SMALL BUSINESS BOOKKEEPING SERVICES

questions worth answering early

What owners usually ask before sharing the file

WHEN SHOULD I START BOOKKEEPING FOR MY BUSINESS?

Bookkeeping starts on the day the business is incorporated. Cloud Accounting officially starts when you open the business bank account. There is no starting in the middle of a period; bookkeeping and accounting is an unbroken sequence of transactions, with account balances that must seamlessly carry from one period to the next. Start when you begin earning or spending for the business, even if you are self-employed, but not incorporated. You need to be tracking income, expenses, and tax deductions, but all bookkeeping and accounting is recording what’s happened in the past, so don’t stress too much if you’re already behind?

If you are far behind, you can send us what you have and TNA can work with you to determine the clear starting period and organize the records from there.

HOW OFTEN SHOULD MY ACCOUNTS BE RECONCILED?

That depends on who’s using the financials. Many small business owners should reconcile monthly. Monthly bookkeeping services keep bank, card, and financial records aligned before small gaps pile up. If there are lots of transactions, or if the business is a quarterly or monthly GST filer, or if monthly or quarterly reports are required, then monthly bookkeeping is probably best.

Some business owners don’t rely on the financial reports to help run their business, and monthly or quarterly reports aren’t adding value. For these clients, we’ll do the bookkeeping either annually or semi-annually, for a mid-year check-point. TNA will recommend a schedule based on your records, reporting needs, and agreed scope.

CAN I KEEP DOING MY OWN BOOKKEEPING?

We like working with professional bookkeepers. But we like to be a one stop shop for our clients where the bookkeeping, accounting and tax are all done together and integrated. There’s value there, as well as in not having to hire both a bookkeeper and an accountant.

You could do your own bookkeeping, but its trickier than you think and best left to the professionals. If your file is simple, and you have the time to do the bookkeeping, that just means the pros can do it even more quickly. Many entrepreneurs don’t value bookkeeping and mistakenly think its easy. But there’s been at least 5 major tech companies and private equity attempts to automate bookkeeping and they’ve all failed. AI can’t even do it. There are just too many variables with small owner-operated businesses, which create common bookkeeping mistakes like mixing personal and business spending, losing receipts, or failing import transactions accurately from bank statements. TNA can review the file or take over the work.

WILL I NEED TO CHANGE BOOKKEEPING SOFTWARE

Not always, but probably. Business Owner’s primary need an invoicing app, or select other modules within Xero or QBO. Only professional bookkeepers and accountants should be make entries in the actual bookkeeping software. TNA can first review your current accounting software and make recommendations before you commit to new tools.

DO I NEED SINGLE OR DOUBLE-ENTRY BOOKKEEPING?

Single-entry bookkeeping isn’t bookkeeping at all. Sole proprietors can track their income and expenses on a spreadsheet, which you could call “Single-entry” bookkeeping. But this doesn’t work for corporations. Every business has two sides to a transaction: who got paid, and who paid it. This is “Double-entry” bookkeeping and is the only proper way to do accounting. This is required to maintain a balance sheet, which corporations are required to present the assets, debts, net income, dividends and equity of a business. TNA can confirm that all corporations need double-entry, while some sole props can get away with single-entry bookkeeping to help prepare an income statement.

HOW DOES BOOKKEEPING HELP AT TAX TIME

A properly prepared income statement and a balance sheet are required to file corporate taxes. Solid bookkeeping is an accurate and complete record of all the business’s activities during the year, including income, expenses, assets, liabilities and equity, so the books are ready for the tax team to prepare for the corporate year-end. The tax team would not know what numbers to enter if the bookkeeping is not prepared first. Good bookkeeping records are supported with 2 things:

1. Proof of Purchase: these are receipts
2. Proof of Payment: this is the bank or credit card statement

Having these records on hand during bookkeeping and tax prep help prevent the last-minute scramble for missing receipts requested by the CRA Auditor.