Organized, accurate bookkeeping is crucial for any business. You must keep a complete record of all your income and expenses. If you can't maintain your financial records on your own, consider hiring a qualified, experienced accountant or bookkeeper to do it for you – it's often well worth the investment.
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It might seem tedious, but financial records can save you a great deal of effort. Good records will:
- Keep you informed about your business' past and present performance
- Keep you in control and give you the information you need to make good business decisions
- Satisfy Canada Revenue Agency, Canada Pension Plan, Employment Insurance, Department of Finance, Goods and Services Tax, and Workers' Compensation requirements, and help you make accurate, timely remittances
- Increase your business' chance of surviving, staying in business, and earning profit
The Canada Business Network has a complete guide to managing your bookkeeping and accounting.
There are lots of different bookkeeping systems, depending on your needs. Single-entry bookkeeping, double-entry bookkeeping, and computerized systems are available.
Keep the right records
You need to keep record of all your business transactions for at least six years. This includes:
- Paper or electronic receipts
- Details of expenses and sales
- Payroll details
- Taxes collected and paid
Doing your own bookkeeping
This is the most affordable option, and can be great for startup businesses trying to keep expenses low. Use a bookkeeping software program to track your day-to-day income and expenses.
Hiring a bookkeeper
You can also hire a professional bookkeeper to come in on a weekly or monthly basis. Bookkeepers can:
- Record all your expenses and income
- Prepare month-end financial statements
- Work with accountants to prepare year-end financial statements and file tax returns
Bookkeepers can be costly – make sure you've budgeted appropriately for their work.
Hiring an accountant
Hiring an accountant can be a large investment, but they're worth it once your business gets to a certain size or complexity. Outsourcing your financial management to a qualified accountant means you can spend more time managing the other parts of your business.
- Conduct financial reporting and analysis: give you an accurate picture of your business' financial health
- Conduct financial audits: to make sure your business is in good financial health
- Act as a business consultant: accountants can be an invaluable source of advice, helping you maximize profits and stay financially stable throughout the life of your business
- Accountants may also offer bookkeeping services. If yours doesn't, ask them for a referral to a bookkeeper they trust
Your industry might require specialized accounting skills. Talk to your industry association or peers to find accountants that have experience in your industry.
Use the Chartered Professional Accountants Canada Firm Directory to find a qualified accountant near you
Visit the Canada Revenue Agency for a detailed guide to payroll. Find out what payroll deductions you need to make, how to remit deductions to the government, and how to track and report them.
You can deduct any reasonable expense you incur to produce business income, with some exceptions. Travel costs, office supplies, and office rent are all tax-deductible expenses.
See the Canada Revenue Agency for a full list of expenses you can deduct from your business' taxable revenue.
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