Let Technology Handle Your Bookkeeping
Don’t you hate scrambling last-second, searching for receipts and trying to allocate them to different expense categories and accounts so that your accountant can understand what you’re trying to tell them.
You promised yourself that next year will be different. But next year comes and goes and the same thing happens again. Sound familiar?
So why the mad dash?
On the income side, from our experience, things are more straight-forward. You either have invoices to back up all of the income you generated or you’re able to quickly come up with a number by looking at your deposits. That being said, as you grow, this will get harder and harder.
But, it’s those annoying expenses that require hours, if not days, of data entry, bookkeeping and categorization. This is especially burdensome if you’re a business with a high volume of expenses - and there are many of you that are.
How Tech Can Help
Although every business is unique, the one common trait is that receipts/bills/expenses need to be kept and stored somewhere for 6 years. Contrary to what some say, credit card statements are not proof enough of your expenses. Some CRA agents may let it slide from time to time, but you must keep the actual receipt relating to that expense as proof that it occurred.
Our clients (tech startups, consulting firms, realtors and others) are using receipt-capturing software to assist them with bookkeeping and it’s been a huge time-saver and stress reliever.
Rather than saving all receipts in a shoebox, our clients are snapping photos of their expenses from their smartphones throughout the year. So yes, whether you’re a a CEO of a tech startup or a realtor, you need to keep your receipts and can use the same app and online software to do the work for you - online bookkeeping at it’s finest!
You’re probably about to ask whether digital copies of receipts are sufficient for the CRA. The answer to that, based on this memo, is Yes.
How It Works
A lot of development has gone into receipt-capturing apps and they are becoming more intelligent by the day. There are many of them out there, each having it’s own pros and cons. It may take some specialized knowledge to ensure it’s set up optimally, but once you’re up and running, it’s very easy to use.
Who wouldn’t love to snap a photo of their receipt/invoice (expense) and let the online accounting software do the rest?
Many of these apps, through OCR (optical character recognition) can extract the information from your document and automatically code it to the right expense category (i.e. advertising, contractors, software, subscriptions, etc.)
If you look below, you’ll see a common gas receipt. Note the ‘Total’ and ‘GST/HST’ paid on the receipt (outlined in red).
On the right side, note that the software automatically captured the amounts correctly, including the vendor name (Esso) and expense category (Motor Vehicle Expenses).
If you manage this correctly, at tax time you can export a report and your expense listing/breakdown is done. Easy!
1st Line of Defense
When the CRA comes knocking asking for your receipts, if you have been using your receipt- capturing app religiously, you or your accountant can find your receipts in minutes and send them off to the CRA. No more hunting for expenses!
Taking It Up A Notch
For many small businesses, this is good enough and extremely helpful. They usually engage us to help with the set-up and then pull the necessary reports at tax time to file their taxes (we’re a one-stop-shop that way). We are added as users to their system and even cover the software costs. This enhances the relationship we have with all of our clients.
For business owners who are tech savvy and are looking for more visibility over their numbers, there are ways to sync your receipt app to cloud-based accounting systems.
Imagine your credit card and bank statement transactions automatically downloaded for you. All you need to do is match the expenses from your credit card to the receipts you snapped a photo of - all online!
Once that’s done, you’ll have reports that provide you with the visibility to make smart business decisions.
Have a look below to see a sample report:
Using online bookkeeping tools and apps to streamline your operations has never been easier. There are lots of online accounting systems and receipt apps to choose from - all providing business owners with the opportunity to stay on top of their performance, leading to smarter business decisions!