Bookkeeping has come a long way from a big ledger book with handwritten entries. In order to succeed, businesses can benefit from much more thorough record-keeping these days and technology can play a big part in streamlining the process.
Jonathan Carter, CPA, CMA, and Principal Accountant of KATA Accounting Solutions Professional Corporation is a Quickbooks Elite ProAdvisor who has been recognized as one of the top 100 Quickbooks ProAdvisors in the world. He is largely considered a thought leader and technology expert in the field of small business accounting and bookkeeping. He answered a few of my questions about bookkeeping, technology, and avoiding costly mistakes.
Why is good bookkeeping so important?
“In the world of accounting and bookkeeping, without a set of records, you have nothing to show for all of your hard work – it’s as though nothing happened. Bookkeeping, in a nutshell, is the creation and maintenance of your business records. You need them for all kinds of things that help you and your business succeed, like business loans and tax benefits. CRA will ask to see these records from time to time as you conduct business, and if they find them to be deficient, they are likely to look deeper into your business. Poor record-keeping can escalate a simple CRA review to an audit quite quickly.”
How can bookkeeping software help a business?
“Selecting proven technologies is vital. Machine learning, automated connections, app integrations, optical character recognition and many other tools out there can save a lot more money than they cost. They can also add a lot of flexibility in how your team reports financial data, make reporting easier and save significant amounts of time, often through the use of smartphones and tablets.
“The hardest part of using cloud-bookkeeping and accounting tools is to change habits. It is very important to work with a company that is plugged into the accounting and bookkeeping app world as app companies will often sell solutions that they can't necessarily satisfy. Currently, there are over 10,000 apps in the realm of bookkeeping and accounting.”
What is most important when it comes to bookkeeping?
“Seek professional help, whether that's a bookkeeping business or an employee. It's important that you get good help. We've seen many, many times where people have taken the cheapest option they could find and have ended up paying a lot more than they needed to down the road, either in taxes or bookkeeping fees, to untangle the mess the ‘cheap’ option created.”
How can businesses avoid bookkeeping disasters?
“First, teach your team basic tech-security, things like not reusing passwords, not leaving devices on, and not using public Wi-Fi networks for work. The human element is the biggest security risk. In today's environment, there is no reason for a bookkeeper to have direct access to your bank accounts, so financial control is easy to implement.
Second, hire qualified help and, although it is acceptable to delegate responsibility for the bookkeeping function, it's vital not to abdicate responsibility. The best people still need the right data to do their job well.
Finally, keep your bookkeeper accountable. Make sure things are filed on time and that payments are collected or disbursed when you need them to be. If this isn't happening, you need to find out why. You also need to be accountable to providing the information the bookkeeper needs on time and in good order.”
What should people look for in a bookkeeper?
“Specialization is increasing regularly in the realm of bookkeeping and accounting and it's best if you can find a person or company with direct industry experience. At KATA Accounting Solutions Professional Corporation, we do not accept every customer who walks in the door. We specialize in serving consultants, coaches, and creatives in the online space. Remember - a Jack or Jill of all trades is a master of none.”
Kata Accounting Solutions Professional Corporation is a virtual accounting firm in Canada that provides personal and business accounting services including bookkeeping services, tax preparation, and filing using innovative cloud-based technology. For more information about how Jonathan and his team can help to streamline your bookkeeping system, give them a call at 1-800-491-4801 or visit them on their website, Facebook, Twitter, Instagram, or LinkedIn.