10 Steps To Start Your Small Business Bookkeeping Off Right

Starting a small business is an exciting endeavor! You’ve come up with a great idea and now you’re ready to get organized. Follow these 10 steps to success to get your small business bookkeeping started on the right track:

small business bookkeeping

  1. Register for a business name and numberOne Stop Business Registry

    • You will want to make sure that your business name is not already in use so that yours will be unique in the market.
    • You don’t need to see a lawyer to start a sole proprietorship business but you should if you plan to start an incorporated business. When you register your name online for a business account number, you can also register a GST or Payroll account at the same time, if necessary. (See Steps 4 & 10)
  2. Get a business bank account

    • Separate all your business banking from your personal banking. Do not use the business account to pay for your personal expenses and vice versa.
    • Try to avoid withdrawing cash from this account – if you need some money for personal use, write yourself a cheque from the business and call it a “shareholder draw” in the memo. If you need to add more funds to the business account, do an online transfer or write a cheque from your personal account and write “shareholder loan” in the memo.
    • Try to avoid using cash to pay for business expenses as this is harder to track.
  3. Determine if you need a business credit card or business loan

    • Speak with your banker about financing options with a low interest rate.
    • As above, only use your business credit card for business expenses.
  4. Find out if you should be charging GST

  5. Find out if you should be charging PST

  6. Create sales invoices

    • A sales invoice just needs to have the following info (as a minimum): Your business name, the customer’s name, date, invoice number (must be unique and should be sequential, ie. Inv#1001, Inv#1002), a short description of the product or service with pricing, and total.
    • If you are charging GST or PST on your invoice be sure to separate out these charges on the bottom before the final total.
    • A simple carbon copy invoice book from any office supply store will do fine in a pinch. For a more professional look, use computerized versions with your logo and invoices prepared from software and emailed directly to your clients.
  7. Use a bank deposit book

    • Resist the urge to make ATM deposits as this makes it difficult for you or your bookkeeper to match up deposits to sales invoices.
    • In your business deposit book, write the last name of the customer and cheque number beside the cheque amount.
    • An electronic option for this is to use a banking app to deposit individual cheques. Since there is only one cheque in the deposit total, it will be easier to match up to the correct customer invoice.
  8. Keep all business receipts

    • Keep all your business receipts in the same spot! A folder or a box would do fine. If you are doing your own bookkeeping, you may want to separate them into envelopes by expense category (e.g. gas, supplies, meals).
    • Yes, all of your expenses should be displayed on your bank or credit card statement, but this is not enough backup should your business face a CRA audit. Also, technically, you are not allowed to claim back the GST on expenses if you don’t have the physical receipts.
    • Alternatively, there are softwares that will replace the need to keep paper copies of receipts! Contact Coastal Tax for more info about electronic document storage as part of your bookkeeping.
  9. Track expenses

    • Hire a bookkeeper or learn to do it yourself. I recommend cloud-based accounting software such as QuickBooks Online. Contact Alicia for a quote on a monthly bookkeeping service package.
    • Another option is to track the expenses in an excel spreadsheet. You will need to include the date of purchase, vendor name, description of the item, and the amount.
    • If you are registered for GST, you will need to separate the GST amount from the expense total (i.e. your final total for “Supplies” should be the cost of supplies before GST). However, you do include any PST paid in the expense total. This is easier to do using bookkeeping software.
  10. Determine if you will be hiring employees

    • Understand that you are legally required to follow Employment Standards rules for payroll. You can learn to do the payroll yourself, but with complicated rules, it is much easier to have an experienced Payroll Administrator do this for you.
    • Learn about your responsibility for payroll source deductions. See my related post The Basics of Source Deductions.
    • You are also required to register for and pay WCB premiums.

Here is another great resource – a checklist to follow from Small Business BC which covers some non-financial steps as well! Small Business BC Starting Your Business Checklist

Until next time!

-Alicia Loewen, Coastal Tax


We’re Hiring: Bookkeeper!

Coastal Tax and Accounting Services is a young but quickly growing boutique accounting services company. We offer cloud-based bookkeeping that is entirely paperless and online as well as payroll, tax preparation, and other accounting services. We are looking for a fantastic person to join the team as a Bookkeeper 3-4 days per week, with the expectation of becoming full-time within less than 1 year.

