Managing your Personal Finances
One of the differences in having a good set of books vs. a poor set of books is communication. Do you have a system so you can communicate what matters to your Bookkeeper and/ or Accountant?
When I hear from small business owners complaining about their previous Bookkeeper, I have some doubts about what they are saying. It is true that sometimes you may come across a professional who has no clue what is they are doing; however, at the end of the day it is the business owners responsibility to communicate any changes and provide any relevant documents on a timely manner.
Make sure you have a system to track your unusual expenses so you won’t be surprised if you are audited.
I have a client who provides House Cleaning Services. If I see a receipt for a new sink on her file, I will question it. Why? Her company is offering services in house cleaning maintenance not replacing furniture and equipment.
Because my client has a system, I did not even have to ask why she purchased the sink. She had everything in writing. She damaged the sink of a client and had to replace it.
It all comes down to communication. You can set yourself apart by having a simple system to collect the important information so you know what to communicate to your Bookkeeper.
My biggest tip for you is to document everything. Make sure you have proof of payment, proof of purchase, in this case, a picture with the damaged item and a picture with the new one. Make sure you have everything in writing. How about communicating with your client by email about any issues? Keep those emails in an email folder.
If there is an audit and the auditor has a hard time accepting the expense, you have proof of communication and a paper trail in place to avoid a legit expense being disallowed.
Auditors are people like us. They have different personality types; they have good days and bad ones. Make sure you have enough proof to avoid unpleasant surprises.
Just follow these simple tips and have peace of mind:
1) Keep proof of purchase – receipt, invoice, etc.
2) Keep proof of payment – credit card, cash, debit card, e-transfer, etc. I highly recommend avoiding cash transactions because you may be challenged by the auditors.
3) Have everything is writing – communicate about issues by email and keep it in a specific email folder.
4) Have images (if applicable) – in case of damaged items, have a before and after picture.
5) Open communication – always communicate any changes to your Bookkeeper no matter how simple it may sound.
6) Timely responses – take action and provide any information requested on a timely manner.
“Reduce risks, pay on time, be efficient and save money and time” Renata Magalhaes
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