Tag: filing taxes for small business

It may not be fun, but as a small business owner you’re required to keep accurate financial records of all activities for your company for six years.

In addition to your financial statements, you’ll need to to keep accurate records for all the individual accounts that make up those statements. Here are some of the major ones:

• Accounts receivable – Who owes you, how much do they owe, and for how long have they owed you?
• Accounts payable – Who do you owe, how much and for how long?
• Inventory – How much did you buy, when did you buy, and how much did you pay? how you account for your inventory will affect your cost of goods sold.
• Payroll – Total salaries paid to employees, payroll taxes and deductions.
• GST/HST and Provincial Sales Tax – All businesses with an income greater than $30,000 per year are required to collect and submit on behalf of the federal government a Goods and Services Tax (GST) and, depending where your business operates, Provincial Sales Tax (PST) or Harmonized Sales Tax (HST).
• Cash – Cash inflows and outflows should be recorded to maintain proper control of cash.
• Fixed assets – Record what you bought, how much you paid, and when you bought, along with depreciation amounts.
• Other records – Insurance, leases, investments.

To support any tax claims for your small business, you’ll need to keep good records. Income records must include the date, amount and source of income as well as sales invoices, contracts and fee statements. Expense records must also show the date, name and address of suppliers/ sellers, name and address of buyers and a full description of the goods or services. You should also keep records of daily income and expenses.

Want more advice? Check out our blog post Tip of the Month: Small Business Record Keeping.