As 2020 nears the end and another fiscal year begins, it’s important for small business owners to get their accounting in order. To keep it simple, I’ve rounded up my top 5 suggestions that small business owners should focus on.
1. Keep good accounting records
Do you use accounting software or a spreadsheet, file folders? Gather your accounting information, put them in order now can save you time and money during tax time. If you are one of those small business owners that scramble during tax time to gather you accounting information you may be leaving out important tax information that can save you money.
2. Reconcile Business Bank Accounts
Reconciling your bank account will help you to determine your current financial position. Do you reconcile your bank account regularly? Or at least review your bank deposits to verify and match the Revenue? Do you mix personal banking with your business bank account? Keep business and personal separate, if you do, it will be easier to track your business expenses and revenue.
3. Accounts Receivable
Do you have any Accounts Receivable outstanding 30, 60, 90+ days? For accounts past due 30 days send a reminder letter, 60 days follow-up with a phone call. Any accounts receivables over 90+ days may be difficult to collect and you may need to write it off as a bad debt. Have you forgotten to bill a client? Make sure your accounts receivables are up to date, this can hold up your cash flow.
4. Keep on top of HST taxes
Are you expecting to have to pay any HST tax? If so, put money aside now, or make interim payments (quarterly) so you are less likely to become overwhelmed financially during tax time. Or even better, why not set up a separate bank account and place money aside just for taxes. It can never be said enough, stay on good terms with Canada Revenue Agency.
5. Do a physical inventory count
Keep track of obsolete, broken, or missing inventory. Sometimes you can return broken and obsolete inventory to the supplier and get a credit or a refund. Keeping your inventory up to date helps you to control inventory levels and free up cash flow.
At the end of the day, ensuring your accounting records are up to date can save you time, money, and unnecessary stress during tax time. If you are like many business owners and find accounting tasks overwhelming hire a bookkeeper or accountant to assist you.