Filing your taxes out of time carries a very high cost that a small business cannot afford to pay.
To stay on top of your taxes and meet the tax deadlines for the year, it is important to be well organized and get all the required documents in order from the beginning.
Running a business is complicated enough without having to worry about paying and filing taxes and doing all of these tasks on your own.
Making the financial decisions for your business should not be your responsibility. Consulting an accountant will keep you and your business from putting yourself and your business at risk of losing money.
Here are some tax filing tips you can take to keep your small business running smoothly.
Maintain Good Organization Throughout the Year
For a small business owner, filing tax returns can be frustrating. People often tend to prepare their paperwork a week early or even a day early. This can result in a bad experience and unnecessary loss of money. If you stay organized throughout the year, it will be much easier to access all the information. It is advisable to have classified files on the computer or in the general ledger and check that the data is accurate.
Hire a Good Accountant or Tax Advisor
If your accountant only prepares your financial records and files your taxes, he or she is not a good accountant for you. A good accountant works hand in hand with you throughout the year doing periodic reviews so that everything is up to date and in proper order. He or she should keep track of your income and expenses to make sure you don’t have any cash flow issues and monitor your gross and net profits. The best accountant will be the one who works with you throughout the year, not just during tax season. As a small business, it is critical that you understand the important role that accounting plays in the longevity and growth of your business.
Properly Record Your Business Income and Expenses
Keeping accurate and complete records of your business income and expenses will ensure that your tax returns are accurate. Making a bad record could cost you money or expose you to an audit. A good idea to record income and expenses correctly is to use basic accounting software that is easy to use and allows you to optimize the way you manage your business. The software will allow you to connect your bank statements, payroll, etc. With this tool you will be able to file your taxes perfectly and keep your business accounting up to date and avoid losing money.
Rely on Other People’s Experience
Being the owner of your own business, you probably find it difficult to let go of the control of each and every area of your company. But when it comes to accounting and tax returns, it’s best to rely on industry experts to help you make financial decisions. With this, you will be able to save a lot of money and effort as an accountant could figure out how to pay a lower amount to the CRA. Remember that tax laws change all the time and it is good to have someone who has the knowledge to help you plan better strategies and build a better structure for your business.
Correctly Classify Your Business
Incorrectly classifying your business could cost you more in taxes. The decision to classify your company will have a different effect on your taxes. Consult with a good attorney and an accountant to determine how you should properly classify your company.
Come tax season, there’s nothing worse than finding out you’ve missed a key detail that could cost your business thousands. Keep these tax filing tips in mind next filing season, and avoid some of the headaches that come with filing for your small business.