Tips from the Expert
Here are some helpful bookkeeping tips to help your business run smoother:
- Photocopy every cheque you receive, before you deposit it. If you do electronic image cheque deposits (photo deposits), or deposit cheques through an ATM, it is important to keep a copy for your own records. E-deposit policy requires that you destroy the cheque after five or seven days which will leave no record of whose cheques may have formed part of that deposit. Similarly, if you receive payments by Interac e-Transfer, or other electronic means, retain a copy of the payment advice that shows who the payment was from. Seeing a deposit on a bank statement is meaningless if nobody remembers who the deposit came from.
- Keep and use a deposit book if you make deposits in-branch. It is extremely difficult to guess what cheques you may or may not have deposited. This is further complicated when you don’t keep copies of the cheques that you deposit. Teller printed deposit receipts are not good enough. Some banks will group the cheques on the deposit receipt, thus showing that five cheques were deposited, but the receipt only shows one total amount. This leads to guessing, which is not good in my business. But hey, I like a puzzle, and as long as you’re paying my bill – er, do what you like with deposits.
- Keep your business and personal accounts separate. I have clients who use their business account for everything, which is fine, if you don’t mind paying for higher bookkeeping & accounting fees.
- Write on your receipts a quick note about what it is for. “Lunch meeting with Bob from Acme Widgets”; or “data stick for office” – some suppliers use obscure codes for product descriptions, which is impossible to decipher for the person who didn’t attend that store to purchase that product.
- When your bookkeeper tells you to pay source deductions tomorrow, make a note & do it. Failure results in the CRA charging steep penalties & interest.
- Ask your bookkeeper or accountant to explain what the various reports or financial statements actually mean, how to interpret them, which numbers you really should worry about. Don’t feel dumb, ask for explanations in layman’s terms, not accountant speak.
- Make sure to ask for monthly or quarterly reports. It’s your business, and you should ensure that you understand its financial health.
- Do be sure to set money aside for GST and source deductions remittances, or make regular instalments. This applies to corporate tax instalments as well.
- Don’t update or upgrade your accounting software without talking to your bookkeeper first. Similar to this is reorganizing your computer files.
- If you are changing your bookkeeper, back-up everything first, but do tell them in advance if it is not a situation of their choosing. A professional will attend to the various clean up items that need to be done, usually for the purpose of saving face. They will want to leave things in good shape, so nobody can call them incompetent. Also, they will make and leave useful notes that will save you money during the transition.
I hope these tips make your bookkeeping experience easier, even if you don’t hire me.