Why You Shouldn’t DIY Your Bookkeeping
In a small business setting, it is far too common for paperwork and bookkeeping systems to fall to the bottom of the priority list. Business owners often get caught up in employee management, customer support, product development, marketing, and other more urgent aspects of business. This means that they have very little time for bookkeeping, and when the time comes, they end up doing a shoddy job with their accounts.
Not paying close attention to your daily bookkeeping can lead to mistakes where items have been categorized incorrectly, and expenses have been posted to balance sheet codes, resulting in profits being overstated. If you fail to keep the system current, or you are inaccurate with data entry and calculations, then it will cost you quite a bit of money in the long run. The experts at Rose Tax & Accounting Service do not want you to face any liabilities due to bad bookkeeping, and this is why we put together a few points that emphasize on why you shouldn’t DIY your bookkeeping.
1. Missalocating expenses
The most common error when doing your own bookkeeping is misallocating expenses between the profit and loss account and the balance sheet. When expenses are misallocated, it means that your final accounts are going to be incorrect and skew your profit figure. Not only will this mean that you won’t have an accurate idea of what is going on in your business, but it will also mean that your tax calculations will be incorrect.
2. Missing deductions
You can also miss out on deductions. Let’s say you brought a new chair for your office. In that case, it’s a tax-deductible business expense. By reporting it to the CRA (Canada Revenue Agency), you can save money on taxes. But, misallocating expenses can lead to you filing your expenses in the wrong account, making it impossible for you to avail of the deduction. The more correct information (and supporting documents) you have, the more deductions you’ll be able to legitimately claim, and the bigger your tax return will be.
The CRA will not be happy if you mess up. If they find any discrepancy in the amount of tax owed by your company, you’ll be fined heavily. Also, if investors find that the financial position of the company is unstable, they will not invest. Thus, bookkeeping affects the future plans of the company, and attempts must be made to keep your books updated and accurate. Inaccurate financial statements prevent a company from growing.
Do things right - Hire a professional!
Hiring a professional bookkeeper will do you and your company wonders. A good bookkeeper will ensure that there are no errors made while keeping track of expenses and revenue and all other bookkeeping entries. This is important because errors made in your record can cost you penalties on filing documents in the future. These basic errors and penalties can be avoided with the help of a bookkeeper.
You also need to know how your business is performing financially and in which areas it can improve. This is where the services of a bookkeeper come in handy. A professional bookkeeper will do a more accurate analysis of your business. When you don’t have to do bookkeeping tasks, you can focus on growth and other important client-related tasks which can make your company more successful in the long run.
If you are looking for a tax and accounting firm in Barrie, ON, then reach out to us at Rose Tax & Accounting Service. We are a rapidly growing tax and accounting firm with clients all around the world. We celebrated our twenty-fifth Tax Season in 2019! Our team of skilled professionals takes pride in the detail and quality of their work. They have up-to-date knowledge and vast experience to help them. They also invest time in getting to know each client on a personal level to gain a thorough understanding of their unique needs. We offer individualized accounting, bookkeeping, payroll, and HST packages to fit the needs of our clients. To learn more about the services we offer, please click here. If you have a question, we’d love to hear from you. Please contact us here.