Does Your Bookkeeper Provide these Essential Services to You?

Whether you choose to work with us or to go elsewhere, these are qualities to look for when seeking a bookkeeper. (Of course, we’d rather you work with us!)

Communication
A good bookkeeper keeps you informed about progress (or delays) and is easy to reach when you have questions. She needs to keep you organized by taking the initiative for following up and keeping you on track to meet deadlines. A little nagging can be very effective.

Organization
Aside from a tendency toward perfectionism and an excellent filing system, your bookkeeper also needs to know the best technology to use to streamline your accounting processes. She is exacting in reporting the appropriate details and reconciling accounts.

Liaison and Relationship Building
A good bookkeeper will act as a go-between for you and your accountant, able to bridge the terminology and jargon communication gap. She will also be able to source appropriate accounting services if you’re in need. As well, she’ll be accomplished at working as part of a team with your own staff.

Problem Solving and Tenacity
You don’t want someone who’s going to flee as soon as they see your shoebox filing system. Ideally you want a bookkeeper who enjoys a challenge and will stick with it when things get rough. Bookkeeping work is tedious and can be frustrating – you want someone to stay the course (and to make the course better).

Flexibility
Accounting is complex and you want a bookkeeper who can evaluate options and select the best for you. Flexibility may be important for other reasons, too, such as if you need someone to work at your location, or to work odd hours, or to work long hours to meet deadlines.

Trustworthiness
You want to feel your bookkeeper has your best interests at heart, that when she is working for you, she is treating your money like it is her own. Trustworthiness can be easier defined by what it is not: unresponsive to inquiries, secretive about pricing, missing deadlines, and murky practices.

If you're looking for a bookkeeper with these qualities, please get in touch.

Don't Mix Business with Personal

Here are 3 reasons why keeping your personal and business finances separate will also help keep you and your business healthy.

Finding, tracking, posting, filing, and reconciling your bank, credit card, and PayPal accounts - paper and electronic - becomes much more onerous and time consuming. You'll often have to chase down personal statements and dig through old purses for receipts to explain debits and credits. If you wait too long, the disappearing ink will confound your efforts even more. All of these things are guaranteed to make you feel overwhelmed.

Accurate information about your expenses on a regular basis will help you make better business decisions, otherwise you're flying by the seat of your pants. When your business and personal finances are muddled, you won't have a clear picture until tax time. Once a year is not the only time you need to make decisions. Inaccurate information can cause insecurity and indecision, detrimental to small business success.

If you keep your finances separate, you'll also find tax season much less stressful. Since less stress is good for your health, keeping personal and business systems separate also contributes to a healthy lifestyle. The impact of "tax stress" can be more than you might think.

If you are already suffering from these accounting ailments, get in touch. Untangling messes is one of my specialties.

Meals vs. Food as Business Expenses

When you're just getting started in business, you may not know how the CRA feels about meal expenses. Here's an excerpt from the CRA's website under business expenses:

The maximum amount you can claim for food, beverages, and entertainment expenses is 50% of the lesser of the following amounts:

• the amount you incurred for the expenses; or
• an amount that is reasonable in the circumstances.

Of course, you need to capture this non-standard transaction appropriately in your bookkeeping records.

Recently a client asked me, "What about when I'm paying for food to be brought in when I'm putting on a training workshop?" In that case the food becomes part of the total workshop expenses because you are (or should be) recouping the cost as part of the workshop registration fee. In effect, you are reselling the food - much different than noshing steak and beer on the waterfront.

5 Resolutions for Your Bookkeeping New Year

We all make promises to ourselves that in the New Year we will do things better. Here are 5 worthwhile activities that will make your accounting processes easier for yourself and your bookkeeper. These are all quick to implement or easy to stick to.

#1. Log all the important dates in your calendar.
This only takes a few minutes and might include dates for payroll input, Canada Revenue dates for HST filings, corporate income tax filings, and even personal income tax filings. Acting on these dates in a timely manner will keep your bookkeeper happy and ensure your books stay up to date!

#2. Book an appointment to see your accountant.
Do it now and meet soon. This will allow you to review how you did financially in 2016 and if there are any tax breaks you can take advantage of before filing your tax returns.

#3. If you are a person who lives with spreadsheets and tracks your expenses that way, STOP.
Get bookkeeping software to manage your revenue and expenses. Need help figuring out which application would work best for you? Please call me!

