Bookkeeping

For most active businesses, monthly reconciliation is the standard. It catches data-entry errors, missing transactions, and reconciliation issues while they're still fresh, lets you make informed decisions on accurate numbers (cash flow, payroll, tax instalments), and avoids the painful year-end scramble. Very small businesses with minimal transactions might get by with quarterly reconciliation, but going longer than that means problems compound and GST/HST returns become guesses. Year-end-only bookkeeping almost always costs more in cleanup fees than the perceived savings, and produces financial statements that can't drive in-year decisions.

Cash basis records revenue when payment is received and expenses when payment is made. Simple, but doesn't match revenue with the period it was earned. Accrual basis records revenue when it's earned (invoice issued) and expenses when incurred (regardless of when paid), giving a more accurate picture of profitability. The CRA generally requires accrual accounting for most businesses, including all corporations and most self-employed individuals other than farmers and fishers (who can elect cash basis). Even if your bookkeeping is maintained on cash basis day-to-day, your tax return must be presented on accrual basis with year-end adjustments.

Outsourcing typically makes sense when (a) your time is worth more than an outsourced bookkeeper's hourly rate spent on data entry, (b) you don't have the volume to justify a full-time in-house employee but have too much for the owner to handle, (c) you want segregation of duties for fraud prevention but lack the staff size, or (d) you need specialized knowledge (HST/GST nuances, multi-province payroll, trust accounting, multi-currency) that a generalist hire can't easily cover. The break-even is typically around 100-300 monthly transactions for businesses with straightforward operations. Hybrid models (outsourced bookkeeping with an in-house controller) are common as businesses grow past $5-10M in revenue.

Audit-ready books come from a few habits: regular account reconciliations, keeping backup documentation for every transaction, and seeking professional advice before significant or unusual transactions. Building these into your monthly routine means that if CRA requests records, the documentation is already in place; no scramble required.