So, you’ve finally decided to pull the trigger and start your own business. As you turn your idea or passion into reality you feel more and more excited and confident that you can make it work. Lots of people nowadays are starting to realise that working for someone else just isn’t going to cut it anymore. When we look back at the last 2 years, we have either been in lockdowns, self-isolating or told to work from home. This is when quite a few people decided enough is enough and quit their jobs to try their hand at entrepreneurship.

Your business is open and running but now you need to start recording all your business transactions and keeping your financials in order. As well as making sure your GST is being filed on time and the right way. Where do you start, and most importantly do you have the knowledge, skill and time to make sure your books are being kept the right way.

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This is where hiring a bookkeeper with come in very handy.

Bookkeepers take all the work off your hands when it comes to all financial data for your company. The bookkeeper that you hire will hold a tremendous amount of power within your company. The information that is tracked in the books will help you as a business owner make key decisions that involve sales planning and product offerings and manage many other financial aspects of your business. If it weren’t for the hard work of bookkeepers, companies wouldn’t have any clue about what happens with their financial transactions.

Keeping your books accurate is a key component when tax season is upon us. Detailed records of your businesses financial records will be detriment if the CRA ask for an audit

==> https://www.canada.ca/en/services/taxes/income-tax.html

So, let’s take a look at 5 common expectations when hiring a bookkeeper vs reality:

1. Bookkeeping is too expensive - Expectation

This misconception is why in general people try to do their books themselves with no prior knowledge of bookkeeping. Think of it like this would you decide that your hairdresser is just too expensive and in turn take your kitchen scissors and start chopping away at your lovely locks. (Lockdown times this could have been a possibility; we all saw the videos). Bookkeeping will be less costly than a DIY job in the long run.

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2. Bookkeepers Free up Your Time - Reality

Hiring a bookkeeper will free up time for you to grow your business. Below is just an example of what a bookkeeper will do to help you:

a. Recording of all bank and visa card transactions

b. Bank Reconciliation

c. Credit Card Reconciliation

d. Making sure your bills are paid

e. Invoice processing

3. Keeping Personal and business accounts separate – Reality

It is very important that as a business owner you open separate bank and visa card accounts as soon as your company is open and running. If you don’t do this and are using one account for both personal and business chances are very likely you will have inaccurate bookkeeping. Some items can be charged through your business account. This is where a good bookkeeper with lots of knowledge will be able to guide you. When it is time to reconcile your accounts bookkeepers should have the skill to be able to differentiate what needs to be taken off your visa and what can be recorded as a business transaction.

4. How to find a Good Bookkeeper: Expectation

When you start the process of searching for a bookkeeper there are a few things to keep in mind. Don’t expect your bookkeeper to just be working solely for you. Unless your company is able to hire a bookkeeper full time. Make sure you interview your potential candidate. As a business owner you and your bookkeeper will work hand in hand, so it is imperative that you get along well. When choosing the right person, it isn’t all about being able to just crunch the numbers it is also about having a good working relationship. This means if you or your bookkeeper need to ask anything of each other it isn’t an uncomfortable situation. Your relationship needs to be both honest and approachable.

5. Keep All Your Receipts – Reality

When conducting any transactions with your business bank card or visa card you do need to keep the receipts. This is vital to keeping accurate records of your business transactions. When it is time to reconcile your bank account and visa account with the statements, if a transaction is questionable then the receipt will tell the bookkeeper where to record that particular purchase.

In conclusion small and medium sized businesses do need the help of a bookkeeper as shown in the 5 points above. If you do decide to take on the job yourself then it is extremely important you understand how to record all your transactions properly and in the right accounts. This will help your accountant to understand your books when it comes to tax time. Which in turn will help to make sure you are getting the right amount on your return.

Last thought: Don’t leave this important task to chance or procrastinate. By this I mean don’t leave getting your books up to date until the end of your fiscal or tax year. This is when lots of problems are created and is where you will end up paying out of pocket for work that needs fixing. If you need any advice, please don’t hesitate to leave me a comment or contact me. I am certain I will be able to guide you accordingly.

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Sincerely

Rebecca C Penner CPA, CGA