Income Tracking: The Other Half of the Equation

Now that we’ve covered expenses from every angle, it’s time to turn our attention to the other side of the coin: income. After all, your expenses only matter when viewed alongside what’s coming in. Together, these two sides tell the real story of your business finances.

Why Income Tracking Matters

Accurate income tracking does more than tell you how much you’ve made — it’s the foundation for:

• Knowing your profit. Revenue minus expenses = your actual bottom line.
• Staying tax-compliant. The CRA expects you to report all income, even cash payments.
• Spotting growth trends. Are sales improving? Is one service or product outperforming the rest?
• Making informed decisions. Should you raise prices, invest in equipment, or launch a new offering? The numbers tell you.

The Income System That Works

Just like with expenses, you need a repeatable, organized approach. Here’s a simple system Canadian small business owners can follow:

1. Record all sales
   • Use invoicing software or POS systems when possible.
   • Don’t forget cash or e-transfers — they must be recorded too.
2. Categorize properly
   • Separate income streams (e.g., “Service Revenue” vs. “Product Sales”).
   • Keep consistency so reports are clear and useful.
3. Track GST/HST collected
   • If you’re registered, make sure sales tax is separated from revenue.
   • Set aside those funds — they’re not yours to spend.
4. Reconcile with deposits
   • Match invoices and sales with actual bank deposits.
   • Watch for payment processor fees (Stripe, PayPal, Square) and record them correctly.
5. Review monthly
   • Compare actual income to your goals.
   • Spot irregularities, like missing deposits or undercharged invoices.

Common Pitfalls to Avoid

• Forgetting small payments. Every e-transfer, cheque, or cash job needs to be logged.
• Mixing gross and net amounts. Always record the gross revenue before fees.
• Ignoring sales tax. It’s easy to blur the line between what you earned and what you collected for the government.

When to Call in Help

If reconciling payments, invoices, and deposits feels like a juggling act, it may be time to bring in a bookkeeper. They’ll ensure:

• Every dollar is recorded correctly.
• Fees and taxes are separated.
• Your books line up with your bank.

Final Thoughts

Think of income tracking as building the “front half” of your financial story. When combined with your expense tracking, you’ll have a complete, accurate picture of your business performance.

The clearer your income records, the easier it is to:

• Plan for taxes
• Forecast growth
• Make decisions with confidence

With expenses and income both under control, you’ll be operating from a place of clarity — not guesswork. That’s the true power of good bookkeeping.

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