How to Avoid a Business Finance Headache (a Weekly Bookkeeping Checklist for Your Small Business)
December 14, 2020

Does This Sound Familiar?

You just started your small business, you're a couple of weeks in, and you're landing jobs left right and center.  That bag of crumpled up receipts you swore you'd organize are still sitting on the floor of your work truck waiting to be collected, but you're not even sure what to do with them.  

Are You Torn Between Learning About Your Business Finances and Hiring a Professional?

A recent study by CB Insights revealed 29% of start-ups fail due to running out of money.  

So how can you ensure that doesn't happen to you?  By making sure you either hire a professional or use our simple bookkeeping checklist to get you started!

What Is The Difference Between Bookkeeping and Accounting?

Accounting and bookkeeping will usually appear in similar contexts, but they play their respective roles in managing business finances.  

Bookkeeping is the first and longest step in the accounting process.  It's a task that requires attention on a daily, weekly, and monthly basis.  

Think of this as building a home, the foundation is poured and cured, and then the framing, plumbing, and electrical work are performed by other trades.  After the house is complete, an inspection occurs, and the home is appraised and sold.

In this analogy, the bookkeeper pours the foundation and builds the house up by organizing the business finances and following proper protocol.  The accountant then takes over as the inspector to review the home – the bookkeeping records, and provides advice on the situation.  If all is up to par, the house is ready to be sold – hello, tax season.

An incomplete house will not benefit from an inspection in the same way a business will not benefit from an accountant unless proper bookkeeping records are prepared (unless, of course, the accountant performs bookkeeping duties, which can and will happen).  

Bookkeepers track and record all business finances, so it's easy to see where your business stands at any given time.  

Accountants then review the information provided by bookkeepers, prepare financial statements, and provide tax and financial advice.

How Do Small Businesses Manage Finances?

Money and time are both limited in business and are critical to your success.  That's why creating an accurate bookkeeping system by recording and tracking all of the financial transactions of your business is a non-negotiable!  

A proper system will save time, money, and headaches all year round and especially when it comes to tax time.  Having a good bookkeeper can alleviate a ton of stress and can help answer many pain points that you may not discover on your own or have the time or willingness to navigate.

Before you get started, open a separate bank account for your business.  Tracking your business income and expenses is a lot easier when there's a clear distinction between your personal and business finances.

What Is the Best Software for Small Business Bookkeeping?

You will have to decide what kind of system will work best.  Whatever you choose, stick to it, and be consistent.  You may choose to create manual spreadsheets in Microsoft Excel or Google Sheets, or it might be in your budget to purchase bookkeeping software.

Bookkeeping software is recommended and makes it easier to record your data, but perhaps it's not in your budget, or maybe you're not tech-savvy – and that's perfectly fine!

If you decide to purchase bookkeeping software, base your decision on your budget and what you would like your software to do for you.  Some popular choices include:

  1. QuickBooks
  2. FreshBooks
  3. Wave
  4. Xero

Still not sure?  This article will help you decide how to choose the right bookkeeping software based on your needs and budget.

Once you've figured out how you will record your data, start to get your business in good financial health by following this simple Bookkeeping Checklist:

Now, let's break it down!  Of course, these elements will differ depending on your business type and will likely get more complicated as your business grows.

If you have employees on your payroll, you'll need to develop a system for that – if you haven't already.  You can also hire a bookkeeper to take care of your payroll.

Our checklist will give you a straightforward overview to get you started on the right track – we've based it on daily and weekly tasks for simplicity's sake, and we will cover monthly tasks in a future post.

1. Keep Income and Expense Records

It's a legal requirement as a business owner to record all of your transactions to support your business income and expenses.

In this day and age, you have access to your bank and credit card statements - this can be a huge time saver!  Keep in mind, you'll run into a problem when the transaction occurs using cash as there will no longer be a paper trail, so be sure to keep those receipts in a safe place.

Income Records

You will need to keep track of all of your business income, whether it be cash, property, or services.  Support your records with original documents, such as receipts, invoices, contracts, etc.

If you are manually creating spreadsheets, you can create something similar to this Sales Journal provided by the CRA.

Expense Records

You will incur expenses daily as you buy supplies and software, pay for vehicle expenses, etc.  It's essential to keep all receipts for your business expenses and record them regularly.  If you've chosen to use a manual system, record your expenses using an Expense Journal.

