[wt_note title=”Part 2 of 3″ align=”center”] This post is the second part of a series of posts for small business owners who want to take charge of their taxes. It was supposed to be just one post, but it turns out we had a lot more to say! Instead of trying to squeeze it in, we’re spreading it out into some smaller actionable pieces. Missed part one? Here you go: Part 1 [/wt_note]
2) Don’t Mix Business With Pleasure
It’s hard isn’t it? For start-ups especially, business and pleasure mix a lot. Not because all of your start up work is fun. But because business can quickly become your whole life.
Stay strong and separate those receipts. Please.
Keep them in your filing cabinet, or if you’re like me in a drawer in the kitchen. Whatever works. Make sure you find a way of tracking electronic receipts too.
That brings us nicely to number 3.
3) Keep Really Good Records
Make your records the squeakiest clean records the CRA has ever seen. Track your expenses, petty cash, payroll etc. If money is moving, make sure you track it.
The most important thing you can do with all those records is to reconcile your accounts regularly.
Choose a reconciliation schedule (usually monthly, but weekly might be better) and mark it into your calendar. Do it right now. If you’re using an electronic calendar, make the appointment recurring.
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Ok, now protect that time like your livelihood depends on it. The more often you reconcile, the easier it will be.
Do not, under any circumstances, wait until you are doing your taxes to try to figure out where your money went.
That is a recipe for disaster, and this is a disaster free zone.
So, to recap:
- If at all possible, use an accountant (See Part 1)
- Don’t mix business receipts with personal receipts. Keep them as separate as drinking and driving.
- Keep track of every penny that moves. Write. Everything. Down.