Let's Talk Money

Keeping Track of Your Business

All business owners must keep very clear, detailed and up-to-date records of the money that is going in and out of the business. To help businesses keep track of what is going on, most hire bookkeepers and accountants. But even if you hire other people to help keep track of business activities, a good business owner should have a clear understanding of what their bookkeeper and accountant do. While their role is similar, bookkeepers and accountants perform different tasks that are essential to running a successful business. As a businesswoman you will need to understand what information they need to do their jobs and learn how to read and understand the reports they prepare. You should try to become very comfortable with financial reports; they are like a report card or statement of health for your business. Managing finances is the biggest challenge for many new businesswomen, so just remember to keep practicing and ask for support when you need it.

Many small Northern communities will not have bookkeeping and accounting services available locally. You can ask your local economic development agency or other businesses in your community for recommendations. There are also several good bookkeeping and accounting software programs available. Talk to a bookkeeper or someone that has experience in bookkeeping about which one is the best fit for your needs and technical skill level. A good program will help you keep track of your revenue and expenses and make reporting to Canada Revenue Agency a lot easier.


Bookkeeping is keeping track of the daily activities of your business. This includes

  • recording all financial transactions (sales, expenses, purchases);
  • recording debits (money coming in) and credits (money going out);
  • creating invoices – bills that are sent to customers for products or services provided and not paid for right away. They usually include what was sold, how much is owed and the date;
  • maintaining and balancing general ledgers and historical accounts; and
  • organizing pay for all employees.

Keeping a general ledger is one of the basic bookkeeping tasks. The general ledger is a document that records the amounts from sales and expense receipts. This process is referred to as “posting”. The more sales made, the more often the ledger is updated.

It is best to have a system that allows you to keep track of your revenue and expenses daily. You need to stay on top of your transactions and how much money is coming in and going out. This will help you identify problems, such as cash flow issues, before they become a big problem. Make sure you keep every receipt for every expense you have. Staying on top of your record keeping also makes it a lot easier and faster for your accountant to organize information and produce reports.

You will also need to have a system that will allow you to keep track of your invoices and bills that have been paid. Staying on top of these will make it a lot easier than going through a mountain of disorganized papers every few months.

Without good information and a clear understanding of your finances, you will not know how healthy your business is. Keeping on top of the reporting takes a bit of time every day, but it won’t be as frustrating as trying to find a lost invoice or bill when you need it.


Accounting is done less frequently and relies on the information provided by the bookkeeper to gain a deeper sense of what is going on in the business.

Key tasks for accountants include:

  • preparing adjusting entries – sometimes businesses may have recorded expenses that have occurred but have not been recorded yet;
  • preparing financial statements for the business;
  • analyzing operating costs – the day-to-day costs of running the business, such as electricity, heat, insurance, telephone and Internet;
  • completing corporate income tax return – filing taxes to the Canadian Revenue Agency; and
  • acting as a general resource to the business owner to help them understand what the financial reports say about the business.

The reporting provided by the accountant can show you if your business is making money, where it is earning money, what the biggest expenses are, and identify problems that may be appearing. This gives you a view of the big picture and a road map to improving the health of your business. Accounts can also be helpful in providing advice to business owners on areas relating to taxation, strategic planning and financial planning for the future (forecasting).


An invoice is a document that tells the customer they need to pay you. The invoice indicates that you have given the customer a specific good or service and now they must pay you a specific price for it. Invoices are mainly used by businesses where the customer doesn’t pay at the exact moment they receive the product. This may sound a bit strange, but we’ve all received an invoice before; it’s just usually called a “bill” instead. For example, when you eat at a restaurant, you don’t pay the waiter when they give you the food. You eat the food and then the waiter brings you a bill (invoice) that tells you exactly what you’re paying for and the total cost. Invoices are very important for keeping track of customers who owe you payment. Usually, invoices include the following information:

  • the goods or services you have given the customer;
  • the price;
  • any discounts;
  • tax you will collect on the sale;
  • the total amount the customer owes;
  • information about the business (name, address, contact information);
  • who the buyer is and their contact information;
  • the date; and
  • an invoice number (to help you keep your invoices organized).

You have probably received a receipt many times before when you’ve bought something. A receipt is simply a paper document that confirms payment for a specific good or service on a specific date. It is proof that the customer now owns the good or service they have paid for. Depending on the type of business you own, it may be very important to your customers to have a receipt. Typically, receipts have the following information on them:

  • what was bought (the good or service)
  • the price
  • any discounts
  • tax collected by the business
  • the total amount paid
  • how the good or service was paid for (cash, credit card, etc.)
  • information about the business (name, location)
  • the date

Invoices and receipts have a lot of the same information on them, but it’s important to remember that they are not the same. Invoices are given to the customer to let them know they need to pay you; they are a record that a customer owes you money for a sale. Receipts are proof that a customer has paid you and are a record of all the revenue (money) you have made. If you have a computer, you can make up a standard invoice and a standard receipt to use with each sale. If you have Microsoft Word, there are some invoices and receipts already made for you to use.

Make sure you keep copies of all your invoices and receipts organized and in one place. It might be helpful to have a file folder or accordion file for invoices and one for receipts, so you always know where they are and can track one down if you need to. Try to keep them organized by month, at least until the end of each year. This will make any accounting that you need to do at the end of the year much simpler and cheaper!

