for more specialized services. Consider how many tasks you’ll need help with and what type of support makes the most sense for your business.
Make Sure You Understand What Services Are Included.
After you’ve narrowed down your list of potential bookkeeping and accounting services, make sure that you fully understand the scope of their offerings. Find out exactly what services they provide and determine whether or not these services meet your needs. Be sure to ask detailed questions about which tasks are included as well as any additional fees or technology costs associated with their service. Also inquire about customer service, turnaround times, and any other benefits the provider includes for using their services.
Ask whether They Provide Comprehensive Support and Training.
As you evaluate a potential bookkeeping and accounting service provider, be sure to ask about their commitment to helping you get the most out of their services. You want to ensure that any provider you partner with is able to provide comprehensive support and training so that your staff is fully equipped to make the most of their technology, services, and processes. Make sure to ask for details about any available customer service or training options as well as how quickly questions and issues can be addressed.
Confirm that the Provider Is Audited Regularly and Compliant with Government Regulations
It’s important to have a bookkeeping and accounting service provider that is committed to compliance with government regulations. Ask the potential provider about their commitment to staying compliant with contractor standards, safety regulations, and other state, federal, and industry laws. Additionally, look for a provider that has been audited regularly in order to ensure they are meeting required standards.
Investigate Their Technology and Security Practices
One of the key features when it comes to choosing a bookkeeping and accounting service provider is their technology and security practices. This is particularly important if you are dealing with sensitive customer or financial information. Make sure the provider has strong data security measures in place, from access controls to encryption protocols, in order to protect your data from malicious hackers or accidental leaks.