4 ways to keep your records clean and organized
It is important to keep your records clean and organized because it makes it easier to access in case of emergencies that can occur in your business. When the CRA or auditor request information, they will set a small time frame to respond to their audit request and you want the documents accessable for when they are requested. Another importance is making it easier for the accountant/ bookkeeping to finish your yearend as they will require certain documents that are deemed expensive or material to be put in their working papers. So this begs the quesiton, how do you keep your records clean?
Use QuickBooks online or any accounting software to record your transactions. Quickbooks online has a function where you can attach your receipts and invoices along with a transaction which can keep your files accessable.
Minimize cash transactions and purchase using electronic methods. Not only does this prevent you from having loose change, but it will be more accurate for you to access your data and to gain a clear understanding on your revenue and expenses. Bank statements are a vital part in tracking the health of a business and they also provide strong accuracy than cash transactions.
Start scanning your receipts so that you have an electronic copy of it. Next, store all your electronic receipts in a folder and even name them accordlingly in the file as they are easy to access. I recommend the following: If you have a receipt for McDonald’s and the purchase occurred in November 26, 2023, I would name the receipt based on the date and the vendor. For example: “2023.11.26 McDonald’s”
Keep all business transactions in your corporate bank account and all personal transactions in your personal bank account. However, if it is grey or unclear if a transaction is more corporate or personal, put it in the corporate bank account and your accountant can review it during the end of the year to determine the appropriate category.
These are the only few methods for now to maintaining better records, but accomplishing these methods for now and you will notice that you will have a better grasp on your expenses.