At this time of the year, many of the inquiries I get are from business owners under a tough time crunch. Their business year end is December 31st, so their tax returns are due March 31st if incorporated, or April 30th if a sole proprietor.
So typically, in the month of January/February they are frantically trying to recreate their financial records for a full year to submit to their accountant.
This frenzy of recording is really what causes bookkeeping to suck. It becomes a stressful event every year, and the whole time they are doing this, they are telling themselves how horrible bookkeeping is.
But it doesn’t have to be such a stressful experience. The trick is to get ahead of it, and stay on top of it, so that you aren’t having to be consumed by it for an extended period of time, day in and day out.
So how can you do this? Well, obviously you know that my first solution will be to call us, and outsource it. That was a given 🙂
But there are things that you can do on your own to ensure that the year end process isn’t such a daunting task.
Here is a list of 4 things that can help you avoid the stress:
- Don’t leave it all to the last minute – I know it seems like an obvious one, but it is amazing how much of a difference it can make. Not only can it make a difference to your mindset, but it will also make a difference it what gets captured. Doing things at the last minute inevitably results in things getting missed. Because it is all being done at the end of the year, sometimes you miss picking up small expenses that you’ve paid throughout the year. Perhaps there was an unusual circumstance and you didn’t have your business credit card with you, so you used your personal card. As you sit at the end of the year, the likelihood that you will remember to pick up this expense is pretty small. The expenses themselves may not individually be a lot, but they can add up. Which means that you end up paying more income tax to the government, and no one wants that!
- Set up a System – Whether that is an accounting system, like QuickBooks Desktop, QuickBooks Online, Xero or Wave, an accounting software program will speed up the process for you. It eliminates duplicate entry of information. As you are entering in your bills, the system is automatically capturing all of the HST figures that you need to pull into your return.
- Do it Regularly – Once you’ve set up this system, commit to updating on a regular basis. That doesn’t mean you have to do it every day or every week, but monthly is fine, and quarterly at a minimum. It will be so much less daunting, and eliminate the frantic scramble at the end of the year. It will also help you to capture those expenses that were the exception, as they are likely to be fresh in your mind.
- Create an Expenses Folder – Rather than just creating one huge pile of invoices/receipts that you are having to deal with, create a folder system for your receipts. Whether that be a designated set of files that sit on the corner of your desk, or an accordion folder, just have a single place. Separating the folders/tabs into categories will also speed up the process. For example, create one folder/tab for customer sales invoices. As you generate your invoices for your customers, throw a copy into this folder. This will not only save you time in having to gather and sort all the papers, but save you time in compiling the information.
Again, the first solution for me is to outsource. You didn’t open your business to do bookkeeping, so give it to someone who can do it for you. They can likely do it faster for you, and if they are any good, will also tell you things that you may have missed. (To make sure that you hire the right bookkeeper visit www.onlinebookkeepertraining.com)
The benefits of staying on top of your bookkeeping is huge. Your sanity will remain throughout these months and focusing on your customers and your sales will not come to a grinding halt once a year.
And who knows, the bookkeeping may also not suck 🙂
If you have any tips that you would like to share that you implement for staying on top of your bookkeeping, I would love to hear it.