Frequently Asked Questions About Accounting
With the ability to make or break your financial and business stability, your accounts play a vital role in your growth story. Unfortunately, when it comes to accounting, there are a ton of questions clients have but often find answers difficult to come by.
At Bookkeeping Bizz Inc. we understand the value of good accounting and want to help clear any doubts you have. To ensure you have the most accurate facts available about financial matters, we have answered some of the most frequently asked questions about accounting.
1. How do I know what expenses are tax deductible?
What is deductible can change in any given year. The CRA is continually revising and updating the tax rules. That is just one of many reasons why retaining the services of outside accounting for both regular accounting or payroll and taxes is a great idea. Your accountant will be up-to-date on what can and can’t be written off and can help you maximize the potential benefit of your purchases and expenses when you’re filing your taxes. Generally, purchases and expenses deemed necessary can be treated as tax deductible.
2. What is the best way to maintain accounting records?
For most companies, investing in digital record keeping, such as cloud accounting software or record keeping, is a fast and ideal solution. Digital records can be accessible anywhere and can’t be destroyed by a fire or natural disaster, like physical records. When you regularly update and save your accounting records digitally, you can easily ensure they are up-to-date. Digital records are also easy to share with your outside professional accountant. Physical receipts and documents can be scanned to create digital copies. Basic information like payroll can be input regularly to maintain accurate records.
3. What are the best ways to separate my business and personal finances?
Mixing business and personal finances is a major problem for small-business owners. Not only does it create headaches at tax time, but it also makes it difficult to track the profitability of your company. Worse-case scenario: you get audited by the CRA and end up with major fines. Keeping these two parts of your money life separate is essential to preserve your sanity and to ensure you have a sustainable business model. Keeping different bank accounts for each use will make your life much easier.
4. How much does monthly accounting cost? What factors go into the pricing?
Pricing for our monthly accounting services varies by your company’s needs. Our pricing is not based on the size of your company, rather our pricing model is based on your company’s accounting activity and the complexity of your financial statements. We will work with you to arrive at an affordable, fixed monthly fee.
5. What does the monthly or quarterly accounting process look like?
Our monthly/quarterly accounting process starts with receiving your source documents. Our staff compiles the information (be ready to answer unknown transactions which we will send to you as a list) and put into reporting and prepares the necessary returns then reports to you for your approval to file the returns.
6. When should I consider outsourcing my accounting?
If your business is too small to hire an in-house accountant or you simply don’t have the desire to do it yourself, you should consider outsourcing the task. Sometimes you save more on outsourcing accounting part of the business than you realize. While many small-business owners use QuickBooks, the software can be more complicated than first realized. By outsourcing your accounting, you free yourself to focus on other aspects of your business.
7. What accounting system do you use?
We primarily use three systems.
a. MS Excel - we have formatted it in a way to match our business-focused templates. We find it much faster to work on MS Excel to save accounting fees for our clients.
b. Quickbooks - both the desktop and online versions.
c. TaxCycle - for preparation of T1s, T2s, T4s, and T5s.
That being said, we will also work with other systems depending on your preferences and needs.
8. Why hire a monthly accountant instead of an annual one?
Truthfully, not all business owners see the need, but our clients sure do! We provide consulting and business advice throughout the year. Our proactive approach allows you to see trends earlier, and spot any issues before they become larger problems. Monthly financial statements are a tool to stay on top of your business, which allows you to focus on growing your profits and your accountant can consult you on ways to minimize your taxes before deadlines.
If you have any more questions about accounting, get in touch with the experts at Bookkeeping Bizz Inc. We pride ourselves on our ability to educate clients and help them achieve their business goals. As the best business accounting and tax services in North York and Toronto, ON, we provide expert solutions for accounting, bookkeeping, tax, advisory, business consulting and payroll services.