Doing business in Canada can mean dealing with a lot of red tapes. There are many government requirements for corporate accounting to keep up with. A good bookkeeper will be able to help you manage all these requirements so nothing slips through the cracks; however, as a business owner, you still need to make sure someone is busy completing these tasks. It can prevent a lot of finger-pointing later. After all, you’re the one the CRA will come after for any missed deposits or payments.
What is a bookkeeper?
Google says “a person whose job it is to keep track of a company’s financial affairs.” For most companies, a bookkeeper and an accountant have separate job descriptions, however, some small businesses might still have one person who does both tasks.
Sounds pretty reactionary. It follows that there is a lot going on and the bookkeeper just fixes everything and is the building block for corporate accounting. Talk to the best accountants near me. Traditionally, this has been the case, but today’s business owners rightly demand a higher level of service: someone who can maintain up-to-date financial records, ensure government paperwork is completed on time, and be proactive about any issues that arise.
Here’s a list of what your bookkeeper can do for you (and why it’s important):
1. Reconcile your accounts at the end of each month
Pretty standard stuff, but we were surprised how many companies don’t do this. Having reconciled accounts means your financials are up to date and you (or your bookkeeper) can start to analyze them. Just make sure they don’t use the infamous “stretch” account, which is a sloppy but prevalent practice.
2. Bill and pay invoices on the due date
A good bookkeeper recognizes that cash flow management is absolutely critical to the success of a small business and will only pay bills when they are due.
3. Create and issue invoices (and subsequent ones and more and more)
Larger companies have an accounts receivable department for a reason. Customers often require many reminders to pay their bills, and the longevity of your business depends on it. Resist the temptation to do this yourself, as you will likely come up with many excuses as to why the customer hasn’t paid yet. Delegate it to your bookkeeper to make the issue black and white. For the bookkeeper, it’s “Have we received payment? No, then proceed until the invoice is paid.’
This way, you can have more seamless corporate accounting and bookkeeping.
4. Monitor your cash balance
Once you start delegating your financial tasks, you’ll want to know what your cash balance is and what money should be flowing in and out. Your bookkeeper should keep these records and notify you if you run out of money to pay your bills so that other arrangements can be made.
5. Processing and reconciliation of wages
I hesitate to add because payroll is a really specialized skill that you might want to consider outsourcing separately from accounting. Make sure you understand which aspects of payroll your bookkeeper or accountant actually handles
- Wages are running
- Submission of payroll
- Make CRA transfers
- Statistical calculation of wages
- Accumulation and tracking of vacation pay
- Cost reimbursement management
- Manage customer spending reports
- T4 deposit and withdrawal
- Registration and provision of employment documents (for terminated employees)
- Calculation of severance pay
- Calculation of commissions and bonuses
- Deductions for medical services
- Allowance (car, phone, etc.)
This list could go on! The important thing to understand here is that payroll is not as simple as many people think. Make sure you understand who is responsible for what. This can also help with preparing your small business taxes. Talk to the best accountants near me.
6. Track, Record, and Pay Sales Tax (GST/PST/HST/RST)
Your accountant should keep track of the sales taxes you collect and pay so that your tax returns are accurate and you don’t overpay. Some provinces even give you incentives for filing your PST on time (up to $198 per month), which can really add up!
7. Provide monthly reporting on numbers
Your accountant should provide you with accounts payable (what you owe) and receivables (what you owe) as well as a simplified profit and loss statement. The stronger news usually comes from your accountant, but technology is certainly upping the game for many accountants. Another useful report is the cash summary report, which shows how much cash you have in the bank. This is a useful report if you have multiple bank accounts and will give you more context to your statements of accounts payable and receivable. This can also help with preparing your small business taxes.
8. All the little details
There are many other little things that a good accountant will do for you:
- Submit a worker’s compensation report and pay the bill
- Don’t forget to renew your municipal business license (or do it yourself)
- Remind your attorney that your year is up and that the annual paperwork needs to be completed
- Give your accountant a clean business record at the end of the year to minimize fees
- Notice when an expense doesn’t make sense or you might be charged twice
- Following on the missing information
As you can see, an accountant and a bookkeeper can do a lot for you. They help with preparing your small business taxes. It is important for entrepreneurs to know that accountants and bookkeepers must fulfill all these things. Once you understand, you’ll be able to better outline what your accountant’s responsibilities are and what you still need to do yourself. I suggest you get your accountant to spell out what their responsibilities are and what yours are so that everyone is clear about their responsibilities. Talk to the best accountants near me.