Bookkeeping for Mission businesses

The asset register is a ledger, not a list

Most small businesses that own equipment keep something described as an asset list, and it is usually a spreadsheet last updated when something was bought. A register that works records each machine with its acquisition date, cost, the invoice behind it, any additions capitalised later, and what happened when it left — sold, traded, scrapped, and for what. Without that, the depreciation schedule on the corporate return is reconstructed annually from memory and bank statements, and disposals get missed entirely. Missed disposals are the expensive kind: a machine that leaves without an entry keeps generating deductions it is no longer entitled to.

Deciding what gets capitalised

The line between a repair and an improvement is a judgement made every month in an equipment business, and it needs a consistent policy rather than a case-by-case guess. Restoring a machine to its previous condition is generally a current expense; materially improving it or extending its useful life is generally capital. A rebuilt engine, a new attachment, a hydraulic upgrade — each has to be decided and the reasoning recorded, because the same invoice can be defensible either way and only one treatment can be applied. A sensible dollar threshold below which everything is expensed removes most of the argument and keeps the register from filling with drill bits.

Loan payments are two entries, not one

Financed equipment produces a fixed monthly payment that is not an expense. Part of it repays principal and reduces the liability; only the interest portion is a cost. Posting the whole payment to an expense account overstates costs, leaves the loan balance frozen at its original figure, and makes the balance sheet meaningless. The split changes every month as the loan amortises, so it has to come from the lender’s schedule rather than an assumption. For a Mission operator carrying several machines on finance, this is the correction most often needed when a set of books arrives.

Cost by machine, not just by category

Fuel, repairs, tires, permits and operator time are usually coded to one expense account each, which tells you what the fleet cost in total and nothing about which machine is losing money. Tracking cost against individual units — through classes, sub-accounts or job tags — turns the ledger into something that answers a real question: whether the old excavator is worth another season. It also makes the annual repair figure explicable rather than a single large number. This does not require different software, only a coding structure decided before the transactions start rather than after.

Work in progress across a month end

Equipment-based work is rarely invoiced the day it is finished. Hours worked and materials consumed before the month closes but invoiced after it produce a period that shows costs with no matching revenue, followed by one that shows the reverse. Over a year it evens out; month to month it makes the numbers unusable for any decision. Recording unbilled work at the close — and reversing it when the invoice goes out — is what makes a monthly profit figure worth reading. Cash versus accrual accounting covers why the timing matters.

PST on the machines themselves

British Columbia charges 7% PST alongside the 5% GST, and for an equipment business the important consequence is on the purchasing side. PST paid on a machine bought for use in the business is generally not recoverable, so it forms part of the cost of the asset and is depreciated with it rather than sitting in a receivable waiting to come back. Booking it as recoverable tax overstates what will be refunded and understates the asset. The two taxes are separate registrations with separate returns, and the ledger has to keep them apart to file either one accurately.

Working with a Mission operator remotely

EverStone is a sole practitioner CPA firm working from a single office at 32615 South Fraser Way in Abbotsford, across the river. There is no Mission office and no local staff. Equipment invoices, lender schedules and disposal records arrive by secure upload or phone photo from the yard, and the register is maintained against those documents rather than reconstructed later. The person keeping the register is the CPA who will prepare the depreciation schedule on the corporate return, so the two never disagree. Monthly versus annual bookkeeping covers how often the work is worth doing.