Archive for the ‘Bookkeeping’ Category

Bookkeeping – Working Smart

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Bookkeeping is not just entering transactions, reconciling your bank statement and saying, “I’m done!” Bookkeeping lays the foundation for everything that is extracted from your financial data, and business owners deserve data they can trust. Good bookkeeping does require work, but working smart now saves time, money and headaches later. Here are some tips for working smart.

Be organized and efficient – We’ve all been there – scouring pockets, wallets and vehicles searching for a missing receipt from months back. That’s human, but frustrating nonetheless. However, when you have a consistent and secure location for receipts and allocate expenses as you pay for them, you decrease the risk of missing receipts or transactions.

Be software friendly – Trying to save money by not upgrading to the latest software or software update is not working smart. Not using current software can leave your files vulnerable to cyber hackers, not to mention the frustration of a slow and glitchy software experience. Keeping current also means you’ll benefit from many new features and improvements that can make bookkeeping easier and more efficient.

Be financially separate from your business – It may take some time to set up business accounts and credit cards but doing so is working smart. It’s much easier to track business transactions, and you’ll save money as your accountant won’t have to spend time sorting business vs personal transactions at each year end.

Be reconciled to reconcile – Reviewing your bank statements, credit card and vendor statements monthly (at the very least) can help you catch errors or potential fraud early in the game.

Be mindful – Use a sticky note, set an alarm in your calendar – whatever it takes to prepare and file sales tax, employment and payroll tax, worker’s compensation and income tax ON TIME. Also, remit the amounts owing ON TIME to avoid penalties and interest.

Be careful – If your bookkeeper is unsure about the posting of any unusual or complicated transaction, they should seek guidance from your accountant. A quick call can save a lot of trouble down the road.

Working smart may mean some extra effort and diligence today, but is definitely worth it to have a successful tomorrow!

Cloud-based Bookkeeping Software – A Word of Caution

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Over the years we’ve learned that:

  • A “server” doesn’t always refer to the person at your favourite restaurant;
  • A “router” isn’t simply a power-tool; and
  • a “floppy” doesn’t merely describe your best sun hat!

Perhaps now you’ve heard the latest “techy” phrase “the Cloud” and you’re wondering: What is this “Cloud” anyway?

The “Cloud” Defined?

Basically, the Cloud is the Internet. The Internet hosts certain software packages that users can access anywhere via an Internet connection, as apposed to installing software directly on their personal computer. In fact, there are Cloud-based products on the market now to do your bookkeeping, such as QuickBooks Online, Wave and FreshBooks, to name a few.

These products boast of their accessibility, drastic simplification and user-friendliness. While we don’t necessarily disagree, we would like to offer a word of caution to business owners.

Cloud-based Bookkeeping – Our Caution

Would you trust someone without a valid driver’s license to drive you to Florida just because your car had an automatic transmission, was self-parking, and had hands-free phone access? A ridiculous concept indeed! However, as accountants, we’ve seen many business owners doing something quite similar. They’re putting too much trust in the automated “ease of use” claims of the Cloud-based software companies, reasoning that they no longer need an experienced bookkeeper “at the wheel”.

Here’s what we’ve noticed:

  1. Many times, the individual preparing the books has no prior bookkeeping experience.  This is a bad idea and leads to very messy bookkeeping – garbage in, garbage out.
  2. A frequent feature for these Cloud-based bookkeeping packages is the ability to upload your bank activity right from your bank account into the bookkeeping software. This is a beneficial feature for sure. But if not set up properly from the start, each time the bank transactions get uploaded, the books get worse. For example, it’s tricky getting the income and expense accounts set up for bank transactions. If done wrong, your books quickly become unusable for your accountant.
  3. In most cases, we find that before any year-end work can begin, the books must get fixed first.  In fact, there have been several instances where fixing a client’s books has taken considerably longer than the time it takes to prepare their year-end financial statements and tax returns.

Therefore, we urge you, when it comes to bookkeeping – use the cloud, but don’t keep your head in the clouds!  Please ensure you have responsible personnel at the wheel. Why not consult with us about your choice of bookkeepers or bookkeeping packages. We can help you make sense of it all and make informed decisions for your business.

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