Regardless of what type of business you run, how you operate, or how you’re faring in terms of sales, there’s no doubt that maintaining proper bookkeeping is essential to stay afloat.
Although it is a necessity for proper operations, bookkeeping is a practice that the majority of businesses still struggle with. As much as 90 percent of businesses—no matter how big or small they may be—face difficulties in starting and completing their bookkeeping by the end of the year.
Standard accounting practices dictate that bookkeeping must be done throughout the year from start-to-finish to avoid the costly penalties and stress for cramming. While bookkeeping essentially involves recording the day-to-day transactions of a business and can be done on a daily basis, business owners often push things back until the “ber” months set in.
Admittedly, bookkeeping isn’t exactly the easiest or most entertaining of processes, as jotting and recording hundreds of receipts, sales, and payments can rob anyone of much-needed downtime. Taking on the task of recording every single accounting document every day may seem like a nightmare, but the costs of cramming outweigh that of spending a bit of time recording daily.
If you’re a business owner who’s been pushing back or delaying their bookkeeping further than desired, here are a few reasons to do bookkeeping daily:
Putting up a business in Canada, particularly in Ottawa, comes with responsibilities, some of which are directly related to proper bookkeeping. Aside from complying with the year-end submission of books, carrying out your bookkeeping process also helps with handling surprise requests from the Canada Revenue Agency (CRA).
At any point in time, the CRA—through its mandate—can audit, inspect, and examine your business’s records, processes, and properties. If it finds that your books aren’t in order, then you’re in for an audit. During a CRA audit, you may be subject to penalties and issuances that may handicap your business and compromise its financial stability, so it’s best to stay prepared with proper recording.
One of the top reasons that business owners should carry out proper bookkeeping is that knowing your numbers can help with spotting legitimate business deductions. Keeping proper records ensures that the CRA will be able to authorize deductions and save you a significant amount of money every year.
One significant benefit of proper bookkeeping is that it can help them with making better decisions and knowing the current status of their businesses. With the help of updated books, it becomes much easier to know how well the business is performing in terms of its finances, which, in turn, provides a better forecast of future performance.
As tedious as it may be, proper bookkeeping provides a wealth of advantages for your business. It can be tempting to skip over a day of recording your business transactions, so keep the four benefits mentioned on this list in mind to make it easier to get back on track.
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