Bookkeeping Basics for Ontario Small Business Owners: 8 Habits That Save Time and Tax

Bookkeeping rarely makes it to the top of a busy owner’s to-do list — until tax season, a CRA letter or a loan application forces the issue. The good news is that a few simple habits make your books accurate, keep you compliant and give you real numbers to run your business with.

1. Keep business and personal money separate

Open a dedicated business bank account and credit card. Mixing personal and business transactions is the single biggest cause of messy books and missed deductions, and it makes it harder to support your expenses if the CRA asks.

2. Capture every receipt

Snap a photo of receipts as soon as you get them, or forward e-receipts to a dedicated folder. The CRA accepts electronic records, as long as they are legible and complete.

3. Reconcile your accounts every month

Match your bookkeeping records to your bank and credit card statements monthly. Reconciliation catches errors, duplicate charges and missing income while they are still easy to fix.

4. Track GST/HST as you go

If you are registered for HST, record the tax you charge and the tax you pay on business purchases separately. That makes filing quick and helps you claim every input tax credit you are entitled to.

5. Use simple, consistent categories

A clean chart of accounts — advertising, vehicle, rent, software, professional fees and so on — makes your profit and loss statement meaningful and lines up with what your tax return needs.

6. Invoice promptly and follow up

Send invoices as soon as work is done and review your accounts receivable each month. Profit on paper means little if customers are not paying on time.

7. Keep records for at least six years

The CRA generally requires you to keep your books, records and supporting documents for six years from the end of the tax year they relate to. Store them somewhere safe and backed up.

8. Review your numbers, not just record them

Set aside 30 minutes each month to review your profit and loss and cash balance. Which services are most profitable? Are expenses creeping up? This is where bookkeeping turns into better decisions.

When to get help

If you are months behind, spend more than a few hours a month on your books, or are not confident your HST returns are right, it is usually cheaper to delegate. Our team offers monthly accounting and bookkeeping, catch-up work and year-end financial statements. Contact us to talk about your books.

General information only; not accounting or tax advice for your specific situation.