It is important to ensure that all your financial documents and information is organized in order to maintain a healthy business and ensure its success.
As per the Canada Revenue Agency, businesses are required to keep records and supporting documents for a period of six years from the end of the last tax year they relate to. This will become very important if you are selected for an audit. Accurate, up-to-date records are essential for successful audits.
Establishing Effective Recordkeeping Practices: The Benefits
- Having good recordkeeping practices will maximize all the expenses you claim, reducing your tax obligations.
- It will also enable a smoother, quicker year-end process to prepare your accounts, answering any questions your year-end accountant may have.
- Finally, keeping copies of your receipts will help your accountant assign the expense or capital purchase to the appropriate account. This will ultimately give you the information you need to run your business and help it grow, effectively allowing you to analyze your expense accounts and ensure you are meeting your industry key performance indicators.
Without copies of your invoices, you will not be able to substantiate input tax credits and therefore will pay extra money to the government when you remit your GST/HST/QST returns. And who wants to give the government any more money than they need to?
Tips to Stay Organized
There are many ways to keep yourself organized when it comes to recordkeeping. From filing invoices in traditional envelopes or folders to using cutting-edge mobile scanning technology that can easily scan and import receipts and invoices, inputting them all directly into your financial system, there are a multitude of approaches you can take for proper document storage. Paperless storage is increasingly preferred (and avoids situations as shown!), but some still choose to store their documents where they can see them, maintaining traditional paper files. Whichever you choose, consistency is key!
Expert Accounting Can Help!
At Expert Accounting, our aim is to lessen the burden of recordkeeping while giving you the peace of mind that comes with establishing structure and accountability. This relieves pressure from your shoulders and lets you focus more on your business.
Reach out to us today for your limited-time Free Business Assessment and we will complete a comprehensive review of your business practices and performance, equipping you with essential information, effective strategies, and the ability to reach your goals.