This new (OK, relatively new) strain of “Cloud” software brings full-blown automation and data entry to heights unheard of just a few short years ago.
As an entrepreneur, all you need to do is connect your bank and credit card accounts to the cloud solution of your choice, and then sit back as the app imports and categorizes your banking transactions all by itself. It’s like having a built-in bookkeeper, and it’s all pretty cool.
Yeah, sure, you’ll want to check the entries; pay particular attention that the transactions are going where they’re supposed to go (travel goes to the travel account. Rent to the rent account. And so on and so on). But these apps are pretty smart. Cause, as time goes by, they’ll begin to learn what goes where.
Which all means that the bane of so many small business owners–that dreadful task known as bookkeeping–can now be crossed of your To-Do list.
Or can it?
Listen up now, cause there’s something that all small biz owners need to know. And that is that every entrepreneur has a “silent partner.” Here, in Canada, that silent partner is called The Canada Revenue Agency (CRA, to those in the know).
And as a silent partner, CRA has taken a not-so-silent interest in all of them there new-fangled, automated, cloud software apps. Their interest, to be clear, is not so much with the software itself, but rather, with something else. Something I’ll call Burden of Proof.
Here’s how it works…
Let’s say you travelled to Vancouver. You went to a conference. And because conferences are never cheap, you racked up a host of travel-related expenses. Let’s see, there were taxis to and from airports. There was at least one hotel. There were restaurants, and there was schmoozing and networking and all of those other marketing-related expenses. And that’s just to name a few.
But you’re using cloud software so it’s all covered, right? I mean, when the software “reads” your credit card statement it’ll just import all of those transactions and plop everything into the appropriate expense categories, right?
Actually, yeah. Yeah, it will.
However there’s one little thing you might be overlooking. And that little detail is actually not so little to your silent partner. Because what CRA is really keen on, is knowing, not one, but two things.
The first thing is, do you have receipts for all that travelling and networking and schmoozing? And the second thing is, where are they–the receipts?
Bottom line is that, to stay on CRA’s good side, the answer to that first question really needs to be “Yes!” As for the second question, they’re looking for an answer that goes something like, “Oh I’ve got all the original receipts right here, neatly stored in my logical and orderly filing system.”
Yep, that’s correct. What CRA is essentially saying is that the onus is on the entrepreneur to make sure that all the receipts (and yes, the originals, not scanned duplicates), are present and accounted for, and that they’re close at hand–and that means they’re here, in Canada.
And, to make things easy, CRA’s even gone and prepared a guidebook. Think of it as a filing-system primer for small-business owners. If you’re so inclined, you can view that primer–the official title is RC4409 Keeping Records–right here. If you’re not so inclined, you might, at the very least, want to chat with your tax advisor about all this record-keeping stuff.
Like I said, Burden of Proof. It might seem like small potatoes. But to your silent partner, it’s a big deal. And like so many partners, it’s not so much fun when we do things that upset them.
Partners are funny that way.