self-employed tax savings tips

5 Reasons Why Good Bookkeeping Is Important

Posted on December 4, 2020 | Written by Mohammed Mecklai, CPA, CMA

Bookkeeping helps you stay organized, prepare for tax returns and budget for your business.  It is a crucial part of keeping your finances in check and most importantly, it makes sure CRA doesn’t cause problems.

Below are 5 reasons why good bookkeeping and maintaining records can help you improve your business.

1.  Helps keep records organized and up-to-date

This helps you know how your business is performing in terms of monthly, quarterly or yearly revenue earned.

2.  Protects your business from CRA audits

If your business is unable to account for revenue and expenses, CRA may make assumptions on the tax bill you owe.  This is also known as a national or arbitrary assessment.

3.  Helps you plan for the future 

Consistent bookkeeping for a period will provide your business with historic data that can help with future growth.  This can help in terms of planning for future hiring, forecasting cash flow into the future and purchasing new equipment or facilities to grow your business.

4.  Makes it easier to get a loan and report to investors   

There are many instances where small businesses turn to the bank or investors for funding.  If your bookkeeping is up-to-date, it is easy to provide the bank or investors with data in order for a loan or funding to be approved.

5.  Gives you extra peace of mind

Unorganized books, CRA and tax deadlines can all cause lots of stress.  When your books are organized, you can sleep well at night!

Bookkeeping is an important process that helps your business keep track of financial records.  Under the law, your business is required to maintain valid books and records.  This will save you future frustration and panic.  Poor accounting is a also a huge reason as to why top businesses fail.  Do not blindly drive your business.

Need help with your books?  We can help! We offer bookkeeping, tax advice and planning, preparation and filing services. Contact us today!