The ideal candidate will possess:

  • An Accounting Diploma or Bookkeeping Certificate
  • 2-3 years of QuickBooks Online or full-cycle bookkeeping experience, including payroll
  • Excellent communication skills in emails and on the phone
  • Moderate technology skills – comfortable with apps, online software, and video conferencing


We are not a traditional accounting firm! This is a fun environment where you will be working one-on-one with the owner of the company who is passionate about helping business owners bring their accounting into the amazing new world of business apps. We absolutely love accounting and find joy and a sense of satisfaction from simplifying and de-mystifying accounting processes and information.

The clients we help are passionate small business owners who are wonderful to work with. We believe that making money should not come at the expense of mental health and have stood by this policy by turning down work from potential clients with a negative attitude. The person selected for the Bookkeeper position will add to the positive energy of the office by exuding a positive attitude and determination in their work.

Responsibilities of the position:

  • Post vendor bills and expense receipts from electronic records
  • Review banking feed and match documents to transactions
  • Prepare bank and credit card reconciliations
  • File GST/PST/WCB Remittances
  • Prepare Payroll, ROEs, and CRA Source Deductions Remittances
  • Communicate with clients about missing info and provide reports


*For Bonus Points* Someone with the following qualities will really knock our socks off!

  • Experience in Personal and/or Corporate Tax Preparation (wage negotiable)
  • Leadership Skills
  • Sales Ability

Please send a copy of your resume to info@coastaltax.ca with an email or cover letter describing why you would be a good fit for this position. We thank all applicants for their interest, however, only those selected for an interview will be contacted.


Tax Tips for Late Filers

We are currently still accepting new clients with slip-only returns for the April 30th deadline and small business owners for the June 15th deadline!

Have you been avoiding filing your taxes? You are not alone. It’s quite common to feel anxiety around filing taxes and attempt to avoid the issue all together. At Coastal Tax, we make having your taxes professionally filed as easy as possible! You don’t even have to leave the house!

Q: Are there penalties for filing late?

A: Yes, the CRA will charge you interest on any tax you owe as well as a late taxlatefilingfiling penalty if you have missed the deadline of April 30, 2018 or June 15, 2018 if you or your spouse is self-employed. Unfortunately, you cannot avoid this forever and eventually it will catch up with you. Waiting longer is only hurting your own wallet because the interest on tax owing is compounded daily.

If you have a balance owing for 2017, the CRA will charge compound daily interest starting May 1, 2018, on any unpaid amounts owing for 2017. In addition, the CRA will charge you interest on the late filing penalties starting the day after your return is due. The rate of interest is updated every three months and the current interest rate is 5%.

The late-filing penalty is 5% of your 2017 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months. If this is your second offence, the rate increases to 10%.

My advice is: Even if you cannot pay your balance owing by April 30, you can at least avoid the late-filing penalty by filing your return on time.

Q: I have not been able to deal with my taxes because of a death in the family/serious illness/extreme financial hardship. Will I really have to pay all the penalties and interest if I owe?

A: Under certain circumstances, interest on unpaid taxes may be waived or cancelled. See Taxpayer relief provisions for more info. You will need to apply using form RC4288 Request for Taxpayer Relief. Coastal Tax can help you fill in this form correctly.

Q: Yikes, well that all sounds depressing! Is there any situation where I DON’T have to file taxes?

If you have no taxable income, i.e. you did not work or earn income of any kind during the year, then you are not required to file a tax return. If you have been working but you have never received a letter from the CRA demanding that you file a T1 return, you may be thinking… Lucky me! I am totally slipping under the radar here.avoid tax

What is probably happening is that you would actually be owed tax refunds and the CRA hasn’t come after you because they owe you money. If you are getting a refund, there will be no penalties or interest because the percentage is only charged on tax owing. If you are behind on a few years, Coastal Tax can help you get caught up and make sure you are getting everything back that you are owed!

Q: My spouse was working, but I didn’t have any income this year so do I have to file? 

There are actually some good benefits in reporting your nil income! If you are receiving Canada Child Tax Benefits (CCTB) then BOTH spouses must file tax returns on time every year in order to keep receiving these payments. Also, did you know that the Child Tax Benefit is non-taxable income? You will not receive a slip for this like you did in 2016.

Another benefit is the GST credit. You do not have to apply for this credit, you are automatically registered for it based on your 2017 family income when you file your taxes. This represents up to $544 that you could be receiving!

Knowledge is power, friends!

-Alicia Loewen, Coastal Tax

19 Days Left to April 30th!

Happy Wednesday! We have limited capacity to take on new clients for the 2017 tax season so if you are needing help, send Alicia a message today at info@coastaltax.ca.

A reminder that if you or your spouse operates a sole proprietorship business, your deadline to file is June 15th, 2018.

