Record keeping for businesses (and individuals) is critical. It is required by law, and also required to prove your income and expenses to the government should you get audited. It’s also essential for your own business to see how it’s doing—what’s going well, what needs work, are you on track to meet your monthly, quarterly, annual goals—all valuable information.
Per canada.ca, “You are required by law to keep records of all your transactions to be able to support your income and expense claims. A record is defined to include an account, an agreement, a book, a chart or table, a diagram, a form, an image, an invoice, a letter, a map, a memorandum, a plan, a return, a statement, a telegram, a voucher, and any other proof containing information, whether in writing or in any other form.”
Count All The Ways You Can Lose Records
Records can be lost in fires, in floods, due to natural disasters, human error, theft, oversight, or just plain lost—I know I filed that, but I can’t find the file! It doesn’t matter what the reason is—if you can’t prove it, it didn’t happen as far as the Canada Revenue Agency (CRA) is concerned. You want to keep your records for your own information, too—trying to run a business without proper record keeping is flying blind.
This video is a good look at overall financial record keeping.
Digital Or Paper Records?
Most of us are still keeping paper records (yes, me too)—my paper files are in danger from many sources, and I can (and should) reduce the danger for them. A fireproof safe for the most critical records is not the worst idea; keeping records off-site in a storage facility that is about as climate controlled as you can get is another safety plan.
The thing with paper records is there is only one copy of them (if you make more copies, you must also keep and track all these records, too, so think about it before you make copies), and if lost, they are lost forever. Digitizing paper records is a good way to allow you to make more backup copies of records that you can store in multiple sites for redundancy of safe keeping.
Better than turning paper records into digital records is making digital records in the first place. There are many ways to create digital records now—as business owners (and individuals), all we have to do is embrace them.
Shaw & Associates would love to work with your business and get all your record-keeping straightened out and flying right.
Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.