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#Small business bookkeeping for dummies pdf how to#

You can simply open a separate bank account within your current bank or credit union and use it strictly for business.įor your credit card, either say yes to one of the many new credit card offers you receive monthly, or just assign one of your existing cards to the business. This means you’ll get a much larger bill at the end of it. If business and personal are not separated, the time it takes a bookkeeper or accountant to do your books will sky-rocket. If your business transactions are lumped in with your personal ones, you’ll spend hours sorting through them when doing your books. Keeping your business transactions separate from your personal ones is the first step to making bookkeeping easier. If you take one piece of advice from this article, let it be this one: get a separate business bank account and credit card.

#Small business bookkeeping for dummies pdf how to#

Now that we’ve identified why bookkeeping is important, let’s learn how to make bookkeeping easier and to do it well. You’ll be able to accurately show your business’ performance and create a forecast to show the bank that the loan will be repaid.

Obtain business financing - If you need financing for your business, well-kept books will help obtain a business loan.

Customers short-paying invoices will also be caught quickly so you can collect every dollar. Bank errors will pop out when doing monthly reconciliations.

Catch and correct errors - Keeping the books up-to-date will allow you to catch errors quickly.

Legitimately claim all tax deductions and back them up with proper supporting documents.

Claim every deduction - Proper bookkeeping will make sure that every transaction is recorded accurately.

Here are a few other reasons why bookkeeping is important: It’s far more cost effective and less stressful to get the bookkeeping right the first time around. Good bookkeeping will also help you to avoid costly and time-consuming audits. Keep the CRA happy by filing and paying taxes on-time. Yes, compliance is also important for your business. Managing your cash flow will allow you to take early payment discounts or stock up when your supplier has a sale. It also will help you take advantage of upcoming opportunities. This especially is important when it’s the CRA that you owe money to.

This will help you to you avoid penalties and interest on late payments. How much cash will the business need over the next month, quarter, and year?.How much cash does the business have access to?.How much sales tax and income tax will you owe?.Up-to-date bookkeeping helps you understand:

If your bookkeeping is up-to-date, you will gain some operational benefits. Should you keep doing what you’re doing or make some changes?īookkeeping allows you to see the information to guide your business decisions.Is your business growing, staying the same size, or shrinking?.Which products or services should you focus on?.Useful Financial Reportingīookkeeping done well will allow you to view useful financial reports for your business. There are a number of other reasons why bookkeeping is important. Compliance with the CRA is just one of the reasons you need to do bookkeeping for your business. You do it because you have to file an income tax return with the CRA. Why Is Bookkeeping Important?įor most business owners, bookkeeping is a necessary evil. This step-by-step guide will give you all of the information you need to make bookkeeping easy for your Canadian business. Bookkeeping doesn’t have to be difficult.