Bookkeeping for Aldergrove businesses

A chart of accounts that fits the business

The default chart of accounts in most accounting software is built for a business considerably larger than an Aldergrove sole-operator company, and using it unedited produces a hundred and fifty accounts of which nine are ever used. That is worse than untidy: it makes coding a guessing exercise, because seven plausible accounts exist for the same transaction and different ones get picked in different months. A short chart with accounts named after things this business actually buys is faster to code, easier to review and produces a profit and loss statement the owner can read without translation. Building a chart of accounts covers the sizing.

One account for the business, and only the business

The single change that improves a small set of books more than any software decision is a dedicated business bank account and card used for nothing else. When business and personal transactions share an account, every month begins with sorting rather than reconciling, and the sorting is done by somebody who was not there when the money moved. A separate account makes the bank feed close to a finished ledger. It also makes the record defensible, because the alternative, a personal account with business items picked out of it — invites the question of what else was in there. Opening a business bank account covers the practical steps.

E-transfers and cash are the weak points

Small businesses in a town like Aldergrove still take e-transfers and occasionally cash, and both arrive without any description attached. An e-transfer shows a name and an amount; it does not say which invoice it settled or whether it was a deposit on future work. Cash may not reach the bank at all. Neither is a problem if a sales record exists independently, an invoice or a sales log the deposits are matched against, and both are a serious problem if the bank feed is the only record of what was earned. Deciding how sales get recorded, before the money arrives, is the fix.

When sales tax registration becomes mandatory

Registration for GST is required once taxable revenue exceeds $30,000 in a single calendar quarter or over four consecutive calendar quarters. Below that a business may register voluntarily, which allows input tax credits to be claimed on purchases but also requires tax to be charged and returns to be filed. For a growing Aldergrove business the risk is passing the threshold without noticing, because the obligation is triggered by revenue rather than by a notice arriving. The bookkeeping job is to watch the rolling total rather than the calendar year. The GST registration guide covers what counts toward the threshold.

Two sales taxes once you are registered

British Columbia has not harmonised, so a registered Aldergrove business may deal with 5% GST and 7% PST as two separate taxes with two registrations and two filing cycles. They do not behave the same way. GST charged is collected on behalf of the CRA and GST paid on purchases is generally recovered as an input tax credit. PST, where it applies, is administered provincially, and PST paid on business inputs is generally a cost rather than something recoverable. Keeping them in separate accounts from the first transaction is far easier than separating them afterwards.

Being behind is common and it is finite

A large share of small businesses arrive one, two or three years behind, usually because the first year was busy and the second inherited the first year’s mess. It is a defined piece of work rather than an open-ended problem: the ledger is rebuilt from bank statements and whatever records exist, outstanding returns are prepared in the right order so interest stops compounding, and the file is brought to a point where a monthly rhythm can start. What determines difficulty is whether the underlying records still exist. Catch-up bookkeeping sets out how it works.

How the work is done

EverStone is a sole practitioner CPA firm at 32615 South Fraser Way in Abbotsford, a short drive east on Fraser Highway. There is no Aldergrove office and no local staff, and a small business needs one least of all: the bank feed arrives electronically, receipts are captured by phone, and the file lives in cloud software you hold your own login to. The person coding the transactions is the CPA who prepares the year end, so a small business gets one relationship instead of two. Monthly versus annual bookkeeping covers how often the work is worth doing.

Keeping the books accurately and knowing what they mean are different jobs, and it is worth being deliberate about where bookkeeping stops being the answer.