Bookkeeping and accounting records are essential from an organizational point of view. These records are used to keep an eye on the company's finances, assess the company's performance and make sure that tax information is accurate at the end of the year.
However, from a legal point of view, it is mandatory for small and medium-sized enterprises (SMEs) to maintain and keep certain accounting records.
In this article, find out what accounting records and documents are mandatory for businesses.
Mandatory accounting records for SMEs
Certain accounting records are not only essential for keeping an eye on the state of your business, but also need to be maintained to comply with the law.
The Canada Revenue Agency and Revenu Québec require certain records to be kept for a minimum of six years. These records can be kept either on paper or in digital format using business accounting software.
The company's expense journal
Each of your company's expenses must be recorded in a detailed log. This log should include several pieces of information, including the date of purchase, the seller's name and address, the buyer's name and address, a description of the goods or services purchased and the seller's Business Number.
In addition, if you sell or exchange a property, this transaction must also be recorded in the register.
The revenue and sales journal
You also have to keep a log of your business's revenues and gross sales, that is, the total revenues before any deductions. This record must contain the date, amount and source of income. In addition, each entry should be backed up by a document proving its authenticity.
Other records to be kept for SMEs
According to law, the following records must also be kept for at least six years:
- The register of fees collected and paid
- The payroll ledger
- The inventory of property, drawn up in the prescribed manner
Supporting documents for your accounting records
In addition to keeping these various accounting records, it is crucial to keep any supporting documents that serve as proof of a purchase, sale or other business activity in the event of a government audit.
For example, always keep your invoices, receipts, deposit slips, cancelled cheques, cheque stubs, cash tapes, etc., in a safe place. In short, everything that supports information contained in a register should be carefully stored in your archives.
T2inc: your accounting and business tax advisor
In short, SMEs are required to keep and maintain an accounting record of all daily income and expenses. Gathering and keeping all your accounting, tax and financial information ensures that you are in compliance with the law.
If you have other questions about business accounting and taxation in Quebec and Canada, our specialists at T2inc have the proven expertise to inform and support you in your accounting operations. Request your free quote today to benefit from our services!
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