You wouldn’t throw money in the trash bin; would you?
I’m sure you would never literally do such a thing but unfortunately there are too many business owners that we come across that do in fact waste and lose money simply because of poor record keeping. If we’re not organized when it comes to retaining receipts and invoices, then we should expect the outcomes of bad record keeping. For example, if we don’t record a supplier invoice, an expense receipt, or a kilometre of mileage, then this is a loss of expenses that could have been deducted from income for tax purposes. For business owners who need to file and remit GST; and where these unrecorded expenses include GST, the negative outcomes also include losing out on GST Input Tax Credits (ITC’s). If a business owner sounds like they are someone who is disorganized, careless when it comes to holding onto expense receipts, or not prioritizing record keeping, then figuratively, they are throwing money in the trash bin so this should stress the importance of maintaining good records and ensuring all expenses are retrieved and recorded.
Unfortunately, no. When CRA conducts their audits, income and expenses can only be substantiated and considered valid with supporting documentation such as invoices and receipts. Bank and credit card transactions do not explain the nature of the expense, what is the expense for or what items are sold, how much sales tax was incurred, and if the expense comes from a valid supplier with a CRA 9-digit Business Number. All of this information can generally be found on invoices and receipts which is suitable enough to substantiate expense claims and GST ITC’s.
At RH&A, we focus hard on streamlining workflows and to make them as easy as possible so clients can devote themselves to what they do best in their business. As such, we use an integrated cloud-based solution that has never made record keeping easier than ever. With Xero and Hubdoc, invoices and receipts can be retrieved and stored using the Auto-fetch function; the traditional desktop dropbox; forwarding documents to a unique email address; or even by simply snapping a photo and uploading it directly to the cloud-based storage system. All these functions allow for the best and up to date techniques for good record keeping; and ultimately, save more money in your pocket.
For further insight on how RH&A can help make record keeping and bookkeeping easy for you and your business, and ultimately to feel secure if CRA were to ever conduct an audit on your records, feel free to reach out to us.