If you are self employed or have a small business then you need to have financial statements completed that are properly done and accurate. Your tax accountant needs these in order to prepare your tax returns for you properly. If you use a qualified bookkeeper then you should not have to worry about the accuracy of your year end statements. That is of course assuming that you have provided this professional with all the proper documents.
It starts with making sure that you have keep all of your business expense receipts in an organized manner which should be by the month. You need to be able to show how you paid for these expenses. This can be done by collecting all of your bank statements and credit card statements, then attaching the expense receipts to these.
You also need to have the proper documentation for your income. Now that you have all of the necessary documentation you can now set up the financial records which can be used to prepare the statements.
The CRA looks at your expenses by categories that are applicable to your particular business. You now want to be able to place your expenses in these categories. While many businesses are similar they can also be unique in some ways. So you may have categories that are different or in addition to what would be the standard for your particular type of business.
The common categories are often vehicle expenses, office expenses and operating expenses and then each of these are then further divided into sub categories. For example under office expenses you could have telephone expenses, utility expenses and so on.
You can see that by following these steps that you are creating a clear and easy to follow financial picture for your business. The CRA wants to see accurate figures that summarize up the yearly financial dealings for your business. This is done through the completion of a Profit & Loss Statement and a Balance sheet.
These financial statements can get a little complicated to complete and this is why many businesses would prefer to rely on bookkeeping services to not only look after the monthly accounting requirements but the year end statements as well.
You may find that you don’t have a problem with the monthly accounting but it’s the year end that is giving you a problem. If you have kept good and accurate records throughout the year, then a knowledgeable bookkeeper can easily prepare your year end statements for you based on this record keeping.
