HAPPY NEW YEAR
While you are nursing that hangover or catching up on sleep might not be the best time to remind you that the last year is over and that you need to start thinking about filing your taxes! but here it is!
You are probably not too excited about filing your taxes but look at this as a great opportunity to review your finances and getting organized early will save you the pain and hassle of doing everything at the last minute.
Here are some simple steps to help you to reduce your stress and get yourself on track for filing your taxes by the end of April or even a little earlier!
- Make an Account List: Start by making a list of all your financial accounts. If you have a small business, you need to create both a personal and a business account list. Include bank accounts, credit cards, investments, retirement, and every other financial account you have. Unused but still open accounts should be included on your list. If these accounts are old and inactive now is a good time to close them. Make sure all of your accounts are accounted for in your bookkeeping software, so you don’t miss any transactions. If you forget to write off an eligible business expense, that is money you are giving money to the CRA that should be in your pocket!
- Get your Bookkeeping up to date: If you have been ignoring your bookkeeping for a while, it’s time to get caught up! You’ll need copies of your annual income statement, which is the core document used to prepare your business taxes. You might also need your balance sheet and depending on the registration of the business you run, you may also need to list assets and liabilities on your taxes, which comes from the balance sheet. Remember that errors in your bookkeeping can lead to errors on your taxes. You don’t want to pay too much and lose out on profits you should keep. Similarly, you don’t want to underreport and find yourself on thewrong side of an audit, fines, and penalties. Making sure your books are done, and done accurately, is key to tax season success. If bookkeeping is not your thing, it might be a good idea to enlist the help of a professional bookkeeper who will keep your records in order for you so that everything is ready for tax time.
- Put Together a Tax Form Checklist: Make a list of all the sources that you expect to get tax forms from. These can be from bank accounts, investments, educational institutions and the government. You can put your checklist in an Excel spreadsheet or Google Sheets for easier access using your phone. Whichever method you use, make sure you have all the forms you need before you file your taxes, or you will have to file an update to your return if something is missed and this can be a big hassle.
- Create a Tax Form Folder (digital and physical): When the forms arrive, it is easy to set them aside to open later then misplace them. Train yourself to open everything right away and file it in a folder either physically or digitally. You can use Dropbox to store digital copies and add in scanned paper copies so that you have everything together.
- Choose your Filing Method: Decide whether you want to do your taxes yourself online, or you want to hire a bookkeeper or accountant to do them for you. Think about how knowledgeable or comfortable you are about doing your taxes. If the answer if not very, you should use a professional to avoid making mistakes or missing deductions.
Taxes don't Have to be Terrible!
You may dread tax season, but taxes don’t have to be a horrible part of your finances and your business. You do them every year, so find ways to make the process easier and faster. Preparation well in advance can be the key to a successful filing and just think how satisfying it is when it is all done for another year!
From an article by Eric Rosenberg