The importance of having books
As a business owner or a potential business owner there are a multitude of things to track. We need to make sure our products and services are up to our standards.
If we use social media or other marketing platforms, we need to make sure they are working properly. One thing that business owners like to procrastinate to the very last possible moment is keeping their books up to date.
Many people may wonder what the importance of keeping up to date books may be. There are many reasons, but first we must define what “keeping the books” means. A businesses’ books refers to their bookkeeping, a way of tracking their financial data. Any purchases made in and for your business are tracked. Any sales by the business are tracked. All your bills, invoices, and bank statements for your business need to be together in one location. Keeping the books is when the business is able to keep track of all their financial data. In the past business kept paper records, but today businesses have the option of keeping their books up to date with modern technology.
Tax Time
Every year businesses need to file their yearly income tax, which are due on April 30th. If businesses keep their books up to date, when the time comes to fill out the tax forms the accountants will have a much easier time. It will relieve the stress most people feel at this time of year. Everyone will feel more confident they are paying enough money to the CRA, and they are receiving the most tax benefits. CRA guidelines require that a business keep all financial records for six years.
Some businesses need to file monthly and quarterly returns for GST/HST, WSIB, and payroll taxes. Working on your books a few minutes every day to keep them up to date may eliminate time spent later. By keeping track of all expenses, employees payrolls, and income, more time is available for work on the actual business.
Audit
Once you have up to date books you can be confident that everything is accounted for accurately. This will help decrease the likelihood of an audit. If you are audited, you will be required to show all of your financial data. The purpose of an audit is to see how well internal controls are working at preventing fraud. If you are not tracking your purchases and sales on a regular basis there is the potential of money going missing.
Investment
Most banks and outside lenders will request current financial statements before granting a loan. They want to see how your business is doing, and that you have a capability of paying back the loan. If you have your books up to date, and you understand the strengths of your business, it will demonstrate confidence to the lenders that you are worth the investment.
Business Health
The general health of your business is reflected in the accuracy of your books. Up to date books will help you be able to make better decisions for your employees and your business.
<