P.S. Check out what our happy customers are saying in the 5-star reviews!




Tax Tips for Sole Proprietor Businesses

It’s now the 2017 personal tax season, the time of year when individuals and sole proprietor business owners gather together their tax slips and business income and expenses. Remember that the personal income tax deadline is April 30th, 2018 and the sole proprietor business income tax deadline is June 15th, 2018. The sole proprietor business income tax deadline is applicable to you if you have self-employed business or farming income (or your spouse does, even if you do not, and you are filing together). It is important to note, however, that all income tax payable is due by April 30th, 2018, so in practice, many business owners prefer to file their taxes before April 30 so they can find out how much they owe. Another option is to prepay an amount to income tax to avoid interest on the balance owing and then you can wait until after April 30th to file and still get it in on time before June 15th.

People often ask me, “What can I write off from my business income?” Here is a quick and easy guide to the basic deductions allowed for a sole proprietor business.

Closeup of young bearded  manager working with laptop and drink

Business Expenses to Earn Business Income

The basic rule is that expenses you can write off for your business should have been expenses necessary to earn business income, meaning that the expense is related to your business operations. This can mean something different for every business. For example, a private hockey coach could write off ice skates, whereas a wedding planner could not. The general sole proprietor business expense categories are as follows:

  • Purchases – Cost of Goods Sold
  • Advertising
  • Meals & Entertainment – Deductible at 50% of total for business meetings
  • Insurance – Business or Liability
  • Interest & Bank Charges
  • Business Fees, Licences, Dues
  • Office Expenses
  • Supplies
  • Legal & Accounting Fees
  • Management & Admin Fees
  • Rent – For office or workshop space
  • Maintenance & Repairs – To equipment or to rented space
  • Salaries & Wages – Includes Employer portion of CPP/EI paid and company-paid benefits premiums
  • Subcontractors
  • Travel – Ferries, Flights, Hotel, Meals while travelling for a business purpose e.g. conference
  • Telephone & Utilities
  • Equipment Diesel, Fuel, Oil
  • Delivery & Freight

You need to provide your accountant with annual totals at tax time. If you are not using a computerized accounting software, such as QuickBooks Online, I have an easy to use template spreadsheet for small business expenses! I can provide this free of charge to Coastal Tax clients.

Business Use of a Personal Vehicle

You can write off expenses for your vehicle if you are using it for business travel. Some examples of business travel would be to pick up supplies, go to a meeting or conference, or deliver items to your customers. You are meant to track your business mileage in a mileage logbook. If you hate recording trips in a paper notebook you can use a mileage tracking app like MileIQ (free for less than 40 trips per month). If you are using a paper notebook, you must also record your odometer total at December 31 every year to get a total of Km driven in the year, including personal mileage. Some of the auto expenses will be prorated by business use percentage based on the mileage calculation.

The Auto expense categories are as follows:

  • Fuel
  • Insurance
  • Maintenance
  • Parking Fees
  • Lease Payments or Auto Loan Interest

Image Source: https://www.mileiq.com/howitworks

Business Use of Home

You can write off a portion of your home expenses if you are using a home office or workshop/studio. You are meant to be using this space to be meeting with your customers for it to be deductible. The business use percentage is calculated by taking your home office square footage divided by the total square footage of your home.

The expense categories for Business Use of Home expenses are as follows:

  • Heat
  • Electricity – If your heat is electric put it in this category
  • Home Insurance
  • Maintenance – Including property maintenance
  • Mortgage Interest – Do not include the principal portion of your mortgage
  • Property Taxes
  • Rent – If you rent instead of own your home
  • Phone & Internet
  • Other Utilities – Water bills, garbage pickup
Capital Assets

Finally, any large equipment that you purchase for your business can be depreciated over time. On sole proprietor business tax returns we call this Capital Cost Allowance (CCA). Depreciation means the original cost of that item is expensed over time, instead of all in one year. Depreciable property can be items such as furniture, equipment, or vehicles to use in your business. Generally, any tools over $500 should be put on the CCA Schedule of your small business tax return. It is expected that these items will last for many years and so their total cost is spread out over time. Your accountant will need the purchase date, purchase price, and a description of the Capital Asset.


If you are interested in having your sole proprietor business taxes prepared by Coastal Tax, please send us a message through our Contact page. Check out the steps involved in our professional online and paperless tax preparation service! We make having your small business taxes filed as easy as possible without an in-person appointment required.

Now get out there and keep hustling!

-Alicia Loewen, Coastal Tax and Accounting Services