Guest blogger Cory Lockhart shares his advice on keeping your accounting costs down. This post appears in our series of tools for WAHMs and mompreneurs.
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A good accountant or bookkeeper should be able to put money back into your pocket. You can help by working smart with them. Working efficiently with your accounting pro will do a lot to eliminate headaches and reduce your accounting or bookkeeping bill.
1. Get information to your accountant 6 weeks before it’s due
It typically takes your accountant 3-6 weeks to complete year-end tax preparation. In Canada, as a work-at-home mom (WAHM) your tax return must be filed by June 15 to avoid penalties. However, any income tax owing is due by April 30. Since it’s often difficult to guess how much tax to pay, it’s a good idea to make April 30 your personal deadline to file. I would mark March 1 on your calendar to have all information in to the accountant. (American businesses, see U.S.-targeted advice.)
Giving your accountant sufficient time to do the work will avoid penalties and interest on any overdue taxes owing. Plus, sufficient time will save on your accountants stress level — and let's be honest, you want your accountant in a good mood when the bill is prepared.
If you're a Wave Accounting customer, the next two points are for you. If you're not using Wave's free online accounting tools yet, you can skip to point 2c.
2a) Invite your accountant as a Guest Collaborator
You can give your accountant access to your Wave account. If you provide "view and edit" access, he or she will be able to get right in there and make changes if necessary. If you provide "view only" access, he or she will be able to see what's going on in the system without making changes. In other words, you're in control, and you can revoke access at any time.
You can also let your accountant know about the Wave Pro Network, where they can learn more about using Wave to support you.
2b) Download the necessary reports
If you're not inviting an accountant or bookkeeper as a collaborator, you can download the reports they'll need to file your taxes properly. Just click on the Reports link at the top of your Wave screen to get started. The reports you'll likely need are:
- Income Statement
- Balance Sheet
- Aged Receivables & Payables
- General Ledger
- Sales Tax (if applicable)
Set the date range for your fiscal year, and then either download a PDF or Excel file, or email a PDF directly to your accountant.
2c) (if you're not a Wave customer) Prepare a summary of Revenues & Expenses
It will save your accountant a lot time if all your revenues and expenses have already been added and totaled. In other words, you do the bookkeeping. A simple suggestion is to use Microsoft Excel. See the example below for how to set it up.
2d) (if you're not a Wave customer) Make sure it adds up
Always have totals at the bottom of your summaries so your accountant can easily reconcile your totals. If your accountant is not confident the numbers are correct he/she will spend extra time fixing errors and making sure they do reconcile, and that will cost you extra money. See the formulas used in the example below.
3. Double check: Don't miss any expenses!
Most good accountants know what expenses are typical for your type of business, and if they see something is missing they will go looking for it. For example, an Avon representative will likely have shipping costs. The time it takes your accountant to call you, receive the documents and make adjustments will all cost you more. See the list I've created (PDF), that shows typical expenses a WAHM can claim.
4. Be available and respond quickly if your accountant has questions
If documents are missing or questions arise your accountant should be in contact to resolve these issues. Your accountant is likely working on multiple files at one time, and it takes time to open, close and become re-familiarized with each file. If you are not available or take too long to respond to questions, your file might find itself back in the queue, taking even longer to get back into.
Being a mompreneur can be challenging at times. Especially when getting started, finding the cash is a common problem. Implementing one or all of these tips should save on your accountant’s bill.
—Cory Lockhart, B.Comm., C.G.A., has six years' experience in small business accounting and four years in public practice. He is a partner a Lockhart & Company and co-founder of bookkeeprly.com
Lockhart and Company Lockhart-CGA.ca
39, 275 Shawville Blvd. S.E. Calgary, AB T2Y 3H9
403-256-4880 Fax: 403-256-4188
Wave is free online accounting for small businesses. It's perfect for home-based businesses, freelancers and other small businesses.