Well-managed records are critical to the success of any company, but unfortunately, this is something that falls by the wayside for many businesses.
The problem is that poor record keeping often leads to missed opportunities and, when looking at taxes, your records can be the difference between you optimizing your tax return and paying substantially more than you ever should have.
To help demonstrate the importance of good record keeping, here are seven benefits:
1 - Observe Progress and Grow Your Business
Good record keeping allows you to better track the progress of your business so that you have a stronger understanding of how your company is performing. From determining what items are selling to identifying cost savings, good records will help you optimize your business for success.
2 - Prepare Statements
To prepare accurate financial statements, such as income statements, balance sheets and statements of cash flow, you need to have well-managed books. Not only will it help provide a clear picture of your business, but they will also be critical when working with banks and creditors.
3 - Track Deductible Expenses
Proper record keeping will ensure that you don’t miss deductible expenses that will lower your business income - resulting in greater tax savings for your business.
4 - Prepare your tax return
When filing a corporate, business or personal tax return, good recording keeping is essential to ensure you optimize your after-tax position. In addition, the same records will help support your claims if you are ever assessed or audited by the Canada Revenue Agency (CRA).
If your records are poorly kept, and you are unable to supply the necessary supporting documents, the CRA may reassess your return, which could result in you owing additional taxes.
5 - Plan for Payments
Maintaining proper records will help ensure you have the cash flow available to cover upcoming expenses, minimizing late fees and interest while allowing you to maintain strong relationships with your vendors.
There are many options for maintaining records. They can be maintained manually, using spreadsheets or with a bookkeeping software. If you do not have the time or resources to maintain your own records, a professional, such as Koroll & Company, can help.
They will have the skills and expertise to ensure your records are effectively maintained while also helping you with business decisions and tax preparation.
For more information on proper bookkeeping, or for help maintaining your books, contact us today.
