Organize Your Records – Part 2

Good bookkeeping records means having a good filing system. Without one you don’t have the other.

Keep your bookkeeping up-to-date. On the sales side if you don’t provide an invoice or sales receipt you don’t get paid. Purchases should be done monthly or quarterly to match your GST reporting period. Don’t leave it annually just because that is your GST reporting period. Excellent reasons for keeping your bookkeeping up-to-date in my article Bookkeeping…Why Bother.

When paying a bill – record the date and payment method. Cheque # if it’s paid by cheque or the credit card on which it was paid. If it’s a partial payment -the amount and date of each payment. Now the information is right at hand for entering into your books. It’s a simple thing but that information can be handy to have 6 or 12 months down the road.

Always get a receipt- Cash purchases are difficult to claim otherwise, and yes Tim Hortons will give you a receipt if you ask.

If the receipts are so faded or crumpled which makes then unreadable – guess what – they don’t get entered into the books.

Credit card statements are not always proof enough. An item purchased at Wal-Mart could be anything and the fact that you bought it with your business card does not prove a business deduction.

Make detailed deposit slips and keep a copy. Last I checked the banks were still giving out free deposit books. Or buy a simple notebook. Keeping detailed records of each deposit helps us match the customer payment to the deposit on the bank statement.

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Use a calendar to remind you of due dates if you’re tracking any of the following taxes – PST, GST, Payroll, WCB, quarterly income. Making payments on time will keep you out of the tax arrears hole with Canada Revenue Agency. See more about this in my article How Did I Fall So Deep Into Tax Arrears?

Smart Business People know that time is money, by planning ahead. Organized records will make life much easier for your bookkeeper whether that person is yourself or someone you’re paying. In the event you have dealings with Revenue Canada the business person with organized records will have a much easier time than the person who is not. Under section 230 of the Income Tax Act, any person who carries on a business in Canada and anyone who is required to pay or collect taxes, must keep books and records at their place of business or residence, in Canada, in such a format or order to enable the assessment and payment of taxes. Most people in business are aware that there is a proper way to keep books. For those who are not aware it is important to realize that Revenue Canada has the power to require you to keep proper books.

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