One: Bookkeeping

Bookkeeping can be defined simply as keeping daily records of business financial transactions. These records include a daily cash sheet, accounts receivable and accounts payable ledgers, and a synoptic (combined) ledger. "Synoptic" is derived from the Greek word meaning to "see everything at once". A synoptic ledger is sometimes referred to as a combined journal, a combined ledger, or a general ledger. Each of these ledgers will be discussed in some detail later in this chapter.

Though few people actually look forward to posting entries in the various ledgers, if your day-to-day bookkeeping is put off or ignored, it could become unmanaged, ledgerable and inaccurate. If you don't have the time, the inclination, or the aptitude to do it yourself, discuss the problem with your accountant and find an affordable and satisfactory solution.

It is important that you make a habit of bookkeeping every day, perhaps every morning with your coffee. It only takes a few minutes, and it will help you to make better informed business decisions.

Bookkeeping records are kept for three main reasons:

1. To keep track of your business' money, particularly if you are in a business where a significant amount of cash is involved on a day-to-day basis.
2. To keep track of your business' daily, weekly, and monthly financial performance, as necessary, and to assess whether this performance is meeting your expectations, projections, and goals.
3. To provide your accountant, if you plan to use one, with the necessary information to quickly and accurately prepare your income tax returns and to produce financial statements as required under Canadian tax law. The Income Tax Act states that you must file a balance sheet and an income statement each taxation year. For more information on financial statements, refer to ED&T's Financial Planning for Small Business.

Hiring an Accountant
Your Accounts Receivable Ledger
Petty Cash
Balancing Your Books
Your Daily Cash Sheet
Your Accounts Payable Ledger
GST Records