OK, now there are 2 ways to organize your documents. 1st - if your company has an employee who comes in each day and does all your bookkeeping needs, and another is if you drop off documents to an outside bookkeeping office and they will do the monthly or quarterly bookkeeping for you.
Lets look at the first scenario – if you have hired a full time or part time staff member to look after all your bookkeeping needs, that person will have file folders with each supplier name and file folders with each customer name and as supplier invoices are received and paid, they get filed in their designated folder and as each customer invoice is prepared it will be filed in their designated customer folder and once paid, the customer cheque stub or E-trf document or credit card receipt, whatever the method of customer payment may be, is attached to the customer invoice as proof of payment for that invoice.
All these documents will remain there for the whole fiscal year of the company and moved to an archive place and new folders set up for the new fiscal year.
2nd way is - If you have hired, on contract basis, an outside bookkeeper, your papers will be sorted differently. The folders will be labeled with method of payment instead of supplier and customer names as in the 1st scenario. EX: a folder labeled bank account, another MasterCard, another Visa and another Customer Invoices and another Cash. All the supplier invoices and store receipts will be filed according to the method of payment. If you paid something by visa, file it in the visa folder and if you paid a supplier by cheque, file it in the bank folder and so on.
Once you receive the statements, in the mail or print online, for your bank and credit cards, match all the receipts and invoices to each statement. File all the customer deposits, weather it be a cheque stub or E-trf or credit card, in the Bank Account folder and match them with the sales invoices.
If you practice this method your bookkeeper will love you for it and it will take less time for them to post entries and reconcile the statements which means more savings for you.
Organizing your business documents for your bookkeeper:
The easiest way to keep documents is to create folders and label them with method of payment. EX: a folder called Cash, a folder called visa 3456 (last 4 digits of the card) just in case you have more than one visa, a folder called master card 4678 (last 4 digits of the card) Just in case you have more than one MC, a folder called Bank Business account 2675 (last 4 digits of the account number, a folder called, Line of Credit 5849 (last 4 digits of the LOC number) and so on. These folders are business related only. No personal items should be charged on these cards. When a purchase is made the receipt or invoice will be put into the appropriate folder. and when a customer deposit is made the invoice and deposit slip will be put into the business bank account folder.
on a monthly basis print each bank and credit card statements and match all the receipts and invoices to each statement. for any deposits into the business bank account, match all sales invoices and how they were paid to the bank account statement.
Now there might be some un-matchable items, the automatic debits from the business bank account, such as, bank charges and credit card interest, loan payments and car payments and insurance payments etc.
have a separate folder for Business insurance, Car Insurance, Loan Documents, government related folders such as Source Deductions for payroll, WCB and Corporate Tax and GST/HST folders. Keep each one in its own folder do not mix Payroll documents with GST even though they are both CRA and government related.
I hope this will get you started. keep in mind CRA does not like personal and business transactions be mixed together, so designate a separate credit card and a bank account for your business.
Your bookkeeper will love you for it.
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