Starting a new business is a lot of work. You are likely doing it to follow your passion and do something you love everyday. Working on the Admin and financial part of a business rarely falls into that passion. Here are some tips that will help you give your business it’s best start and make that back-end work flow better so you can focus more on your business and all the things you love.
First thing to do is set up a separate business bank account and credit card. This is important as it will start your entire business off on the right path. Keeping a separate bank account will help you track purchases you make for your business and you will be able to see how your money flows. It is important to have separate accounts. Especially in case of an audit. The CRA does not like seeing all your accounts mixed in together. It is a common Myth among small businesses that the CRA does not look at new companies or Audit until they have been in business for 5 years or more and had a loss on the books. In fact the CRA pulls businesses early on so they can see that the business is starting off with good habits.
This leads into our second tip, reconcile your accounts monthly. Don’t let it build up. If you reconcile monthly, you can see right away if you are missing any receipts. It is very important that you have all the physical receipts to support any purchases that relate to your business otherwise in the case of an audit those costs could be disallowed and fees may apply.
Our Third tip is how to use the cloud to help you track and capture receipts. There are some great tools available now to help you capture expenses as they happen so you don’t have to worry about losing receipts. If you are already using cloud based software for your bookkeeping such as QuickBooks Online there may already be a way to do this within the software. On QuickBooks Online you can download a mobile app that allows you to take a picture and enter in expense details in one step, this is an incredible time saver. There are some other third party apps that can be used to help you manage your receipts in partnership with a bookkeeper or accountant. Ask your professional if they have one they prefer. Once it has been uploaded you can discard the physical receipt. This helps keep track of all your purchases and when you have time to sit down and update your books you will be able to find all your receipts in one place.
Our Fourth tip is one that many Small business owners miss. Track your mileage! To claim your vehicle expenses, you must have a compete mileage log. If audited the CRA will want to see all trips recorded and complete. There are some great apps you can load onto your phone to help with that. One we have tested is Everlance and it works well. Otherwise a simple Excel will do. You can find one here on our website.
Finally, our last tip is to find a professional who can help. You might not need an accountant or even a bookkeeper full time but finding someone who knows what they are doing can be valuable. We offer a DIY package that allows a small business owner to keep their costs low but still have access to all the knowledge we offer. It helps to have someone you can go to with your questions or have review your files on a regular basis to make sure you are not missing anything.
Best of luck with your venture!