Setting Up Your System

Before you can keep good books, you need a system. That doesn’t mean complicated software or expensive accountants right away — it just means creating a simple, organized structure for tracking every dollar. A good setup saves hours of frustration later and prevents costly mistakes.

Choosing Your Tools

You’ve got two main options:

• Spreadsheets
  Great for brand-new or very small businesses with a handful of transactions. Free and flexible, but easy to break and harder to scale.
• Bookkeeping Software
  Tools like QuickBooks Online, Xero, or Wave automate a lot of the work: bank feeds, receipt uploads, and instant reporting. They cost a monthly fee, but the time saved (and errors avoided) is often worth it.

👉 Rule of thumb: if you’re handling more than 20–30 transactions a month, software pays for itself.

Separate Business and Personal Finances

One of the biggest mistakes small business owners make is mixing personal and business spending. Not only does it make bookkeeping a nightmare, but it also creates problems if you’re ever audited.

Action step:

• Open a dedicated business bank account.
• Use a separate credit card for business purchases.
• Keep personal and business expenses apart from day one.

Create a Chart of Accounts

Your chart of accounts is the backbone of your bookkeeping system. It’s the list of categories you use to track money in and out. Typical categories include:

• Income: Sales, service revenue, product revenue.
• Expenses: Office supplies, advertising, travel, wages, professional fees.
• Assets: Equipment, vehicles, inventory, accounts receivable.
• Liabilities: Loans, credit cards, accounts payable.
• Equity: Owner contributions, owner’s draw, retained earnings.

Keep it simple — too many categories create clutter. Start with broad groups, then add detail as your business grows.

Set Up a Recordkeeping System

Bookkeeping isn’t just numbers — it’s also documentation. The CRA requires you to keep records for at least 6 years. That includes:

• Invoices and sales receipts
• Supplier invoices and bills
• Bank and credit card statements
• Payroll records
• Contracts and loan agreements

Use cloud storage, bookkeeping apps, or even labeled folders — just make sure everything is organized and accessible.

Build the Habit Early

The best bookkeeping system is the one you’ll actually use. Whether that means updating records weekly, setting aside 30 minutes every Friday, or hiring help, consistency is what keeps the system working.

The Bottom Line: A clear system — with the right tools, separate accounts, organized categories, and consistent habits — is the first step to bookkeeping that actually works.

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