An effective and organized bookkeeping system is crucial for business success. Maintaining up-to-date and easily accessible financial records will save you time, reduce unnecessary expenses, and enhance your long-term performance. Here are five bookkeeping tips from Bluemount Backoffice Solutions to help you stay organized while managing your business.

1. Efficiently Handle Your Data

Consistency and timeliness are essential for effective data management. By adopting good bookkeeping habits and maintaining an organized structure from the outset, you will find it easier to:

  • Prepare year-end documentation,
  • Maximize tax deductions,
  • Analyze and comprehend your financial status, and
  • Enhance your company’s profitability

Your Accounting Ledger

Planning for growth begins with organizing your chart of accounts. Properly labeling and categorizing your records will streamline your bookkeeping and ensure your financial reports are useful. Start with the essentials, then adjust and expand your accounts as your business evolves.

Your Primary Records

Accurately recording and reconciling transactions related to various business activities is essential for maintaining the validity of your financial records. The optimal time to document expenses and income is as they occur. Ensure your company has strong daily bookkeeping processes for collecting, generating, and storing primary records such as receipts, invoices, timesheets, and other tax documents. Consider the following points:

First, ensure you gather all financial documents. This includes:

  • Invoices (both received and issued),
  • Receipts,
  • Bank and credit card statements,
  • Payroll records,
  • Expense reports,
  • Tax forms and returns,
  • Contracts and agreements

Next, categorize all documents according to their type and purpose. Common categories include:

  • Revenue:Sales invoices and receipts, cash register tapes.
  • Expenses:Purchase invoices, receipts, and utility bills.
  • Payroll:Employee wage records, payroll tax documents.
  • Banking:Bank statements, loan documents, and credit card statements.
  • Tax:GST/HST returns, income tax filings, and any correspondence with the Canada Revenue Agency (CRA).

Documents should be filed in a logical order, typically chronologically and by category. Digitize all documents using a scanner or a mobile scanning app to create digital copies of paper records. Finally, comply with the CRA’s record retention requirements. Generally, you must retain all business records for six years from the end of the last tax year they pertain to.

Your Accounting Software

One of the key functions of any accounting system is to ensure easy access to needed information. Digitizing your payables and receivables with online accounting software like Xero or QuickBooks Online enhances data accessibility and can eliminate the need to store and manage paper files.

2. Maintain Separate Bank Accounts

Many business owners often use both their personal and business credit cards for business expenses. Mixing personal and business finances can create tax and liability issues for both you and your business. Establishing and using separate bank accounts for personal and company funds will help you avoid the hassle of sorting out expenses and income at year-end, and you’ll also benefit from:

  • Enhanced financial forecasting, business planning, and budgeting,
  • Accurate tax deductions for shared expenses such as cell phones and vehicles, and
  • Improved eligibility for supplier credit, business loans, and investor funding

Keeping your personal and business bank accounts separate also reduces the likelihood of attracting unwanted attention from tax audits.

3. Utilize Digital Bookkeeping Tools

When it comes to organizing your business bookkeeping, there is no better support than the array of modern digital apps, automation tools, and software.

Third-Party Apps

Switching from manual bookkeeping to online accounting provides your business with access to numerous integrated, time-saving apps like Dext, Plooto, and TSheets. These digital tools not only simplify bookkeeping tasks but also minimize the need for manual data entry, reducing the risk of transcription errors.

Business Management Programs

Specialized industry management software is the best way to organize your enterprise. Whether you run a brewery, construction company, or cannabis dispensary, dedicated management platforms can help you manage inventory, track production, and monitor sales more effectively.

Automated Notifications and Digital Payments

Often, gaining better control over your cash flow can significantly impact the growth of your business. If you haven’t already, consider:

  • Subscribing to text or email alerts to notify you when credit card and utility bills are due,
  • Setting up automated payments for recurring expenses,
  • Streamlining receivables by accepting client payments through PayPal or e-transfer

Utilizing digital assistants will not only help maintain a positive cash flow but also reduce fees associated with late or missed payments.

4. Employ a Professional Payroll Service

Business owners can manage employee payroll using online payroll software, but proper payroll knowledge cannot be replaced by software alone.

Handling payroll on your own requires a thorough understanding of regulations related to:

  • deducting, reporting, and remitting income tax, EI, and CPP,
  • handling vacation pay, T4s, and ROEs

Depending on your business model, you might need to navigate different payment requirements for full-time, part-time, commission-based, and contract workers.

Many business owners find it less stressful and time-consuming to work with a payroll service like Payworks or to outsource their employee payments entirely. Hiring a professional back-office team is often the most reliable way to ensure your payroll process is accurate, timely, and compliant with payroll regulations.

5. Keep Yourself Updated on Your Business

The greatest advantage of an organized bookkeeping system is that it keeps you financially informed about your business. The more you know, the better your decision-making will be. By consistently monitoring your accounting transactions and statements, you can effectively chart a successful path forward.

Consider scheduling dedicated time in your calendar to:

  • Review your business transactions at the end of each day,
  • Analyze your financial statements monthly (preferably with an accountant’s assistance to interpret the data),
  • Compare your income and expenses month-over-month and year-over-year, and
  • Evaluate the return-on-investment from various sales initiatives and categories

Creating an organized plan to monitor and analyze your finances daily, monthly, and annually will help you identify trends and seasonal fluctuations, highlighting areas for improvement in your business’s short-term and long-term operations. When tax season arrives, you can confidently provide your tax accountant with your books to maximize your tax returns.

If you’re struggling to manage your accounting and bookkeeping processes, we’re here to help! At Bluemount Backoffice Solutions, we offer bookkeeping services to business owners throughout Canada, with our head office located in Vancouver, BC. Contact us today to learn more about our services!

How We Choose and Assess Our Recommended Software

We thoroughly research and test the apps we incorporate into our regular workflow for client bookkeeping services. After establishing criteria for evaluating the software and researching the app, we tested it, noting its strengths and weaknesses. We then used the app for at least a few weeks before deciding whether to recommend it to our readers. We use the software as intended for its designed tasks. For a detailed walk-through of our selection and evaluation process, please refer to the details of our methodology.