It happens at the same time every year. Like Christmas. But not as fun. There is no reason to fear tax time though! If you have followed The Money Dream Machine Program, then your small business should be whirring away like a well-oiled machine. The key to success with small business, in general, is the same as the one that will get you through tax season with flying colours – organization.
Tax Tip Number 1! File, File, File. If you have kept all your records and receipts filed away in an organized system from day one, then it will be a breeze to pull them out and add up all your deductions. Go a step further and LOG everything online. A few minutes a day will save you hours at tax time. Many bookkeeping software systems also help do away with having to deal with many paper receipts altogether.
Tax Tip Number 2! Make a list of everything you think you can deduct for business. Do you have a dedicated office space in your house? You may be able to write off the square footage. Do you drive or travel for work? Note your odometer numbers at the beginning and end of every year and log your work kilometres and gas purchases. Do you entertain for work? Keep those restaurant receipts!
Tax Tip Number 3! Check with your accountant on large purchases. Some items are easily written off but many larger purchases could require several years to write off. This is called depreciation. Your accountant will be able to tell you the CRA rules for everything you want to buy so you can factor it into your budgeting.
Tax Tip Number 4! Use an accountant! They are the experts. They went to school for this. Most importantly, THEY LOVE TAX TIME! They will be able to get every deduction you are entitled to and help you streamline your tax process so you are ready for year two of your business.
Tax Tip Number 5! This one is a no-brainer – FILE ON TIME! Why give the government more than you have to by paying late penalties? If you have started your business out correctly, it should be easy peasy to file your taxes on time.