Why Spend So Much Time on Financial Records?
It might seem tedious, but organized 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
- Help you forecast and budget for future expenses and revenues
Setting Up a Bookkeeping System
There are lots of different bookkeeping systems, depending on your needs. Single-entry bookkeeping, double-entry bookkeeping, and computerized systems are available.
Learn about bookkeeping systems and software from Small Business Services Canada.
Keeping the Right Records
You need to keep a 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
Find out what records to keep from Small Business Services Canada
Finding an Accountant or Bookkeeper
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.
Get a list of free and low-cost accounting software from the Business Development Bank of Canada.
You can also use our Ask an Expert program to meet with an accountant for 30 minutes—this can help you determine the amount of support you may need going forward. Visit our events page for a list of upcoming sessions.
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: make sure your business is in good financial health.
- Act as a business consultant: are an invaluable source of advice, helping you maximize profits and stay financially stable throughout the life of your business.
- Offer bookkeeping services: if yours does not, ask them for a referral to a bookkeeper they trust.
Your industry may 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 Alberta Firm Directory to find a qualified accountant near you.
Employee Payroll Deductions
As an employer, you must deduct the following from your employees’ pay:
- Canada Pension Plan (CPP) contributions
- Employment Insurance (EI) premiums
- Income tax
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. Use the Payroll Deductions Online Calculator to calculate the payroll deductions you must make.
You may also have to deduct Workers Compensation Board of Alberta premiums, depending on your industry.
Small Business Taxes in Alberta
Taxes for Sole Proprietorships and Partnerships
If you own a sole proprietorship or are part of a partnership, your business income (or your share of it) will be taxed as your own personal income. Make sure you budget for it—save a portion of your revenue so you will have your payment ready when tax day comes.
You will report your sole proprietorship and partnership income on your T1 General Return. Learn more about taxes for sole proprietorships and partnerships on the Canada Revenue Agency website.
You can deduct any reasonable business-related expenses from your taxable income, with some exceptions. Your expenses must relate to generating business income—travel costs, office supplies, and office rent are all tax-deductible expenses.
See the Canada Revenue Agency for a full list of eligible expenses you can deduct from the taxable revenue of your business.
Taxes for Corporations
Corporations must file their own separate tax return—corporate earnings are not taxed as part of your personal income. Taxes for corporations can be complex, so you may want to seek help from an accountant to make sure you’re complying with all applicable laws.
The Government of Alberta has an excellent overview of provincial corporate tax law or you can visit the Canada Revenue Agency’s guide to corporate taxation.
Taxes on the Goods and Services You Sell
You may have to charge your customers a Goods and Services Tax (GST) on your business’ products and services, and remit those funds to the federal government. Most goods are taxable, but some are exempt. Check with the Canada Revenue Agency to find out if your products or services are exempt from GST.
The province of Alberta does not have a Harmonized Sales Tax (HST) or Provincial Sales Tax (PST), but you may have to add them if you operate in other provinces. Check with the provincial government of each province or territory you’re operating in to find out what additional taxes apply to you.
Excise Taxes and Special Levies
Additional excise taxes and special levies may apply to some types of goods:
- Fuel-inefficient vehicles
- Automobile air conditioners
- Certain petroleum products
- Insurance premiums
See the Canada Revenue Agency for more information about excise taxes and special levies.
Excise duties are charged on:
- Tobacco products
See the Canada Revenue Agency for more information about excise duties.