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Keeping Business Records, Part 2in Tax Advice Information and Updates
There are 3 basic types of business records: Income records, Expense records and Property records.
Income records: Income records keep track of the gross income your business earns. Gross income is your total income before you deduct any expenses including those associated with goods sold.
Your income records must show the following information with regards to your income:
- Amount and date received
- Source of the income
It is also important that you record the income whether it was received as cash, property or services.
Original documents must support all income entries. These documents include sales invoices, cash register tapes, receipts, bank deposit slips, patient cards, fee statements and contracts.
Expense records: You must always obtain receipts or other vouchers when you buy something for your business. These receipts or vouchers must show:
- Date of the purchase
- Name and address of the seller or supplier
- Name and address of the buyer
- Full description of the goods or services
- Vendor’s business number if they are a GST/HST registrant.
There are some instances where the seller is not able to provide a description of the goods or services on the receipt or the seller is not able to provide any receipt at all. In these instances, it is important to write the necessary information in your expense journal.
Property records: You must keep records of the properties you bought and sold. These records should show who sold the property, how much you paid for it and the date you bought it. This information will help you calculate your claim for capital cost allowance and other amounts.
If you sell or trade a property, make sure you have a record showing the date you sold or traded the property and the amount of the payment or credit from the sale or the trade in.
Remember, if you run multiple businesses, keep separate records for each business. Also, these records are not to be sent to the CRA with your income tax return. Keep them in good condition in case the CRA asks for them at a later time.