April 30th has come and gone; as good Canadians we know that for individuals, it’s the deadline to submit personal income tax returns. If you are an entrepreneur or small business owner you may experience the added joy of collecting all your business related paperwork and trying to make sense of it all.
You might have a great business idea, you may have recently launched a start up or maybe you are an expert developer. Maybe you are a marketing guru or a wizard at web design. But, and this is a big one, all of these skills do not necessarily go hand in hand with being an expert at small business administration.
For some entrepreneurs preparing to send your paperwork to the accountant can be a daunting task, especially if you haven’t kept up to date with accurate expense & revenue tracking, data entry and the organization of it all. If you are minimizing costs by being a DIY bookkeeper, this can be exponentially frustrating. Let’s face it, we live in a digital world and many tech savvy people don’t want to deal with the massive amounts of paper that relate to running a business, but it is a necessary evil. Believe me; the last thing that your bookkeeper or accounting firm wants to see is a cookie tin or plastic bag full of mismatched receipts and unopened mail.
Here are a few tips I have used to make the bookkeeping process cost effective and cause fewer headaches for people that would rather spend their time on something else:
1. Be organized – this means all year long, not just at year end. Create a process or system for recording and filing that works best for you, and use it! Track revenue and expenses from day 1 of your company. This is really important because in the early stages many entrepreneurs co-mingle personal and business expenses. Keep a spreadsheet or if it is easier to keep an accordion file and file receipts by month or maybe you want to track expenses by vendor/supplier - just do it! Your bank statement is your friend. Keep all the bank statements together and reconcile monthly. There are even really cool tools available to convert all your documents to digital copies (visit www.neat.com) and QuickBooks (go to www.quickbooks.ca) is a very affordable option for start-up businesses. Keep all records organized and save everything for 7 years.
2. Plan time to keep up on the unpleasant stuff – build it into your calendar to spend 30+ minutes a week documenting and filing your paperwork. It beats saving it all up until year end and spending an entire weekend trying to remember who you took to Rolly Rockets for a business lunch last December, scrounging around looking for lost receipts or trying to figure out if all your payables came in. Use this time to open all your mail, especially if it is from the government. Designate a place too! Don’t let your business pile up on your dining room table. You may want to buy a plastic tote and store all business paperwork in your ‘office in a box’ which allows you to open it up once a week and stay focused on the task at hand until it’s completed.
3. Know your limits - you are your company’s best asset. Attach a dollar value to your time and determine if it is worth the cost for you to be wading through the minutia of detailed calculations, HST remittances & bill payments. As a business owner, you do need to know everything that goes on, but you may be better off paying someone else to come in once a month to work on the ‘boring stuff’ and then provide you with a detailed summary – while you spend time growing the business.
In short, stay on top of the little things so that you can focus on your passion!