According to the CRA, all business receipts must show the following:

  1. Date of Purchase
  2. Contact details of the seller or supplier (name and address)
  3. Contact details of the buyer (name and address)
  4. Description of the goods or services
  5. GST/HST Business Number of the vendor (if they are registered)

If not all criteria are present, write the description of the purchased material on the receipt and enter it on your expense journal as usual.  

You will need to organize and record both the income and expense records regularly.  It's a good idea to stay on top of tracking these items so that it doesn't end up being a massive three-day project.  

It will also allow you to evaluate where you are spending too much on expenses so that you can make changes right away.

2. Review Current and Projected Cash Flow

Cash flow is another vital piece of business finances.  Check your account statements and balances daily.  Especially in the beginning, this will give you peace of mind knowing you have enough money to pay reoccurring bills.  

It's essential to know how much cash you have on hand now and what you plan to need in the future.  Knowing this will help you make responsible business decisions and take advantage of any opportunities that may arise.

To keep track of your cash flow manually, create a Cash Flow Statement.  Your spreadsheet will set out your current cash balance, your future cash receipts, as well as your expected cash payments.

3. Review Accounts Payable

Your business runs on having the tools and supplies to bring in revenue.  Expenses for your supplies become an accounts payable transaction.

Every business should create a folder for unpaid invoices.  Track outstanding invoices and take note of their billing dates, the amount of the invoice, as well as the payment due date.  

You should review these items regularly and either pay the invoice or schedule a time when you know you will have sufficient cash flow to pay it.  That's why it's essential to know exactly where your business stands at any given time.  

Knowing whether you can pay an invoice could save you money in the long run as some suppliers may offer a discount for early payment.  

4. Review Accounts Receivable

Come up with a system to invoice your customers and stick with it.  Choose whether you will invoice customers as soon as the job is complete, or perhaps you will choose to invoice at the end of every week—track your accounts receivable by recording invoices sent out.

If you're using a manual tracking system, develop a strategy to color code invoices that are paid or still outstanding and then set up a tool to remind you of the payment due date.

If you're using bookkeeping software, there will be a reminder system built-in for unpaid invoices, so it won't be something you will have to monitor as closely.

5. Review Tax Rules

You must review all tax rules applicable to your business from the very beginning.  Check out this list of resources to find a variety of information about small businesses, including how to sign up for your CRA Account.

Keep in mind, CRA states that you're a small supplier if you are a sole proprietorship and your revenue does not exceed $30,000.00 over four consecutive calendar quarters.  As a small supplier, you don't need to register for a GST/HST account with CRA.

As a small business, it's also imperative that you set aside money for tax time.  The easiest way to do this is to regularly review your revenue (weekly or monthly) and transfer money into a separate bank account.  

Base the transfer amount on a percentage (25%-30%) of your business income.  Doing this will alleviate stress when tax season rolls around, and you are required to pay a large sum of money to the CRA.

Seems Like a Lot of Information?  It's Only the Beginning!

Although the above Bookkeeping Checklist is an excellent start to your business, this is a tiny piece of an enormous business long project!  It's important to mention that this is a straightforward approach to getting started with the bookkeeping of your small business's finances.

At an absolute bare minimum, every bookkeeping system should keep track of your cash, record your income and expenses, track accounts receivable and accounts payable, project your business's growth, and save properly for income taxes.  

A professional bookkeeper is knowledgeable in many other aspects that would benefit your business as it grows and would provide services such as preparing formal financial reports.  

Eventually, you will need to fully understand how to create financial reports to understand your business's financial health. You will need to learn how to create, review, and interpret documents such as a Chart of Accounts, a Balance Sheet, and an Income Statement.


Do you feel that this checklist will help you get your business finances in order? Or has this article made you even more worried about what's to come?


Maybe it's time you hire help.  Schedule an initial consultation with us today, and we can discuss how our services will help you save time, money and avoid a business finance headache.

- DA Eugenie

Dayna Ann Eugenie is a freelance writer for hire who offers blogging/website content services.  She uses her knowledge and research skills to write educational content focused on digital marketing technology and also writes content in ANY niche with digital marketing aspects in mind.  When she’s not busy writing, you can find Dayna Ann sweating doing functional training exercises, on a road trip adventure, or eating delicious food.  Check out her writer website, find her on Twitter, or connect with her on LinkedIn to learn more about how she can help you with your writing needs!

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