5 common accounting mistakes SMEs make

After several years supporting entrepreneurs, here are the most frequent mistakes we encounter. They're pretty easy to avoid, once you know what to look for.

1. Mixing personal and business finances

Using the same bank account for personal and business expenses complicates bookkeeping and can cause problems during a tax audit. A separate business bank account is essential from day one.

2. Neglecting monthly bank reconciliation

Putting off reconciliation month after month leads to a build-up of errors that are hard to untangle by year-end. Systematic monthly reconciliation avoids unpleasant surprises.

3. Forgetting to keep supporting documents

The CRA requires financial documents to be kept for six years. A lost receipt can mean a non-deductible expense.

4. Underestimating source deduction obligations

As soon as you hire your first employee, income tax, CPP and EI deductions must be calculated and remitted on a precise schedule. Late remittances result in penalties.

5. Leaving tax preparation to the last minute

Bookkeeping that's kept up to date all year long makes tax preparation quick and stress-free, rather than a race against the clock in April.

Let's talk about your situation. A quick diagnostic of your books can reveal unexpected savings.