Tax season is a stressful time for most business owners. Preparing to file your business taxes can involve a deep dive for information and a whirlwind of paperwork. A survey by the National Small Business Association discovered that one third of small business owners spend more than 80 hours preparing for federal taxes. Reduce the pressure of tax season by planning ahead, getting organized, developing helpful habits and starting early. Following are tips for reducing the confusion, worry and mayhem of tax season.
- Use accounting software to track income and expenses. Software makes daily data input easy saving time and providing accurate, up-to-date information. Consider using expense categories (i.e. office supplies, restaurant expenses, gasoline, etc.) to improve tracking information.
- Go paperless by creating electronic copies of all financial documents. Scan receipts or ask for PDF receipts. Download bills from vendors, bank statements and credit card statements. This makes it quick and easy to locate information.
- Be aware of tax deadlines and mark them on your calendar. Set a reminder of when you need to begin final preparation.
- Reconcile your bank accounts monthly. Compare each transaction in your bank account to your business records. If errors are detected, deal with them immediately.
- Take advantage of deductions by carefully recording charitable contributions, staff bonuses, holiday party costs, depreciation of business equipment (vehicles, computers, machinery) capital cost allowance, RRSPs, travel-related expenses and scientific research and experimental development costs. Use the Canadian Business Expense Index to determine what expenses qualify.
- Seek the help of an experienced CPA and provide them with all necessary information. A CPA will have the knowledge, experience and skill to deal with your tax challenges. They will understand the latest tax reforms, tax preparation and filing procedures and will inform you of what records to keep, how long to keep them and how best to record you business’s transactions. A CPA can answer all your tax questions.
Tax time can be simple. Start with good accounting software and use it consistently through the year. Keep clear records of eligible deductions. Reconcile your bank accounts. Employ a CPA and don’t be afraid to ask questions. With good records and professional help, filing your taxes can be an easy and efficient process.
For all your tax needs, contact Cook & Company. Whether you operate a sole proprietorship or a sizable corporation with multiple subsidiaries, Cook and Company use their experience and expertise to make tax time a breeze. Contact us for a consultation.
References:
- https://articles.bplans.com/how-to-prep-your-business-before-tax-season/
- https://genesacpa.com/how-canadian-small-businesses-can-prepare-for-tax-season/
- https://www.deputy.com/blog/8-tips-to-get-your-small-business-ready-for-tax-season
- https://www.nsba.biz/wp-content/uploads/2015/04/2015-Taxation-Survey.pdf
- https://www.thebalancesmb.com/canadian-income-tax-and-your-small-business-2948640
- https://www.business.com/articles/prepare-for-2020-tax-season/
- https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses.html
