Five Accounting Hacks To Help People Manage Their Accounts Efficiently
Accounting plays a vital role in businesses of every size but often becomes a low priority for small business owners, specifically, as they juggle all the other responsibilities of managing and maintaining day-to-day operations. Maintaining balanced books can help financially forecast months into the future and alert you to potential financial gaps. The right accounting insight could even help you save your business in case things get tough.
As experts in the field, we at Balance & Foster Inc. have written down five accounting hacks to help people manage their accounts efficiently.
Hack #1: Be organized!
The simplest and perhaps most important advice an accountant can give you is to stay organized. You’ve heard that there are “pilers and filers” when it comes to being organized. That may be true, but whatever your method, know where your documents are when you need them or if they are called for by the CRA. The better organized your papers and electronic files are, the less likely you’ll have trouble in your financial matters, whether they be tax-oriented or not.
Hack #2: Keep business expenses separate
An important part of being organized is to properly categorize your expenses as business or personal. Be sure to keep business expenses separate, and don’t tell yourself it’s OK to blur the line or to “fudge” it. If or when you have an audit, questions will assuredly arise about any questionable business expenses that may, in fact, be personal. Keeping business and personal expenses separate will also help you ensure that you don’t accidentally pay for a business expense out of your personal funds without reimbursement.
Hack #3: Document business expenses
While you’re keeping your business expenses separate from those that are personal, be sure to create and maintain a paper trail on your business expenses. Of course, many of those expense records may also be in electronic form, but you get the idea. The more documentation you keep on your business expenses, the better.
Simply stated, for each expense, document and be able to answer these questions:
Who incurred the expense?
What was purchased?
Where was the purchase made?
When did the transaction take place?
Why was the item or service needed? and
How much did it cost?
Hack #4: Do an internal audit
When your documents are in order, you’ve successfully separated your personal and business expenses, and you have your expenses documented, you’ll have little to worry about when you’re audited. And the best way to get ready for a CRA audit is to perform an internal audit. When your accountant conducts an internal audit, you may feel like your business is being turned inside out. It is, and that’s OK. Better to turn your business inside out and make corrections to your financial records on an internal audit than to have to answer to RC in the form of a penalty.
Hack #5: File and pay taxes
Above all, perhaps the best piece of advice a wise accountant will give you is to file and pay your taxes on time. Financial penalties for failure to file, failure to pay, failure to pay estimated tax, and dishonored check/payment have the potential to cause a significant financial setback to your business or even cause it to close. Having an excellent accountant on staff or contracting with an accounting firm to meet your tax filing and payment deadlines is even better than doing it yourself.
If you are looking for tax accountants, advisors, and experts in Hamilton, ON, then reach out to us at Balance & Foster Inc. We deliver global capabilities with the “local” touch that brings world-class assurance, tax, and consulting expertise to our clients through enduring relationships built on genuine understanding and trust. We offer tax/ accounting, trusts and estates, bookkeeping services, and more. We serve clients across Hamilton, St. Catharines, Niagara Falls, Toronto, Markham, Vaughan, Kitchener, London, and the surrounding areas.