What is bookkeeping for small businesses?

Bookkeeping for Small Businesses

What is Bookkeeping for Small Businesses?

Both a legal obligation and a business management tool, bookkeeping must be carried out rigorously, whether by an accountant or someone from the company. But what exactly does this mean for small businesses?

In Quebec, each company must keep up-to-date paper or electronic registers and keep them at the disposal of the competent authorities for six years. At any time, they can be requested by Revenu Québec for verification and must be made available to them within a reasonable time.

If the form of the books is not imposed, the information contained therein must make it possible to verify:

  • The company's income and expenses, to be reconciled with receipts and disbursements;
  • The amounts collected for the GST and the QST;
  • Amounts of taxes paid, requests for credit or refunds of input tax;
  • The useful information used to calculate source deductions and employer contributions.

At the same time, the supporting documents must also be kept for six years. It's about:

  • Daily statements of turnover, invoices, cash register tapes and daily statements from credit card Payment terminals;
  • Daily expense records, checks, canceled checks, credit card statements and receipts;
  • Mileage statements for each motorist combining professional and personal use with the same vehicle;
  • Supporting documents for travel;
  • Supporting documents for fixed assets;
  • The register of employees, with an indication of their salary and deductions made for each;

The different accounting systems

There are several accounting systems that are to be assessed according to the needs of the business.

  • Single part accounting or cash accounting: transactions are recorded only once, either as expenses or as income. For clarity, the entries are grouped together in a one-page table called the income journal, and the outputs on another, called the expense journal.
  • Double-entry or accrual accounting: transactions are recorded twice, once on credit and once on debit. Whatever type of bookkeeping services is chosen, the system must be reliable, precise, consistent, easy to use and understand, in order to allow easy access to the necessary information at any time. Procedures for checking the accounting entries must be put in place, and first of all the bank reconciliation which makes it possible to compare the bank's entries with those recorded in the accounts. It is done at least once a month upon receipt of the bank statement.
  • The accounts can be kept in the form of spreadsheets, but this system is relatively cumbersome, the functionalities limited and part of the errors are only detectable at the end of the year, that is to say at the time to release the financial statements. Conversely, accounting software saves time, limits errors, automatically calculates taxes and makes precise financial forecasts. Today, most are available online and many are free or inexpensive.
  • Good bookkeeping certainly helps meet legal obligations, but it is also an essential management tool. By rigorously following your accounts, you know the performance of your business in detail and in real time. It is thus possible to compare them with the results of past periods, to make forecasts and to make informed decisions.

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