Meeting Compliance Requirements for Your Small Business
As a small business owner making sure your financial records are being handled in accordance with federal and provincial laws is essential. Keeping your financial affairs in compliance can be a time consuming process. You need to not only keep track of the obvious sales and payroll tax obligations but ensure that all your books are always accurately maintained. At any point in time, a business should be able to provide accurate information about its accounts to regulating authorities such as the Canadian Revenue Agency (CRA).
To ensure compliance, it's necessary for small businesses to have processes in place for recording, tracking, verifying, and reporting the large volume of financial information generated by the business. This accurate recording and management of financial records also allows the business to protect itself from employee fraud.
Let's take a closer look at how compliance issues can affect your small business and how to best maintain overall accounting integrity for your business.
Accounting Standards
While there aren't specific accounting standards for small business, most businesses use the Canadian Standards Generally Accepted Accounting Practices (GAAP) for private enterprises to prepare their financial statements and other documents. Banks and finance companies often require companies they deal with to use GAAP standards in all their financial documents. If you haven't followed appropriate accounting standards you may lose credibility and will have trouble securing finance.
Tax Obligations
Timely and accurate employee and sales tax charges and payment is critical to businesses of any size but since late payment of withheld taxes can result in substantial financial penalties, small businesses are especially vulnerable to ensuring tax obligations are met on time.
As a small business owner you must have an accurate and timely way to account for payroll expenses, withhold and pay government taxes, and generate the proper reports required by law. Payroll can be a complex process governed by legal obligations and is prone to errors given the detailed elements involved. Administering payroll even for a small business can quickly become overwhelming and can lead to penalties if handled incorrectly. It's more than just payroll taxes - you need to accurately account for overtime, vacation pay, benefits and much more. And you must stay on top of updates and changes to any of these tax requirements.
Small businesses must charge and remit sales taxes in a timely manner. Service and sales revenue generated by your small business are likely subject to both federal and provincial sales taxes (GST or HST and PST or QST). You must understand when these taxes are applicable, track them accurately then file returns and remit payment on time or be subject to penalties.
Vulnerability to Employee Fraud
Research shows that small businesses are often more vulnerable to fraud than their larger counterparts because they have fewer employees. Companies with fewer employees tend to have less segregation of duties and fewer internal accounting and auditing controls. Closer relationships and trust occur between small business owners and their employees, making the business more susceptible to employee fraud.
So what is the Best Way to Keep your Small Business in Compliance?
You will find it much easier to use an accounting software solution like Sage 50 Accounting for accurately managing all your financial records in a compliant manner. The software does not require accounting know how to keep the financial integrity of your business intact and can easily meet all your Canadian small business needs.
So keep your financial affairs in order with Sage 50 Accounting and rest easy knowing you are always in compliance by:
- Easily tracking of all your business financial records
- Having access to an "always on" full-time audit trail to ensure accounting integrity
- Managing payroll tax obligations, including benefits, vacation and overtime
- Automatically tracking all sales tax information and easily remitting your GST/HST return online to reduce any chance for errors
- Following Generally Accepted Accounting Principles (GAAP) standards for your business
- Reducing fraud with role-based security settings
Let's take a closer look at each of these in more detail:
Proper Financial Record Management
Use Sage 50 Accounting to keep track of all your financial records - including sales transactions, revenue, expenses, invoices, taxes and much more - to keep you in compliance with accounting rules and regulations but without the need for any accounting know-how. To enhance product ease-of-use, Sage 50 Accounting uses non-accounting terminology for clearer understanding and keeps everything simple by hiding features you don't normally use.
Full Time Audit Trail
Take advantage of the built-in full time audit trail within Sage 50 Accounting. The audit trail is always on and tracks and records every single entry and transaction. Nothing can be deleted; you must fix entries with adjustments or corrections. Not only does this reduce instances of fraud but if your company is audited for any reason, you'll know your records are fully compliant, accurate and reliable.
Meeting Payroll Obligations
Reduce the risk of payroll tax penalties at year-end by accurately calculating your employees' earnings and deductions. Sage 50 Accounting Business Care Payroll offers all the tools you need to prepare payroll in-house. You can remain confident your calculations are accurate by receiving the latest federal and provincial payroll tax updates as soon as they are released. Payroll cheques with automatic tax calculations are also easily prepared along with T4, ROE or RL-1 forms. You can review payroll records prior to preparing T4's with a PIER-like report.
Electronically File CRA forms
Sage 50 Accounting not only automatically calculates applicable sales tax (GST/HST or PST/QST) on your invoices but accurately tracks the collection of these taxes and the allowable deductions so that you can accurately report and remit these monies on time. To further reduce any chance of error, you can use Sage 50 Accounting to file your GST/HST return online and not have to enter the data manually. You can easily calculate the net GST/HST owing, upload the return, record the amount owing or the refund, and reset the general ledger balances.
Sage 50 Accounting reports codes 85, 31, 33 and 71 on T4 or RL-1 slips before they are electronically uploaded. For some of these codes, Sage 50 Accounting also automatically includes a note on the payroll slips as required by the CRA.
For businesses in the construction industry, T-5018 forms can be filed electronically from Sage 50 Accounting.
Meeting Accounting Standards
Sage 50 Accounting meets the Canadian standards for GAAP private enterprises and also meets most International Financial Reporting Standards (IFRS) requirements (The standard for reporting of comprehensive income is the only exception). Sage is committed to ensuring Sage 50 Accounting complies with accounting standards at all times.
Preventing Employee Fraud
By deploying Sage 50 Accounting, small businesses can not only mitigate fraud risk through the full-time audit trail but also with the use of role-based security settings. Role-based security ensures that employees only have access to the areas of the business within their specified responsibility making it unlikely to cover up fraud schemes.
More about Sage 50 Accounting
A respected software tool that keeps your financial affairs in compliance with a full-time audit trail, automatic sales and payroll tax calculations and role-based security settings, Sage 50 Accounting is the right choice for your small business. This feature-packed and easy-to-use accounting software allows you to manage all your financial records, including cash flow, and invoicing and billing while keeping your costs in check and taking control of your inventory. Sage 50 Accounting allows you to do what you do best, run your business knowing you have access to a diverse line of accounting options as your business changes and grows.
With a valued reputation in the market, our offerings continue to make Sage 50 Accounting the #1 choice for accountants and small businesses in Canada1.
