Maintaining Accurate Records
Posted On: 28/06/21 - 0

Maintaining accurate records is vital to the success of your business. As a business owner, you should realize that keeping good records are one of the most important management tools in your business. And, due to the sensitive nature of your records, they should be handled and protected with a high level of security. Many business owners invest a lot of time and effort to run their businesses. Because so much time and attention is spent each day running a business,  entrepreneurs fail to realize the importance of maintaining and protecting proper documentation. You as a business owner should be looking for a maximum return on your  investment. And, the maintenance of your business records is part of that equation.

At Padgett Business Services N.W., we have prepared a quick guide to show the importance of maintaining accurate and timely records. Accurate records will help you with the following tasks.

Firstly, Monitoring the Progress of Your Business

You need  up-to-date, accurate records to monitor your business growth. Your records show if your business is improving and which items or services are popular.  And, what changes you need to make to improve your business services or products. Excellent and up to date records increase the likelihood of your business success.

Secondly, Preparation Of Your Financial Reports

You need accurate records to prepare strong and accurate financial statements. If your records are inaccurate or you are missing important information, this will result in bad financial reporting. Tax services provide you with statements that help you when you are dealing with your bank and your creditors.  Most importantly, your reports are only as good as the data you provide to your accountant or bookkeeper.

Thirdly,Identify Your Source of Income

You are likely to receive revenue from many sources in your business. Your records identify the sources of your income. You require this information to separate business from non-business receipts and taxable from non-taxable income. This also helps you to make informed decisions on what areas of the business you need to focus on to generate more income, or equally important, what products or services you need to eliminate. 

Fourthly, File Your Tax Return

You need accurate records to prepare your business tax returns. These records must support income, expenses, and credits you report. Generally, these are the same records you will require to monitor your business growth to prepare your financial statements.

Fifthly, Support Items on Your Tax Returns

You must make your business records available for inspection by the CRA. If the CRA examines any of your tax returns and there are inconsistencies,  you may be asked to produce relevant proof of your claims (both paper and electronic) as well as all supporting documents.  The auditor will expect that you explain all of the items reported. A complete set of records speeds up the investigation and removes a lot of undue stress for you.  Failure to provide requested records is an offence under the law.  

Finally, Track Your Expenses

Unless you record expenses when they occur, you are bound to forget these when you prepare your tax return. When you hire a tax preparation service, they will assist you in providing more information on what items you can deduct to run a business.

Your business records can be maintained manually, computerized on a spreadsheet, or you can keep your data online. Make sure the system you use is easy to manage and complements your business model. It’s important that you keep your receipts, bank statements, and invoices in the event of an audit.  Once your business gets really busy, it is wise for you to outsource the work to an accounting firms to ensure accuracy in records.  Hiring a professional accountant will give you and your business peace of mind.

Contact us for more information related to your tax services for your small business today!

12203-107 Avenue.
Edmonton, Alberta.
T5M 1Y9

Call us:
780.482.7297