If you own a business, you should definitely be familiar with accounting records.
Organizing these accounting documents is mandatory for SMEs for two reasons. On the one hand, the state requires each company to account for 100% of its accounting operations in order to accurately complete its returns for the Canada Revenue Agency and Revenu Québec. On the other hand, record keeping is essential for a company to analyze its own performance.
Find out how good bookkeeping can have a positive effect on your business operations.
Monitor your SME’s financial situation
Accounting records are documents that summarize your business transactions. This can take the form of journals, tax returns, sales invoices or bank statements.
These documents make it possible to monitor an SME’s current or past financial situation. This clear vision of your activities will then allow you to make comparisons with past situations.
It is generally easier to hire an accountant to manage your books, as handling a great deal of information is required.
Keeping accounting records to make forecasts
Controlling the past and current financial situation of your company will allow you to make forecasts.
SMEs often neglect financial forecasts due to lack of preparation. Your past account registers will make it possible to assess your previous situations and therefore make the necessary readjustments before embarking on new projects.
Monitor and control your expenses
Keeping track of your invoices, product and service tax returns and other documents that include expenses is important.
Record keeping will allow you to keep track of your production costs and will protect you from unnecessary expenses or any discrepancies that could affect your business profitability.
Accounting records to optimize your business management
Accounting departments within a company are one of the areas that centralize the most information. With this information, you will be able to identify the needs and problems that your company may encounter.
With these insights, you can improve your responsiveness by quickly making important decisions, increasing your business profits and life expectancy.
Comply with the law
As a general rule, your accounting records need to be kept for a period of 6 years. This enables you to determine your tax obligations and the credits to which you are entitled with the Canada Revenue Agency or Revenu Québec.
Keeping these documents will also reduce errors when you file your returns.
Save time in case of an accounting audit
If your accounting records are properly established, tax audits, which can happen to anyone, there is no reason to panic.
On the contrary, you will know that you are in good standing because you have consistent knowledge of your company’s situation. All of these efforts will be worth the trouble since well-kept accounting records will speed up the tax audit.
Keeping accounting records: an essential element for SMEs
Keeping accounting records is very important for an SME, it keeps track of all your expenses and optimizes your business management to make it sustainable and competitive.
If you are looking for an accountant to help your accounting records, do not hesitate to contact us.
Frédéric Roy-Gobeil
CPA, M. TAX
As President of T2inc.ca and an entrepreneur at heart, I have founded many start-ups such as delve Labs and T2inc.ca. A former tax specialist at Ernst & Young, I am also a member of the Ordre des comptables professionnels agréés CPA and have a master's degree in taxation from the Université de Sherbrooke. With a passion for the world of entrepreneurship and the growth mindset, I have authored numerous articles and videos on the industry and the business world, as well as on accounting, taxation, financial statements and financial independence.
