Congratulations. You’ve made it through another tax season and managed to search through a shoebox of receipts to meet the deadline. Now what? Rather than endure the same stress next year, follow our top tips to put processes in place now to ensure you’ll be ready when the 2017 tax season looms.
1Let Software Work For You
Implement a good filing system now. While it might be tempting to shove all those bills and receipts into a desk drawer or box, you’ll end up wasting hours sorting through then when tax season rolls around. Not only that, you’ll forget the details of many business expenses. With an increasing number of businesses going paperless (even the Canada Revenue Agency now offers online statements), keeping track of your finances, including expenses, as they occur has never been easier. Cloud-based accounting software, such as QuickBooks Online, is an affordable, accurate way to keep track of bank account activity, expenses and invoices all year round.
Making your paperwork easy to locate ensures that you won’t have to scramble when tax time rears its ugly head. However, there’s no need to set up a special email folder, print out financial statements or manually input numbers into a spreadsheet. Instead, paperless invoices can be seamlessly integrated with your accounting software, which is then backed up on the cloud. QuickBooks Online allows you to automatically fetch statements each month, and neatly files them away for easy reference.
3Examine Last Year’s Tax Return
Nothing is worse than wrapping up the financial year only to be told by your accountant that there were expenses you could have claimed – if only you had bothered to hang onto the receipts. It’s important to make the most of your deductions as this can greatly improve your bottom line.
By reviewing last year’s filing and keeping up to date on new tax laws and benefits, you’ll be aware of expenses you can claim and plan accordingly. Since tax laws change substantially from year to year, understanding what special tax credits are available for entrepreneurs and small businesses, such as research and development credits, can be hugely beneficial.
Prevent hours of mind-numbing data entry of business expenses simply by using apps such as Expensify. Snap a photo of your business receipt as soon as you pay it, and a copy is sent directly to your accounting software. If you use a car for work, apps such as TripLog automatically track the mileage and log expenses. For those in retail, apps such as SOS Inventory can help you determine what’s in your stockroom, which will be necessary to help you calculate net income at year-end.
5Make Regular Appointments With Your Accountant
Give your accountant some love all year round! While you may think visiting your accountant is an annual chore, regular check-ins will ensure there’s less paperwork and stress come tax time. A skilled professional can also help you identify gaps in your financial management and cash flow, and help you make the most of your taxable income. Your accountant can also alert you to new tax laws or those that are changing and how they might impact your business.
6Create an Online Business Account
If you haven’t already done so, registering for an online business account with the Canada Revenue Agency (CRA) can be hugely beneficial. In addition to accessing your tax information, you can set up pre-authorized debits for GST/HST installment payments. Paying on time means no interest, and less hassle at the end of the year. Alternatively, you can download the CRA’s Business Tax Reminder mobile app, and create custom reminders of due dates, including remittances.
By getting organized now, and taking advantage of apps and technology, you will save time, money and headaches when preparing your next tax return.
While it may be tempting to forget about taxes until next year’s return is due, you will save a lot of time and stress about implementing measures now.