Top 3 Reasons for Outsourcing Bookkeeping

Outsourcing grants businesses the freedom to dump non–core, yet important sectors of its administration on companies specializing in that area.

1. Outsourcing frees up time and resources that allow you to focus on your business core activities.

2. Outsourcing saves you money in payroll costs.
The expenses for an employee-bookkeeper include wages, paid time off, payroll taxes, unemployment taxes, worker compensation insurance, and benefits.  In addition, you must provide work space, office furniture, office supplies, software and computers.  The average Here’s why you should consider outsourcing:business owner spends five or more hours per week managing bookkeeping personnel.  By outsourcing your accounting functions, you receive services from a professional at a fraction of the cost.

3. Outsourcing your bookkeeping is a much more effective way to organize finances for the Tax Man
The Canadian Revenue Agency is much more likely to accept the opinion of a reputable bookkeeping service than an in-house company accounting assessment. A professional bookkeeping company will be able to organize records in a way that they will be able to understand. In short, bookkeeping professionals speak the language of the CRA. Most business owners do not, nor do they have the time to learn it.
Saving money on taxes and saving time on potential audits one of the biggest ways to save money as a small business owner. A great majority of small businesses that fail do so under the weight of a tax burden along with other expenses.

Outsourced bookkeeping is a true cost-reduction benefit for small businesses.

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.

Organize That Shoebox – Part 1

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

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Set-up a filing system that you can follow and use it. This is probably the first most important step to keeping good records. Simple file systems are easy to set up and maintain.

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GST is Due July 31st.

GST Quarterly Filers

Your GST return for April/May/June 2008 is due July 31, 2008.

How do I know if I’m a Quarterly Filer?

Get out your GST form named “Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return for Registrants”. The essential pieces of information you need are the three boxes at the top right-hand corner on Page 1. The first box shows the due date of your remittance, the second box shows your business account number and the third box shows the reporting period.

Or you might be an annual filer. The reporting period box will tell you the date range for your remitting period.

How Much Do I Have to Pay?

Organize your Sales receipts to calculate the GST collected on sales.
Beginning January 1, 2008 the GST rate is 5%.

Collect and organize your business receipts to calculate the GST paid out on purchases.

Subtract GST/Purchases from GST/Sales and remit the difference to the Receiver General. (I’m assuming that sales were greater than purchases.)

If your GST/Purchases is greater than GST/Sales you may have a refund, but it all depends. There are always exceptions to the rule.

Nowadays there are lots of ways to make your payment.

You can-
-snail mail a cheque
-visit your local bank
-online banking
-GST Netfile http://www.cra-arc.gc.ca/menu-e.html
-GST Telefile http://www.cra-arc.gc.ca/menu-e.html

Send your payment on time. The Receiver General is very unforgiving of lateness and will apply penalties and interest charges compounding daily.

Click on this link to the Canada Revenue Agency site for everything you ever wanted to know about GST. http://www.cra-arc.gc.ca/tax/business/topics/gst/menu-e.html

What Are You Waiting For?

Raise Your Hand

Raise your hand if you’ve begun working on 2008 bookkeeping. Excellent! And the rest of you. What are you waiting for?

Why wait until April 30th to see the results of this years work. By starting now you can create a Profit & Loss statement that will show you whether you’ve made or lost money and how you spent it. This one report is a terrific piece of information that can help you more now than later.

Do you use the services of a bookkeeper or are you doing it yourself? We wear many hats while trying to run our business and maybe we’re wearing too many. If you struggle with the bookkeeping, and I know it’s not an enjoyable task, then perhaps you should consider getting some help. Most Professional Bookkeepers will provide outsourcing of the work; training in the use of the software; or help in figuring out what expense category to use.

Excerpt from a Home-based Business article-
Don’t overlook management/bookkeeping. Lack of managerial expertise is one of the single highest causes of business failure. Take courses, seek expert advice or hire help, but do learn basic management skills before you start.
http://www.canadabusiness.ca/servlet/ContentServer?pagename=CBSC_FE/display&c=GuideFactSheet&cid=1081945277281?=en

Of course you need some type of system for recording everything. This could be an accounting program, spreadsheet or paper-based. In the comment box please let me know what kind of system you use for your bookkeeping. I’d really like to know. In a future article I’ll post my findings along with info on the various systems.