2016-05-03 00:00:00TaxesEnglishhttps://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/03/two-men-discussing-taxes-at-a-desk.jpghttps://quickbooks.intuit.com/ca/resources/taxes/5-steps-to-take-the-stress-out-of-tax-time/5 Steps To Take The Stress Out of Tax Time

5 Steps To Take The Stress Out of Tax Time

3 min read

As the tax deadline draws near, many small business owners will be feeling overwhelmed and daunted by the prospect of getting all the necessary paperwork together. To help you overcome your tax-filing procrastination, we’ve compiled an easy-to-follow checklist. As a bonus, learn how low-cost software can make the task quicker and stress free.

  1. Receipts for Expenses

One of the many benefits of running a small business is there are a number of expenses you can claim at the end of the financial year to maximize your return.

The first step is to organize your receipts into categories for easy filing, including:

  •  Advertising (including business cards, domain registration and directory listing fees)
  •  Meals and entertainment (client meetings and meals during business travel)
  •  Office expenses (office supplies, postage, courier fees)
  •  Legal, accounting and professional fees
  •  Salaries, wages and benefits
  •  Travel
  •  Telephone and internet
  •  Interest (including on loans, lines of credit and credit cards)
  •  Capital expenses (items that have lasting value beyond this tax year, such as a computer)

Better still, plan to avoid wading through a sea of crumpled paper receipts in future by using accounting software such as QuickBooks Online, which easily captures all your expenses on the go.

For example, if you are entertaining a client, immediately take a photo of the receipt with your smartphone. Just click on “Expenses” in the app, followed by the camera icon. Snap a shot and the expense – as well as the corresponding photo – will be uploaded to your QuickBooks Online account. All your information will be automatically and securely backed up to a cloud or remote server, which makes saving your receipts a lot easier than trying to hang on to all those scraps of paper.

  1. Home Office Deductions and Motor Vehicle Expenses

If you have a home office, or even just use part of your house to occasionally conduct meetings, you can claim a percentage of this space. “Business use-of-home expenses” includes rent, interest on your mortgage, utilities, insurance and property taxes. For QuickBooks Online users, tracking these expenses is as easy as syncing your bank and credit card accounts. Instead of painstakingly entering all your expenses into a spreadsheet, the program will download your monthly purchases, including home-office expenses such as utilities. It will even learn to categorize them, so that you don’t have to.

Similarly, you may be able to claim for use of your vehicle if it is used for business purposes (including maintenance, repairs, insurance and gas). The amount of deductions will be based on the number of kilometres you use for business. However, as this is one of the areas that the CRA might review, be sure to keep a diary to log your kilometres.

  1. Profit and Loss Report

Next, you’ll need to have your net income (loss) for the year totalled. For QuickBooks Online users, just click the “Profit and Loss” and “Balance Sheets” reports, which will show your snapshot for the entire year. It includes subtotals for each income and expense account, as well as your total income, gross profit, expenses and your net income or loss.

  1. Charitable Donation Slips and Retirement Plan

We know you give from the bottom of your heart, but it doesn’t hurt that it helps your bottom line too. Keep all receipts from donations, and claim them as a deduction.

For Registered Retirement Savings Plans (RRSPs), don’t forget that contributions made within the first 60 days of 2016 belong with your 2015 taxes. RRSPs are non-taxable (as long as they stay in the plan) and can be used as deductions to reduce your tax. However, if you withdrew any money from your RRSP in 2015, you will be required to pay tax on that amount.

  1. The Last Tax Return You Filed

Usually printed on a blue paper, your notice of assessment is the letter that the Canada Revenue Agency (CRA) sends you after you file your return. You’ll also want to have your 2014 tax return on hand, as well as any other CRA notices. You’ll need these for reference, as well as to access your CRA account if you’re filing online.

These days, keeping on top of your accounting year-round is much easier with the use of low-cost and simple-to-use accounting software. Not only will it save you precious time when you are due to file your return, but it will no longer seem as daunting as it once did.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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