Business Budgeting

As a business owner, an important document to have is a budget for your business. A business budget is used to estimate and plan how much money you think your business will make and spend. Usually, a budget is done every month. When you’re first starting out, you might need to do some research in order to estimate your sales and costs. Over time, you will see that many costs are the same, or about the same, each month and you will be able to plan for them. You may also find that you sell around the same amount of your good/service each month or in certain months. This you will also be able to plan for in the future. A monthly business budget can help you make many decisions and may also be helpful in applying for a grant or a loan.


Whether you make your budget on the computer or by hand, the first thing to start with is revenue. Make a list of all the sources of revenue you think you will receive that month. These sources might be sales of your product or service, cash that you have saved for your business, grants or loans. You don’t need to write down every sale you expect to have, but just think of the total amount you expect from each source of revenue. After you write them all down, add them up. This will show you how much money you expect to bring in to your business that month.


Below your list of revenue, make a list of all the expenses you think you will have that month. Expenses are generally grouped into three categories: fixed, variable and irregular.

Fixed costs are the exact same amount every month. No matter how many items you sell, these expenses will always be the same amount (i.e. rent). You can easily plan for fixed costs because you know how much they will be in the future.

Variable costs change each month depending on how many goods or services you produce and sell. One example is materials and supplies; the more items you make, the higher will be your expense for materials and supplies.

Irregular costs don’t happen every month and most months you may not have any, but it’s still important to think about when these expenses might happen and plan for them. For example, if you pay for someone to do your accounting at the end of each year, then accounting expenses would be considered an irregular cost.

Depending on the type of business you own, expenses might be fixed, variable or irregular. Do some research if you aren’t sure; this way you can plan carefully each month. Then, add up all your expenses so you have a total amount of money that you expect to spend that month.


At the bottom, take your total revenue and subtract your total expenses. The result is the amount of money you have made as profit that month. If the number is positive, you have profit, but if the number is negative, your business is losing money that month. Seeing all your revenue and expenses planned out can help you with your business decisions. If your business is losing money, you can plan which expenses you need to decrease or whether you need to increase your sales (maybe by raising your price). If your profit is large and you are making a lot more money than you are spending, you may plan to increase some of your expenses (such as your salary).

Try to make a business budget each month, estimating what you expect will happen. At the end of the month, you can fill in happened – the revenue you received and the expenses you had. It is very helpful to compare what actually happened to what you planned for; this will help you make your budget for the next month. If there is a big difference between your plans and reality, you should probably do some research to find out why.

Once you have gotten used to making a business budget for each month, you can also start making one for the year. To plan for expenses 12 months away, it will take a lot more time and research. It will be easy to figure out your fixed costs, but it may be difficult to plan for your sales and your variable and irregular costs. For some loans and grants, you may need to prepare a budget for a year to show all the money you expect to have coming in and out of your business. This is called a Cash Flow Projection; it’s very similar to a monthly budget but has a column for every month of the year.


If you are keeping a copy of all the invoices and receipts that you give to customers, then you will have a record of how much money you have received or are going to receive. This is your business revenue – all the money coming into your business. Just as important, you need to keep a record of all your business expenses – all the money going out of your business. You need to keep all the receipts that prove you bought goods and services for your business. It is a good idea to keep all these receipts organized by month in a file folder or accordion file, just like you should do for all the receipts and invoices that you make for customers.


You need to keep a record of all the money coming into your business. This includes the money that you make from sales and any money that you receive as a loan or a grant. Just like you keep copies of all invoices and receipts you give to your customers, also keep all documents that prove you have a loan or grant. For a loan, keep a copy of any contract that you sign; his contract is your record of how much money you owe, to whom and any other details about what the money can be used for or when it needs to be repaid. For a grant, make sure you keep a copy of the cheque and any documents that come with it.

Along with keeping your revenue invoices and receipts organized, you should also keep track of the amounts on a separate sheet. On the computer, or even by hand, make a sheet to record every receipt that you have. This way, you don’t have to dig around for receipts every time you want to add up your revenue. A simple revenue sheet will have three columns:



Make sure you get a receipt every time you spend money for the business. If there is no description of what was purchased, write it on the back of the receipt. If they do not have a receipt to give you, write one out for them and have them sign it, this way you can prove that you paid. Just like for your revenue, make up the same sheet for your business expenses with the same columns. Always try to record your revenues and expenses as soon as you can!

With your separate tracking sheets for your business revenue and expenses, you can create a ‘record of transactions.’ This document combines all your revenue and expenses on one sheet, showing all the money coming in and out of your business as it happens. With the record of transactions it is very important that the transaction is recorded as soon as it happens. Tracking this can save you a lot of money in accounting fees, because you will have done the basic work. To create a record of transactions, you should use five columns:


Every time money comes in or leaves your business, write down the date, the invoice # if there is one, what was sold or purchased and whether it was revenue (money coming in) or an expense (money going out). Then use a calculator to find out how much money your business now has. For example, if you made a sale for $100, you would put $100 in your revenue column and add it to your balance. If you bought something for $100, you would put $100 in your expense column and subtract it from your balance. Your balance column shows the total amount of money you have in your business at that moment.

Bank Statements

You can ask your bank for a statement on all your account activity every month. This statement can be used to check against your record of transactions where you have recorded all your revenue and expenses. Your record of transactions and bank statement should match if you have been using your bank account properly and putting all your revenue in it. The bank statement will also have bank charges that you need to record in your record of transactions. Call the bank if there are things on your statement that you do not understand. Banks can make mistakes, too! Additionally, remember that if you wrote some cheques close to the date when the statement was printed, they might not appear on the statement.