![]() You’re a business owner who has lots to do. You have more important things on your to-do list than bookkeeping. You want to be able to stay in control of your bookkeeping, regardless of which route you take. 1. Become familiar with an accounting software such as Xero, Quickbooks, SimplyAccounting, etc. Accounting software is generally tailored to different expertise levels, business needs, and functionality. I would recommend to do your research. Get a handle on what is out there, and which platform would be most beneficial to your business. I operate an online-based bookkeeping business, and we find Xero works best for us. A cloud-based accounting software will be beneficial. Your accounting software will keep audit-logs of all work completed. This will allow you to see exactly what your new-hire is inputting. A google search will quickly give you a top 10 bookkeeping software list. Once you have invested in your foundation, pick one of the following: Practice bookkeeping on your own. I’m a firm believer in understanding to know the principles of something before you outsource it. By any means, you don’t need to be an expert in the field. Yet, I would recommend to understand the basic concepts of bookkeeping. For example, to enter basic journal entries, reconcile bank accounts, and generate reports. Invest in the time, even if it is an hour a week to learn the essentials. This is a skill you will never regret having. How else will you know if your future-bookkeeper is going to add value to your business? Train a family member to do your bookkeeping. If your bookkeeping isn’t complex, outsourcing to a family member may prove useful. Complex bookkeeping may be: inventory systems, payroll, or dealing with depreciating fixed assets. It’s still critical to understand basic accounting principles which your business requires. You’ll know exactly when your new-hire has made an error, and how to fix it. Add your friend or family member to your cloud-based accounting system so you can keep an eye on their input. Keeping close watch will allow you to provide feedback. Hire an accounting student from college or university. You may be skeptical of your twelve-year-old cousin having fun with your books. If so, you will sleep better at night by hiring someone who is working their way to becoming an expert in their field. The key here is they are not yet an expert. They will be eager to learn. They’re eager to get work-related experience. Thus, they won’t expect industry-standard bookkeeping fees. You wanted to save money, right? Hire a local bookkeeper If you’re not ready to invest in a soon-to-be financial guru, it’s time to look for a bookkeeper. They will hand your books to your public accountant if you need tax preparation or planning at the end of the year. Don’t exercise your network for recommendations yet. Know what to look for in a quality bookkeeper before you invest your money into expertise. Seeking bookkeeping at your local accounting firm isn’t the most cost-effective route. They have a higher rate for bookkeeping compared to independent or freelance bookkeepers. Think Rolls-Royce, but for bookkeeping. Engage a CPA Perhaps you want the Rolls-Royce of bookkeeping, or more realistically, your books might be a complete mess. A clean-up can be like untangling many threads all knotted together. If your business is complex, hiring a CPA may be the most cost-effective option. An inexperienced bookkeepers attempt to clean-up may only make things worse. It may take more time and hurt your wallet in the long-run. By having your CPA take care of this, you will have the confidence in the quality. 2. Keep important paperwork, invoices, and receipts. Think about the CRA knocking on your door tomorrow. Uh-oh, you’re flagged for an audit. Could you produce evidence for the transactions on your bank statement? I would recommend becoming familiar with the CRA list of business expenses. Create a system which allows you to have a paper trail. Be able to speak to and justify any expense. Your bookkeeper can help with this. Once you have systems in place for this, you can rest assured you have all your bases covered. This is the best investment you could make for your free time. Use this time instead to invest on business operations. Or better yet, sunbathing. 3. Keep business and pleasure separate. Do not mix personal and business accounts. Your bookkeeper will have to determine which expenses are personal and business. This will demand more time, and as such, need a higher monthly retainer. You will also need to make more time for your bookkeeper to explain the differences. It’s a lose-lose situation. Not only will you save time and money, you will protect your personal accounts from question. You don’t want CRA review your personal accounts to think the e-transfer received from your parents for groceries is income. 4. Go digital. If you only use your debit or credit card, you will not need to collect cash receipts. You won’t have to worry about losing track of your write-offs. This means you will only need to submit bank statements to your bookkeeper. This will save you and your bookkeeper time, and as a result, money. If you need to make a withdrawal, be sure to make note of the purpose. 5. Invest in the green movement. The bigger your business becomes, the more documentation you will accumulate. You need to keep tax records for the CRA for at least six years. Invest in changing how you handle, prepare, and store files for your business. Begin right now by creating an electronic filing system for your business. Exactly like your physical one, but electronic. Keep the same categories and order to your files. Keep a backup of this in your fireproof box for extra protection. Bonus Tip: use cloud-based file systems such as DropBox to store your files online. 6. Meet with your CPA. Be mindful of the time you spend with them. A 30 to 60-minute meeting twice a year is all you need. Bring important questions to table. Questions about your business plan, financial advisory, and tax strategy are fair game. It is important to have a forward-thinking CPA. One who is bringing ideas to the table. One who can offer strategies. You’ll know you have an great CPA when they follow up on your questions after your meeting. If your CPA is listening to your input to only shoot down ideas, it’s time to rethink your CPA. Thank you for reading. You can subscribe to get our latest blog posts that help you to financially succeed in business. Feel free to connect with me on Twitter or learn more about us here.
0 Comments
Leave a Reply. |
Welcome,Whether you're looking for personal tips and tricks for your business, or tax preparation, or you're looking for strategic insights and ideas, we've got you covered. Archives
June 2018
Categories |