Michelle Duford

I am behind in my bookkeeping

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Stressed out from being behind in bookkeeping

Behind in your bookkeeping? An experts guide to getting caught up.

When you started your business you likely had some really big plans. Provide great customer service make lots of money and have more time to spend with friends and family.

Sometimes things don’t go as planned. Perhaps you ‘fell’ into your business as a result of a great opportunity or maybe you had a plan. In any case you didn’t intend for your accounting to get behind. After all, you aren’t an accountant. Maybe you even had someone helping you but they are long gone.

At first it wasn’t too bad, maybe one GST return was missed. Clients were paying and your suppliers were getting paid, so nothing that caused you worry.

Now fast forward to today and suddenly the books are way behind. You might be getting letters and phone calls from CRA. Maybe you aren’t getting letters and phone calls yet, but you know they will be coming soon.

Where to start?

  1. Set up your CRA online business account to see what has been filed and what is missing.
  2. Collect your business documents and receipts. Click HERE for a list of what you need
  3. Connect with a professional. Make sure who ever you work with is qualified. In Canada this would be a CPA (Chartered Professional Accountant) or a CPB (Certified Professional Bookkeeper).

How long does it take?

The next question on your mind might be how long will it take? Once CRA starts calling there is pressure to have things caught up quickly. A lot of that depends on you and how organized you are and how far behind things are. Getting all of your receipts together and organised BEFORE you connect with an accountant or bookkeeper will speed up the process. At my firm one year of bookkeeping and taxes can be completed in as little as 4 -6 weeks as long as we have all the information.

How much does it cost?

There are a lot of variables that affect the cost of your bookkeeping and taxes.

  • How many years you are behind
  • The state of completeness or organization of your documents
  • The volume of transactions
  • The number of bank and credit cards
  • Are items purchased with cash vs credit/debit cards or PayPal
  • Do you use industry software (BuilderTrend, MindBody etc)
  • Whether the information is provided electronically or via paper
  • Did someone else already do some of the accounting or is it a fresh start?

Can I go to jail?

This question does come up a lot. On occasion taxpayers do end up in jail. It just isn’t going to be the first conversation CRA has with you so be wary of any ‘CRA’ calls that suggest you are going to jail. Please check this link at the Canada Revenue Agency Website . CRA – Slam the scam.

 If you still aren’t sure, call your CPA or CPB if you get any suspicious calls from people claiming to be from CRA.

What information do I need to get started?

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What information do I need to get started?

This list is a starting point, your specific situation may differ.

Business bank and credit card statements.
  • Many banks and credit companies provide this information online and can go back as far as seven years
  • Copies of cheques (often these are on your bank statements)
  • Listing of e-transfers sent and received
Documents that support your business transactions
  • Invoices that you have sent out to clients
  • Documentation for purchases you have made. Receipts, bills from vendors.
  • Loans that you have in the business name
  • Agreements that you have made that result in a financial obligation.
  • Lease, rental agreements etc.

Business Registration and incorporation documents.

Most recently filed Annual return (this is not your tax return)
Incorporation documents
Including:

  • List of shareholders and directors
  • business articles
  • Share structure and ownership
  • shareholder agreements.
Business registration and incorporation documents will be available from your lawyer.  If you self-incorporated you likely do not have all of these documents.
Previously filed tax and information returns
  • If incorporated your last filed Corporate tax return (T2)
  • If self-employed your last filed personal tax return with the T2125
  • Statement of Business activities.
  • Copies of GST/HST/PST returns filed
  • Copies of T4 Summary and T4s filed if you have payroll
  • Copies of any T5018 (contractor payments) filed
  • Copies of any T5 Summary and T5s filed for shareholder (if incorporated)
  • Copies of any correspondence received from the Canada Revenue Agency
  • Copies of any correspondence received from your province (if you are
  • subject to PST).

Note that some of this information may be available online at CRA or your Province.

It may take a while to collect all of this information, but the best place to start is to connect with a professional who can provide more guidance on what information is required for your situation and what to do if some information is missing.

Why your accounting tech stack is important

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Accounting tech stach

Whats a tech stack? Why is it important?

Pre Accounting Apps

These apps can take a digital image, like a PDF or JPG file and translate it into a format that can be automatically posted into your accounting software. Three very common Pre-Accounting Apps are Hubdoc, Dext, and AutoEntry. While they all work in a slightly different manner they all have a common purpose which is to reduce and in some cases eliminate data entry.

Cloud Accounting Software

Cloud accounting software has dramatically changed how accounting is being completed. While it isn’t yet to the point where it is 100% automatic there are some real game changing features that cloud accounting brings that you just can’t match with desktop software.
– Bank feeds that instantly pull transactions from your bank account
– Rules that allow many transactions to be coded automatically
– Connections with other supporting software (‘apps’)
– Close to real time access to your financial information and reporting

Payment Apps

Payment apps now exist that automatically collect payments from your customers AND post the payment back to the accounting software. In Canada a couple that are very popular include Rotessa and Plooto. Plooto is also able to pay your vendors directly and you can approve payment on your smart phone.

Cashflow Apps

A big question for many business owners is where did my money go? By pulling directly from the accounting software the business owner is now able to analyse and plan based on very current information. Some apps in this category include DryRun, Float

Reporting and Dashboard Apps

These apps are for the business owner who is looking to grow and monitor business operations. Some of these tools are very sophisticated and can provide a wide variety of information. Many apps also have features that can permit what-if scenarios so the results of business decisions can be simulated. Some examples are Fathom, PowerBI, Spotlight.

So what does that mean for the business owner still working on the desktop? These functions still happen in the business they just take longer to complete. In general, this is because the process is either manual (cheques) or the lack of connections between the software tools require data to be rekeyed to another tool (Excel).

While it may seem to be a huge undertaking to move to the cloud and implement these technologies in your company it all starts with moving your accounting online.