It’s no secret that entrepreneurs are typically very good at what they do, but usually have little time or interest in doing their own bookkeeping.
As a result, they often visit the accountant with a shoe-box of receipts and a file of papers, hoping it will all work out—taxes will be minimal…and they won’t get audited by CRA.
As businesses grow, owners often realize that they need help. They might be missing deductions with poorly tracked expenses… or even paying bills on behalf of customers and then forgetting to bill for them—a huge hit to the company’s profitability, to say the least.
That’s when they often ask a family member or friend to help, even if that person has little or no bookkeeping experience.
Despite good intentions of a business owner or friend helping with bookkeeping, the information provided to the accountant for tax planning or tax preparation is usually incomplete or inadequate. As a result, the accountant has to spend more time working on the business’ books and tax deductions are missed…all costing you, the business owner!
On top of missed deductions and higher accountant bills, as a business grows, there are bookkeeping tasks related to payroll, required government remittances. If these are late or wrong, penalties can be steep.
For a business to successfully grow, an owner needs accurate and up-to-date financial reports to make timely, informed decisions to effectively manage the business.
Income statements, receivables (money coming in) and aging reports (who owes money and how long is it taking to get paid), and payables are all significant management tools that can mean the difference between success and bankruptcy.
Yet, most young businesses or mom-and-pop shops don’t have access to such reports if they don’t use the services of a professional bookkeeper.
…the classic case of “penny wise and dollar foolish” all in an attempt to save money.
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