#4. Put a simple filing system in place and ditch the shoebox.
Does a box sit in the corner with receipts in it waiting to be sorted? Take just a little time to put an organized system in place - it will reduce your stress!

• In a file box or file drawer, place file folders labelled for each month of the new year. This way, your receipts will be sorted by month at the end of the year.
• If those receipts relate to bank statements or credit card statements, match them up as you go and staple them to the back of the statements. It's a great way to know if you are missing something!

#5. Finally, pay attention to your financial statements. They tell a huge story about how your business is doing. If you need help understanding these reports, give me a ring!

File HST Returns even for Zero Sales

After you register for an HST number when setting up your business, you are required by law to send in your remittances even if you have zero sales.

When you start a business, unless you are expecting sales right away, or under $30,000 in sales for the first year, you do not need to register your business to collect HST. When you do decide to register, here's a story you should know about.

A recent client of mine had registered their business two years ago with the intention of proactively looking for business. This client had not had any sales in those two years. However, when they called CRA to register for HST, the start date was backdated instead of beginning when he called. We are uncertain why. This client was then responsible to file returns for the previous reporting periods. Because they didn't know this, CRA assessed him for what they believe they owed them. They received a bill in the mail they were expected to pay. When they finally realized they had to file all the returns backdated, they filed all of the zero returns so they could claim HST on expenses they had incurred for the start up. Because they hadn't filed previously, CRA took their credit and applied it to the outstanding amount. When they called asking why they owed money on a zero sales return, CRA said it was because of the penalties for not filing his returns!

Lessons learned?

1. Always file your HST returns, even if there are no sales!
2. When calling to set up an HST account number, ensure they date the paperwork for the date you are applying. Keep an eye on the mail and check for confirmation of the reports due.
3. Although it does look professional when you charge HST, unless you are over the $30,000 mark in revenues there is no point in registering before you are ready unless you want to claim HST for expenses.

It's Risky to Make Decisions without Financial Statements

A common question I’m often asked is, “Why do I need financial statements?” The answer impacts all types of businesses – in an office tower or in a basement.

Financial statements consist of a Balance Sheet and Profit and Loss (or Income) Statement. (And then there’s the dreaded Cash Flow Statement, the thing that really confuses people.)

A Balance Sheet shows you:

• How much cash you have in the bank
• How much money may be owed to you
• How much money may be tied up in Inventory
• Assets of your business
• How much money you may owe vendors
• Liabilities for things like loans or lines of credit
• How much equity you have in your business

A Profit and Loss Statement (my personal favourite) indicates the following:

• A breakdown of revenue streams and how much you are making in each
• The direct cost of goods to sell your products or services
• Costs of the operations of your business: payroll, administrative expenses, general costs

To understand how your business is performing on a month-to-month basis, or even quarterly, you need a set of financial statements. To make decisions, you need financial statements. If you are watching your financials, unpleasant things won’t be surprises.

If you simply want to pass over your shoebox full of receipts each year to have your returns filed, you don’t need financials. But, if you want to understand how to grow your business, financial statements are highly recommended.

Just Because You Know How to Do Your Own Bookkeeping...

Are you still insisting that you do your own bookkeeping because you know how?

It is imperative that you maintain a current set of books. Canada Revenue Agency can audit you at any time with little notice. If you are not keeping up, think about the things happening around you that are causing you such unnecessary stress.

CRA is likely hounding you because you haven't filed last year’s taxes or, worse, HST and payroll remittances. They have likely decided to send you an assessment of what they feel you owe and it is due just like any other bill.

Your cash flow is suffering and now you need to take a loan out to cover expenses until your backlog of receivables and payables are cleared up. But, wait, you don't have any statements to show the lender. Your accountant is telling you to hire a bookkeeper if you can't keep up... in the end causing much stress and money that didn't have to be spent trying to get things caught up.

You haven't reconciled your bank accounts in months. Oopsie, was that an NSF charge on the last statement?

Your vendor won't ship your orders because you haven't paid for the last few. You swear you did but can't prove it.

Your clients are loving their extended credit terms! (Good for them, not you.)

Does this sound familiar? Don't try to be the expert in everything. Very few people can handle everything in a timely fashion and they are normally those workaholics we never want to be.

Just because you know how to do your own bookkeeping, doesn't mean you should.