For many entrepreneurs, getting started is the most exciting part of the business. Selling new products or services, acquiring new clients, marketing, and promotions can take up most of your time. The last thing any entrepreneur wants to ‘focus’ on is bookkeeping, accounting, and taxes.

Unfortunately, managing your books is a MUST for any successful business. It is important to know how much your gross profit, expenses, and most importantly, your net profit is at the end of each week, month and year. You need to know how much you need to pay or collect from the government: from HST, payroll, and corporate taxes, it’s critical that you know the details.

1. Accounting Software — Getting set up with an accounting software that links to your business bank account and any credit cards will help with understanding your expenses and cashflow. You can send invoices directly to your customers and quickly record any partial or full payments. The software will also track any taxes related to sales transacted. Accounting software, such as Quickbooks Cloud or Sage 50 Cloud software are great tools to help manage your books.

2. Capture and/or keep business receipts — Maintaining good records and receipts is important to ensure you maximize your expenses and any tax write-offs that are available. Thankfully, we have apps and scanners that can upload and sort your receipts directly into your accounting software. It’s recommended that you keep your records for seven years in case of an audit from the CRA.

3. Savings Account for taxes — When setting up your business bank account, it’s highly recommended that you open a savings account and set aside funds for taxes potentially owed. It’s common for business owners to owe a significant amount of tax at the end of the year and not have the funds available.

4. Emergency Capital — The rule of thumb is to keep three months of working capital available for any unforeseen expenses. Although it may be difficult to set aside the funds, if available, make it a must-do!

5. Hire a Professional bookkeeper/accounting firm— Simply put, tax laws are complicated! As your business grows, your company’s tax planning is critically important. A professional bookkeeper & accounting firm will ensure to take full advantage of the latest tax strategies. 

If you’re in the Greater Toronto Area, consider giving our sister company, Phoenix Management a call! They’re an accounting firm that specializes in working with small to medium size business owners. 

Staying on top of your business bookkeeping, accounting and taxes over the long run will provide any entrepreneur with the confidence and competency needed to grow and add value to the business in the future.