There are many reasons why a business should be maintaining their books on a regular basis. It's not only used as a tax-saving strategy but can help you maintain your sanity in the event you get dragged into a legal dispute from the commingling of funds. Here is a list of reasons why you should maintain a set of books for each business you own.
Distinct Corporate Entity
You’ll save yourself a lot of hassle and headaches if you avoid combining your personal and business finances. Every business should have its own checking account from which expenses are drawn and into which revenue is deposited. Having a separate checkbook shows you recognize the company is its own distinct entity.
Bookkeeping allows a straightforward reporting of profits for tax filings. It maintains an expenditure profile that assists in identifying tax deductions. If done properly will provide better records to reduce the tax burden on your business.
It’s incredibly easy to mix up personal expenses with business ones. However, the CRA will often disallow expenses when personal and business expenses are commingled in the same checkbook.
With your books in order, an agent reviewing will be happy that they can quickly see at a glance what was spent on a particle item and be comforted that the item is properly accounted for.
Note: Agents are human beings too and do have families that they would like to leave early to see.
When your books are disorganized and you don’t know how much is going in or out, you can feel an incredible amount of stress. With this kind of uncertainty, it ultimately can cause your undoing.
Improve vision and decision making
By taking the time to properly manage your accounting system, you’ll be opening the way for a clear vision on where you can and should take your business, based on your bottom-line numbers.
Incorrect reports provided by poor bookkeeping can hamper the decision-making process and damage the client and employee relationships. Thus, you cannot afford to have bad bookkeeping.
Time saved from having an organized set of books can be put towards business-building opportunities such as meeting with clients, workers, and promoting the business.
Having the bookkeeping work done by professionals helps to effectively evade the problems mentioned above and puts your business in a great position for growth. Contact us to get your free Bookkeeping consultation today.