With the extra burden of BAS for small business owners, demand for bookkeeping has grown enormously, but there has been an influx of inexperienced practitioners offering their services.
With accurate bookkeeping, you’ll have valuable information like how your business is performing, if you’re making a profit, which marketing campaigns are successful, and more. Armed with this information, you’ll be able to make informed and timely business decisions.
Before you hire anyone, you want to make sure it’s worth the cost. In this article, we outline eight benefits of hiring a professional bookkeeper for your small business.
1. A professional bookkeeper will save you time
You spend hours and hours each month on bookkeeping and other financial tasks. Since it’s so time-consuming and tedious, you always leave it at the bottom of your list. Then when the tax filing deadline creeps up on you, you waste valuable time scrambling to catch up.
And any time spent managing non-core activities – like bookkeeping – is time spent away from growing your business. The time you would spend on bookkeeping can be dedicated to your business – product development, customer experience and ultimately, your bottom line.
2. You won’t miss unpaid invoices
Late and unpaid bills can put a dent in your cash flow and business goals. A bookkeeper can put a process in place that helps keep an eye on your invoices. This can include sending out reminders if a bill is late, making a phone call, or issuing a late fee penalty.
They’ll also keep on top of any late or forgotten payments, so you don’t have to worry about missing financial obligations.
3. They’ll help you identify any cash flow issues
Since your bookkeeper handles the day-to-day recording of your invoices, receipts and other transactions, they have a good handle of your income, expenses and spending habits.
Their attention to your accounts will help you understand your business performance and identify any cash flow issues as they come up.
4. You can focus on growing your business
Understanding your business income and expenses month by month will help you get a handle on your financial situation. You’ll be able to identify spending patterns and sales trends.
A tax professional and bookkeeper can help you make better business decisions about your day-to-day operations, like what time of year it’s best to make major purchases. They can help forecast seasonal ups and downs, ensuring you have access to capital during the slow months and avoid taking out too much money during good months.
A greater awareness of spending will help you control and lower operating expenses where possible, saving you money in the long run.
5. Tax season will be smoother
If you hire the bookkeeper at the same firm that employs your tax specialist, they’ll work together to ensure you have an update of your accounting records and return filings.
From this they’ll provide you with an interim or year-end financial statement, giving you a clearer picture of your business’ financial health and an advance view to what your annual tax obligation may be. You’ll be able to make decisions in advance that could modify or lower your tax bill.
And having your paperwork in order makes it easier to prepare accurate and complete tax returns, such as income tax and GST/HST/PST returns.
6. You’re prepared for an audit
In the unlikely event your small business is audited by the CRA, having accurate and up-to-date records will ensure a smoother audit process. The sooner you can get back to running your business, the better.
If you’re considering applying for financial assistance programs related to COVID-19, having up-to-date records will ensure your applications meet the appropriate government requirements and would pass any review or audit test.
If you’re already enrolled in an existing COVID-19 program, we expect the CRA will increase their audit activity in the coming months due to the demand for financial assistance programs. You should have peace of mind knowing that if the CRA comes calling, you won’t have to worry about getting your books organized and proving your compliance with program guidelines.
If you’re worried about audit activity, good bookkeeping is your best defense. Without proper records to support your income tax return or GST/HST return, non-income items can be taxed as income and legitimate expenses may be disallowed, among other problems.
7. It’s easier to secure loans from banks and other creditors
Creditors need accurate information about the financial position of your business before they give out a loan. Good records show prospective creditors that you know all facets of your company.
You will have an easier time securing capital when you are able to clearly outline past performance. Banks and other lenders need to be assured that you have solid history and a good handle on your business’ finances.
And if you want to sell your business, good financial records demonstrate the value of your business to prospective buyers.
Besides, when it comes time to sell your business or secure capital to grow your business, being able to thoroughly document your past performance will help your company’s valuation.
8. You won’t miss any credits or deductions
Without proper bookkeeping, input tax credits may be overlooked or forgotten when income tax or GST/HST returns are filed.
And you want to make sure you’re taking advantage of every possible tax deduction. The more you can claim, the lower your tax bill.
There’s a lot to know when it comes to expenses and what you can claim. And missing a deduction means paying more in taxes than you need to.
Even though you don’t need to send in original receipts when you file your taxes, if the CRA wants to see proof of a claim and you can’t find it, you can’t claim it. A bookkeeper will keep everything organized for you.
Reduced labour costs.
By outsourcing your booking services on a needs only basis rather than employing a full time bookkeeper, you only have to pay them when you use their services. Companies that do their own bookkeeping have higher labour, training and capital expenditure costs, all of which must be passed on to customers.
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