The benefits of bookkeeping
In its Guide for Canadian Small Businesses, the Canada Revenue Agency (CRA) advises small business owners that there are five reasons why keeping records can benefit them:
Reason #1: Complete and organized records can help identify the sources of income
Cash deposited into a business account may come from different sources, for example, customer payments, loans, owner’s contributions, purchase refunds, and etc. If there are no proper records showing the sources, it may be difficult to prove that some sources are non-business or non-taxable.
Reason #2: Complete and organized records can mean tax savings
Without proper bookkeeping, some of deductible expenses and input tax credit (ITC) may be forgotten when it comes to file income tax return or GST/HST return. By partnering with us, our clients are able to enjoy even the smallest deductions they deserve.
Reason #3: Complete and organized records can prevent most of the problems if the business is selected for audit
Without property records to support the income tax return or GST/HST return, non-income items can be imposed as income and legitimate expenses may be disallowed. Good bookkeeping is the best defense in an audit.
Reason #4: Good records keep the owners better informed about the financial position of their businesses.
The owners need records to know if the business is making money or not. The information from good records can also tell the owners what is happing in their businesses and why. Most of our clients feel the financial reports are very helpful in their businesses.
Reason #5: Complete and organized records may help businesses get loans from banks and other creditors.
Creditors need accurate information about the financial position before they give out a loan. Good records show potential creditors that the owners of a business what is going on with their business.