Accounting is at the heart of any company's strategic management, and small and medium-sized enterprises (SMEs) are no exception. Good accounting practices not only provide a reliable reflection of a company's financial health, but are also an essential pillar of informed decision-making. What's more, beyond the managerial and decision-making aspects, keeping accounting records is rooted in a strictly regulatory framework.
In this legal context, SMEs must navigate through a range of legal documentation and record-keeping obligations. Respecting these guidelines is crucial to compliance with Canada Revenue Agency and Revenu Québec requirements, but can be complex without a thorough understanding of the subject.
This is where Bankeo comes in as an innovative matchmaking platform, connecting entrepreneurs with the ideal accountant for their business. With Bankeo, SMEs can simplify their record-keeping and ensure smooth, compliant accounting management. This article explores in depth the legal requirements and best practices for keeping accounting records, while demonstrating how Bankeo can be your ally in this essential process.
Diligent bookkeeping is a non-negotiable requirement for SMEs in Canada. Obligations dictated by the Canada Revenue Agency and Revenu Québec call for meticulous, transparent management of registered economic activities. The aim is to present a true and fair view of all financial operations, to facilitate audits and tax inspections.
To comply with the law, it is imperative for an SME to retain its accounting records for a minimum period of six years. This retention period often extends well beyond the current financial year, as financial transactions in one year may have repercussions or require clarification in the future.
SMEs have a choice between keeping their accounting records in paper or electronic form. While paper has long been the norm, the digital transition now offers significant advantages in terms of efficiency, security and accessibility. Digital media are encouraged, as they facilitate the storage, retrieval and transmission of information.
Every expense incurred must be accurately recorded in the dedicated register. This rigorous practice is crucial, not only for keeping track of finances, but also for meeting the transparency criteria imposed by the tax authorities. Information such as the date, the supplier, the nature of the expense and its amount are essential for optimum record-keeping.
Similarly, the recording of income and sales captures the overall flow of cash receipts before any deductions or adjustments. Each transaction must be accompanied by valid physical evidence, such as an invoice or receipt, to certify its authenticity and reinforce the register's reliability in the face of tax inspection.
Legal compliance in accounting goes beyond the simple keeping of expense and income journals. Other specific records play a crucial role in complying with tax legislation and making it easier to understand past transactions in the event of an audit.
An essential element of SME accounting is proper tax management. Accurate recording of Goods and Services Tax (GST), Quebec Sales Tax (QST) and other relevant taxes is essential. This rigorous follow-up ensures that the company declares and reimburses the appropriate amounts to the tax authorities.
Payroll management is another critical component. The payroll register records all details of salaries, deductions and contributions to various funds (e.g. employment insurance, pension plan, etc.). Keeping track of this information is crucial for any SME, as it is an obligation to both employees and government bodies.
A precise inventory of the company's assets must be kept up to date. This includes not only products for sale, but also capital goods and other fixed assets. The method prescribed for this inventory must comply with recognized accounting standards, thus facilitating any valuation during operations such as mergers, acquisitions or simply company valuations.
Rigorous record-keeping goes hand in hand with an equally meticulous policy of keeping supporting documents. These supporting documents are essential for validating accounting entries during tax audits.
Supplier and customer invoices, payment receipts, cancelled cheques, contracts and similar documents represent irrefutable proof of recorded transactions. They must be filed in an orderly fashion and be easily accessible.
Deposit slips record cash receipts into bank accounts, while cash register tapes record day-to-day sales transactions. These are the building blocks of reliable business accounting.
Document archiving must be designed for ease of access and retrieval. Using codes and dates, and following a consistent filing system are recommended practices. Digital storage solutions are also to be preferred, thanks to their ability to back up and secure data.
The technological revolution has brought reliable, high-performance solutions for keeping accounting records, providing SMEs with financial management tools tailored to their needs.
Digitization offers a host of advantages, including reduced human error, faster access to data, and improved collaboration between the various players in the company. Automation also saves significant amounts of time, allowing you to concentrate on higher value-added tasks.
The market offers a variety of accounting software solutions to meet the specific needs of SMEs. Some tools are designed for a more generalist approach, while others specialize in particular business sectors. The choice of software must therefore be carefully considered and aligned with the company's objectives and size.
Bankeo, as a matchmaking platform, assists SMEs in choosing and implementing the accounting software best suited to their operations. By analyzing the specific needs of each company, Bankeo recommends customized solutions aimed at optimizing financial management.
Good bookkeeping requires a structured approach and rigorous practices.
It is advisable to establish regular routines for updating registers. Not only does this keep information up to date, it also prepares the company for potential audits without stress or haste. Adopting a consistent nomenclature for entries and documents is also vital.
Common accounting errors can take many forms: omitted entries, incorrect categorization of expenses, or negligence in keeping supporting documents. It is therefore essential to nurture a culture of accuracy within the accounting team.
During tax audits, the accuracy of records and the availability of all supporting documents are paramount. Good record-keeping favors a positive outcome during audits, reinforcing the credibility and reputation of the SME.
Bankeo stands out as the intermediary of choice for entrepreneurs seeking quality accounting services.
Thanks to its extensive network of professionals, Bankeo makes it easy to put SMEs in touch with qualified chartered accountants. This enables them to benefit from personalized advice and recognized expertise in accounting and taxation.
Bankeo's services cover a broad spectrum of accounting assistance, including bookkeeping, taxation, financial planning and much more. The platform offers adaptable solutions to meet the diverse accounting needs of SMEs.
Keeping accounting records remains one of the fundamental pillars ensuring the smooth running and financial health of SMEs. As we have explored, this involves careful management of expense and revenue journals, but also extends to mastery of tax, payroll and inventory records. Compliance with legal and tax standards is essential, and requires rigorous practices that can be facilitated by the adoption of modern technologies.
Complying with legal obligations and following best accounting practices ensures that your company is well positioned to meet the requirements of the Canada Revenue Agency and Revenu Québec. Accurate archiving and digitization of accounting records reinforce this position, optimizing internal processes and responsiveness to consulting or audit needs.
Good record-keeping has a direct impact on a company's ability to grow in the long term. Not only does it provide a clearer picture of the company's financial situation, it also enhances strategic decision-making and confidence among investors, partners and customers.
Bankeo is a strategic lever for all SMEs wishing to strengthen their accounting management, offering tailor-made contacts with experienced accountants. Entrepreneurs have everything to gain by relying on Bankeo's expertise and services.
Do you want to ensure the compliance of your SME while optimizing its accounting management? Bankeo is here to support you in your quest for efficiency and compliance.
Whether you fill out the form or talk to our team, we will get to know you, your business and the type of bookkeeper you are looking for.
Our solution will find you the 3 accounting specialists that best fit your needs and will contact you at the desired time.
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