As a business owner, if you’ve ever been up at night worrying about your numbers and wondering, “Where did all my money go?” or “Do I have enough saved for taxes?” hear me when I say that you’re not alone. These are the questions that keep entrepreneurs up at night, and today we’re going to tackle the most common accounting questions I get from my clients.

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I’m Amelia, a Toronto-based accountant dedicated to supporting women-owned businesses. My main purpose is to help you know your numbers, increase profits, and avoid mistakes when it comes to the numbers side of your biz.

Whether it’s taking it off your plate, helping you DIY with ease with our Small Biz Starter Pack, or increasing your financial awareness—I’m here to make it simple.

Be sure to sign up for free monthly bookkeeping & tax reminders sent straight to your inbox to be sure you stay on track and never miss a deadline. 

Question #1: I see the profit on my Profit and Loss Statement, so why isn’t it in my bank account?

One of the most frustrating things for business owners is seeing solid profits on your P&L statement (aka Income Statement) but not feeling it in your bank account. The answer my friend is cash flow.

There’s always money following in and out of your business. You have revenue, then expenses, and what’s left is profit but that’s not the full picture.

Maybe you paid down a credit card or took money out of the company. These transactions affect the cash in your bank account but don’t appear on your Profit and Loss statement. While your P&L tracks revenue and expenses, it doesn’t show the full picture of your cash flow.

Money moves in and out of your business in other ways, and that’s where the Cash Flow Statement comes in.That’s why it’s so important to not only look at your Profit and Loss but also your Balance Sheet and Cash Flow Statement.

Question #2: Should I incorporate?

It depends on the level of profit you're bringing in. This is a complex question because the answer involves both your business and personal financial situation. As a general rule of thumb, if you’re able to cover your personal lifestyle and still have money left in the business after paying yourself, it might be time to think about incorporating.

However, if you incorporate and end up draining all the money out of the corporation, there’s no real benefit to it. Incorporating too early could end up costing you more in the long run and might not give you the financial flexibility you're hoping for.

Question #3: If I hire an accountant at year-end, do I still need bookkeeping?

Yes, you do, and here’s why.

If you only see an accountant at year-end, they’ll prepare your books for taxes. But with monthly bookkeeping, your books are prepared for both your business and taxes.

The real value of bookkeeping isn’t just a compiled set of books to file an accurate tax return at the end of the year. It’s having a monthly pulse on your business so you can see exactly what you brought in, what you spent, what you kept, how that felt, and what you need to do to adapt in as close to real time as possible.

Looking at your numbers each month (and not just at tax time) is an absolute game-changer in your business.

Question #4: How should I pay myself?

Your business structure determines how you will pay yourself. As a sole proprietor, you’ll take owner’s draws by transferring money from your business account to your personal account. Incorporated businesses can pay a salary through payroll or distribute dividends.

The choice depends on your personal and business financial goals, and each method comes with its own tax implications. It’s important to choose the one that best supports your business and personal needs—consulting with a professional can help ensure you make the right decision.

Question #5: Which Bookkeeping Software Should I Use?

Our preferred softwares are Xero and QuickBooks Online depending on your unique business.

That said, Xero is our primary recommendation due to its user-friendly interface, customizable reports (with formulas!), excellent customer service and easy integrations with payment platforms.

Question #6: Do I really need to keep all my receipts?

The CRA requires you to keep business records, including receipts, for six years from the end of the tax year they relate to. If you're ever audited, you’ll need to provide clear and organized records, whether digital or physical. The easiest is to snap a photo of your receipt, save it in google drive with a clear naming format (vendor, date, amount), and you’re all set.

Question #7: How much of my income should I be saving?

I always recommend keeping two separate savings accounts:

1. Tax Savings Account – Set aside money for taxes and GST/HST to avoid surprises at tax time.
2. Cash Reserve – Aim for 3-6 months' worth of expenses for emergencies (Remember, building this takes time. Start with small, consistent transfers and build it up gradually.)

What’s next?

Be sure to sign up for free monthly bookkeeping & tax reminders sent straight to your inbox to be sure you stay on track and never miss a deadline.

Be sure to get your hands on my best selling Small Biz Starter Pack today and start catching up your books.