Trucking Advice on proper record keeping

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1. Well-kept records help in an audit situation. If your records are incomplete and an auditor cannot determine your income and expenses to support your claims then they could be disallowed, therefore costing you more in tax dollars.

2. Good records can result in tax savings. Good records serve as a reminder of the expenses you are allowed to deduct. By keeping track of all allowable deductions and credits you are maximizing your tax savings resulting in more money in your pocket.

3. Good records help with tax planning, budgeting and financial projections. You will be better informed about the financial position of your business when you keep accurate books and records. Good records help you establish a profit and loss statement for your business. This information can also help you to monitor what is happening with your business and why. Good records can help to establish trends and let you compare performances in different years, as well as help you to prepare budgets and forecasts when necessary.

4. Proper books, records and financial statements help you to obtain financing from creditors. Before a lender will give you financing for equipment he/she is going to want to see up-to-date financial statements on the performance of your business. You can’t give this information if you don’t keep organized records. In addition, good records and proper financial statements show potential lenders that you know what is going on with your business and you are staying on top and in control.

5. A good record keeping system promotes an organized lifestyle and can help in reducing stress. Not knowing how your business is doing can be very stressful. With a simple routine and a good record keeping system you can keep on top of your business affairs.

6. Legal requirement – All businesses must keep a proper set of books and records, and they must be kept in Canada and be available when requested by Revenue Canada. Your books and records must support all claims made on tax returns and other government documents.

1. Always separate business and personal expenses.

2. Use a separate chequing account (with return cheques and monthly statements) for your business.

3. Deposit 100% of all business income into your business bank account. Make withdrawals and transfers afterwards.

4. Make sure you have proper records and receipts to support all income and expenses claimed.

5. Use separate credit cards for your business and personal expenses. If there is cross over, ensure that you highlight all business expenses on the credit card statement. Remember to attach all signed copies of the credit card receipts to the corresponding statement. This is important in order to support your claims and to receive any GST/HST refunds available.

6. Keep all your personal income tax information (government correspondence, T-slips, donations, RRSP’s, etc.) in a separate folder. Also, keep a separate folder for all of your corporate income tax information if applicable.

7. Keep all government registration numbers and correspondence in a separate folder.

8. Maintain a special file for all bills of sale, finance agreements, leases, warranties, etc. for your equipment.

9. Keep a special maintenance file for your equipment containing all repair bills and warranty work.

10. Have a business use mileage log for your service vehicle - use it. All mileage claimed for business use on your personal vehicle(s) must be supported.

11. Avoid cash purchases that do not produce a valid receipt.

12. Write on the back of receipts that are not obvious as to what the purchase is.

13. Reconcile your bank statement each month.

14. Reconcile your credit card statement(s) each month.

15. Highlight all long distance business calls on your personal (home) phone bill.

16. Write down the cheque number and date paid on all bills of sale and invoices when paying by cheque.

17. Separate all Canadian and US receipts.

18. If you are going to do payroll yourself, we suggest you buy a "Dean" payroll ledger book from your local business supply store. This ledger book will simplify and record what is required for payroll for your employees.

19. Run all service vehicle and office in the home expenses through your business chequing account. Eg. Pre-authorized payments for leases, gas and hydro bills, etc. This will ensure that none of these expenses are missed for business purposes.

20. Obtain valid US exchange receipts either by making purchases on your business credit card or obtaining an exchange receipt from your bank.

21. Get a receipt for everything!! If you are unsure as to whether it is a business expense, get a receipt anyway. The general rule of thumb: if the expense was incurred for business purposes or in the course of producing business income then it is tax deductible.

22. Keep all records and receipts in a safe place for future use. Documentation used to support income tax returns must be kept for 6 years from the end of the last taxation year to which they relate. If filed late, records must be kept for 6 years from the date the return was filed. For GST/HST/QST, records must be kept for 6 years from the end of the year to which they relate.