Small business FAQs to bookkeepers

How much home-office expense should I claim? 

According to CRA, to calculate the portion you can deduct, use a reasonable basis such as the area of the work space divided by the total area of your home. If you use part of your home for both your business and personal living, calculate how many hours in the day you use the rooms for your business, and then divide that amount by 24 hours. Multiply the result by the business part of your total home expenses. This will give you the household cost you can deduct. If you run the business for only part of the week or year, reduce your claim accordingly. (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/t2125/ln9945-eng.html)

Can I claim my phone expense 100%? 

Yes, if you have a second phone for personal use. If you only own one phone, then claiming 100% is not advisable. 

Can I claim auto expenses without a mileage log?

Ideally, all auto expenses must be based on your mileage log. You should have a detailed documentation of all your business-related driving. If not possible, a reasonable estimate is allowed by accountants. However, should you be audited, there's a higher chance your claims may be denied.

If I took a business trip and paid using my Air Miles, can I still write it off? 

This is something you should discuss with your professional accountant. In my experience, accountants have allowed their clients to claim the fair market value of the ticket purchased with the Air Miles. Documentation showing the fair market value of the ticket at the time of purchase is necessary to make the claim.

How often should I have my books assessed?

At the very least quarterly, if monthly is not doable. Waiting for year-end does not necessarily save you money. It only deprives you of making timely decisions about your business. Regular bookkeeping and understanding of your financial statements must be completed regularly and consistently to ensure you are on track with your goals and budget.

Most Common Bookkeeping Mistakes and Easy Fixes

Growing a business requires a lot of effort, but it's fun! Bookkeeping is something you shouldn't sweat because it's not as fun.

Here are some of the most common bookkeeping mistakes that are costing you time and money and how to fix them.

1.  Messy receipts

One solution is to digitize them using a smart phone app or scanner and saving it in an organized folder. For digital receipts, save them directly into one of these folders.

For paper copies, use a sorting envelope/accordion. Depending on the structure and needs of your business, you may sort it according to expense categories (ie meals, office expenses, gas, etc) or methods of payment (business chequing, business visa, personal accounts etc).

2.  Non-accounting software

Nowadays, cloud accounting software are a big hit, and I love the benefit of being able to sync your bank feeds into the software. Make sure you choose the right software that can generate the appropriate and accurate financial statements for you and your accountant.

3.  Incorrect/Inaccurate financial statements

 The best solution is to outsource the job to a competent bookkeeper and review the reports regularly. If you are doing it yourself, hire a bookkeeper that can check in on a regular basis to pick up any inaccuracies and make sure you are looking at the correct data.

At the end of the day, growing your business is your priority.  To succeed, it’s important to know where your numbers are at. If you’re not reviewing your numbers regularly, you are holding back yourself from achieving the success you deserve.

Bookkeeping Checklist for Entrepreneurs to Save time & Money

Sales

• Copy of all invoices

• Access to Paypal or invoice software

• Deposit book

Expenses

• All expense invoices/receipts/agreements related to the business

• All cheque stubs

Assets

• A detailed Asset Listing of all assets acquired since the business’ inception, including date of purchase and original cost

• Invoices for all capital assets purchased or sold in the current filing year. A capital asset is anything you purchased existing more than one year (e.g. computers, printers, furniture, etc.)

Statements

• Business chequing statements

• Credit card statements (mainly used for the business)

• Paypal/merchant statements

• Trade statements

Government Filings/Correspondence

• Corporate Taxes

• GST/HST

• PST

• WCB

• Payroll Source Deductions

• Personal Income Tax/Notice of Assessment

Info from Accountant/Former Bookkeeper

• Latest back-up of accounting software/online access to cloud software

• Trial Balance

• Capital Cost Allowance Schedule

• Business-use-of-home expenses/percentage

• Motor Vehicle Expenses

• Other pertinent notes/details

• CRA letters (if not yet included in the above group)

• Copies of GST/HST forms filed during the filing year and the last year filed, as well as forms received but not filed