BUSTED! DON’T BELIEVE THESE ACCOUNTING MYTHS!

Accounting is not just about handling the financial records accurately but also about transparency, reliability, and consistency. People think that accounting decisions are the same everywhere, but contrary to popular belief, different financial nuances must be kept in mind when dealing with businesses.

Individuals and businesses who do not have proper knowledge about accounting and bookkeeping have certain disbeliefs regarding the same. A professional can guide them in the right direction by suggesting, planning and executing solutions with the help of accounting software that they are trained to use. 

To help you steer clear of these misconceptions, AKCS Software PRO LTD. has debunked some of the most widely believed myths about accounting.

Myth 1: Bookkeeping is not that important
This is a myth, however, it is not perpetuated by accountants but primarily by business owners. For a variety of reasons, bookkeeping and accurate financial data are critical. It not only allows you to make sound financial decisions as a business owner, but it also gives you an estimate of how much you owe the CRA (GST, corporate taxes, payroll source deductions, etc.). This will enable you to make on-time payments or help you start putting money aside for upcoming bills and financing purposes.

Myth 2: Focus should be on more cash flow instead of cash planning
This myth persists because many people do not place cash flow planning and minimizing penalties and interest as their top priority. Many businesses struggle with day-to-day cash flow and are more focused on building revenue to help with the cash flow.

Myth 3: It is useless to hire a professional
If the individual in charge of the office is new to bookkeeping, they would not have any idea about the consequences of incorrect data entry. They would probably not even know how to do it. Business owners consider expenses that go into their training as unworthy and uncalled for. But they must see it as an investment because, in the long run, it can save business owners a great deal of grief and money. If you hire someone without expertise in this field, they can land you in trouble, and CRA would charge penalties.

Myth 4: Do It Yourself is the way to go with your bookkeeping, as it will save you money
This is 100% incorrect. However, it is okay to want to do your own financial data recording if you know what you are doing. This is why you need a good advisor in your industry on your team. This advisor will be educated in the various components such as what CRA considers to be a fixed asset, when GST needs to be paid, what is an expense vs a liability, etc.

Myth 5: Professional help is only interest in the money
Accountants, trainers and troubleshooters like myself are NOT interested in just the money. Instead of spending 8 x the amount of time to earn 8 x the money, we really want a clean set of books so that we can do the job to take you to the next step. I will use myself as an example. Whether it is readying for year or showing you how to do a GST return, I really want to get to the nuts and bolts of what needs to be done, show you how to do it and then get it completed. When I see that there is 5 hours of clean up that needs to be done, it is unrealistic to think that I can go through it one by one with you and use it as a training experience. It is too much and too overwhelming for my clients. So I end up doing this part and 5 hours later get to what I need to train you on. Yes I can do it, yes I know I will get paid to this clean up but I really just wanted to train you. The same applies to accountants and doing your year end. They really do not want to spend extra time figuring out what happened. As a bonus, have a clean year end submitted, your accounting bill will be lower. Same with my bill for the training.

Myth 6: CRA really doesn't review or audit that many businesses
CRA certainly does reviews and audits. Some industries are specifically targeted (construction industry and cash based industries) as there is a higher chance that there will be under the table deals where cash is paid and there is no record of the income. I have also seen CRA target certain expenses - vehicle expenses and meals expenses come to mind immediately, as does GST reviews. When I get word that CRA is starting to review vehicle expenses for 2019 (for example), I anticipate that at least one of the clients I work with will also get a review. What should you do to prevent this? There is really nothing you can do to prevent it. However you can prepare for it. Make sure you keep all your receipts, do your data entry correctly and make sure the expenses are business expenses not personal expenses. A family trip to Disneyland is not a business expense. My advice to everyone, be prepared and have the expectation that CRA will be contacting you for one of these reviews or audist. Then you have nothing to be afraid of and nothing to hide.

If you’re looking to steer clear of these myths, reach out to AKCS Software PRO LTD. as the leading accounting software trainer and software implementation specialist in Edmonton, AB.

We have ten years of experience setting up accounting software and training classes, workshops, and customized training. We serve clients across Leduc, Edmonton, Fort McMurray, Red Deer, Grande Prairie, Calgary, Alberta, Saskatchewan, Manitoba, and the surrounding areas.