7 Tips to Help Small Business Owners Prepare for Tax Season

The life of an entrepreneur can sometimes feel overwhelming when it comes down to accounting, tax filings and other similar matters. Often times, small business owners will overlook deductions or pay too much in taxes when they take on the responsibility. That’s why it’s essential to hire Chartered Professional Accountants (CPA) to assist you with your tax filings so you avoid any costly errors that may catch the attention of the Canada Revenue Agency (CRA). As tax season quickly approaches, you can follow these seven tips to help your small business prepare and stay organized so it’s less stress on your end.

Here are seven tips to help small business owners prepare for tax season…

1.  Use a separate bank account

It’s best to keep your business and personal finances separate. It makes it easier for you and your accountant to track expenses and take advantage of tax deductions

2. Hold on to those receipts

All business-related purchases need to be ready for tax time so you can claim them as business expenses. If you tend to lose your receipts, software programs such as Intuit QuickBooks and Freshbooks allow you to take a photo of them and store them away, so you don’t have to worry about holding on to any paper.

3. Wait to purchase your capital assets at year end

Expenses that relate to you, such as office furniture, equipment, computer hardware, etc., should be made towards your year-end. This will allow you to claim a full-year depreciation even though the assets were used for only a few weeks or months. 

4. Track your accounts receivable 

Record all deposits to your business bank account throughout the year so you can account for where your funds are coming from. This is one of the key reasons we recommend opening a separate bank account for your business, so it’s easier to manage the funds that are coming in.

5. Monitor your customer invoices

Are your clients paying on time? It’s always best to keep track of this and ensure there are no outstanding invoices owed to you before you file.

6. Always set aside a budget to pay taxes

There’s one thing for certain, we all have to pay taxes. Try getting into the habit of setting aside funds you’ll owe to the government once you file. Failing to do so might result in a costly surprise come tax season.

7. Hire a professional accountant

It never hurts to turn to a professional to help you manage your finances on a monthly basis so when tax season comes around – it’s no sweat. Our team provides a variety of services such as bookkeeping to help you record and classify your expenses as well as income. Our experienced accountants can take it a step further by helping you strategize a budget, file your tax returns accurately, help with write-offs, deductions and will find you other opportunities to help lower your tax bill. 

For more business-related tips, review our recent blog posts or visit us on our social media channels. 

Article written by: Kassandra Kondo

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