Small Business Bookkeeping 2025 Guide

With proper bookkeeping, you can determine the types of taxes and calculate the amount payable in advance. FreshBooks’ online bookkeeping services help you protect your profits, save you time, and grow your business. In collaboration with Bench (more on them later), we offer expert virtual bookkeeping systems and tax services support.

• Primarily, you need to have an accurate picture of all the financial ins and outs of your business.
• A consolidated financial statement brings together all the financial statements of a parent and its subsidiaries into a single financial statement.
• A company should organize and track when and where cash goes at all times.
• Due to its accuracy and reliability, double-entry bookkeeping is widely preferred by businesses seeking thorough financial management and long-term growth.
• In summary, bookkeeping delivers organized financial data, while accounting turns that data into meaningful insights that guide business growth and decision-making.

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But once your business is big enough that you can’t (or simply don’t want to) wrangle finances by yourself, it’s probably time to get a bookkeeper or CPA on your payroll. The best results happen when a business implements a bookkeeping strategy over a period of time or builds a long-term working relationship with a qualified bookkeeper. Waiting until crunch time to prepare documents and fix bookkeeping errors can be too late if the records are kept with many mistakes. If you have mistakes to fix or transactions to track down, don’t stress. Most of the time, a qualified professional can correct or document these errors. This is particularly true once the business accounts for its operational costs and recurring expenses.

In this case, the current value may be different on the day it’s translated than on the date when the assets were originally purchased. Although this difference is only a paper gain or loss, it nonetheless affects the valuation of the firm. Popular accounting software like FreshBooks offers all the basic features you need for any business’ bookkeeping. You can check for small business packages that use simple templates for all financial documents. When you implement a proper bookkeeping system, you can get up-to-date, accurate records, avoid missing transactions, and have better control over your business savings account. Before you can start your business, you need to register with the CRA.

Adjusted Trial Balance

Keep records of your business transactions for 6 years if you don’t report income and if the income represents over 25% of your return gross income. Luckily, with simple bookkeeping tips in this article, you can streamline the whole process in a matter of days. As long as you automate tasks and pick the right bookkeeping system for your specific needs, you’ll have an easy time implementing all the advice above. You should consider electronic invoicing to make the process easier and faster. Sending an invoice within 48 hours is a great account receivable practice to boost collection.

Benefits of hiring a bookkeeper

You may think that combining your personal and business expenses is a good idea. However, merging your business and personal bank accounts is most likely going to cause you headaches sooner rather than later. GST/HST, payroll taxes, and corporate income taxes are common obligations for Canadian small business owners. Many small business owners confuse bookkeeping and accounting, thinking they’re the same thing. However, while these two roles complement each other, they serve distinct functions. Although bookkeeping isn’t legally required for every business, adopting a reliable system—especially the double-entry method—is highly recommended for startups aiming to grow.

Our accounting tips can get you started on your way to assessing your finances. If you’re looking for a way to make this essential process more efficient and manageable, FreshBooks and Bench can help! FreshBooks can automate several time-consuming business tasks, from invoicing to expense tracking, all while automatically creating detailed, insightful financial reports. Bench, meanwhile, supports your business with expert bookkeeping services, helping you manage your finances accurately and efficiently, leaving you with more time to run the business itself. Using the data you gain from keeping a ledger, your next step will be to generate and prepare financial reports for analysis.

Pay your team

Bookkeeping involves the day-to-day administrative tasks of recording sales and financial transactions. You need to keep track of every sale and purchase you make, along with payroll records business bookkeeping and tax returns, since you’ll use the information from these documents for the next steps of the bookkeeping process. Psst—to stay organized and make recording easier, remember to keep your personal finances and your business finances separate. From payroll taxes to managing invoices, efficient bookkeeping smooths out the process of all your business’s financial tasks and keeps you from wasting time tracking down every dollar. Our income statement template (pictured below) will help you understand how the financial data on this report is used for small businesses. Maintaining bookkeeping tasks is essential for the stability and success of small businesses.

Remember Your Tax Deadlines

Profits are earnings or cash in, and loss refers to anything the company has to pay for or money out—record profits and losses on a profit-and-loss statement or income statement. Cash flow refers to the total amount of cash that comes in (revenue) and out (expenses) of a company. The company can use this financial data for budgeting, forecasting, and making financial decisions. Cash flow statements include internal and external cash inflows and outflows over a certain period, which may include investments, financing, and operational costs. The cash-based accounting method is the simplest method, and makes it easier to track your cash flow in real time. You record transactions when the money actually enters or leaves your business, even if they were earned or billed earlier.

Bookkeeping consists of creating and maintaining an organization’s financial records. It involves consistently recording a company’s financial transactions, as well as the archiving and secure storage of financial documentation. When bookkeeping is handled properly, the information is accurate, well organized and helpful. This way, business owners or shareholders can make key financial decisions involving the company.