When it comes to income tax preparation, there are do-it-yourselfers and there are those who have their income tax prepared by professionals.
For many businesses, having a professional such as a tax accountant prepare their income tax returns is the most sensible option. We don’t all have time to become income tax experts and income tax mistakes can be costly. So why not hire an expert to get the job done right and cut down on tax time anxiety?
To do the job right, though, your tax accountant or other income tax preparer will need to have all the right tax records at hand – preferably organized. Use this checklist to get your records together for your tax accountant.
Business Records Your Accountant Needs
· Revenue and business expenses for the year
· Business use of auto
· Auto operating expenses
· Vehicle driving log with business kilometres driven
· Asset additions
· Business use-of-home details
Your tax accountant will also need any tax records such as:
· Last year’s Notice of Assessment
· Amounts paid by installments
· A copy of your income tax return filed last year (if you’re a new client)
Other records your tax accountant will need will depend on whether you’re asking him or her to prepare a T2 (corporate) or T1 (personal) income tax return.
If the latter, your tax accountant will need all the relevant information slips and tax-related documents. Here are some of the most common:
· T4 slips (if you have employment/business income)
· T4A commissions & self-employed
· T5013 Partnership Income
· T3 Income from Trusts
· T5 Investment Income
· RRSP contribution slips
· Charitable donations
· Medical and dental receipts
· Child care information
Save Money on Your Tax Accountant’s Fee
Accountants generally charge by the hour, so the harder you make their job, the more it will cost you.
Summarize and tally records wherever possible. Cheques, invoices, business expenses - all should be categorized and totalled. Sort all your information slips by type. Having your tax accountant do the organizing and tallying is the expensive way to go.
If you have several businesses, remember that you will have to have separate revenue and business expenses figures for each business, as business income should be listed by individual business on the T1 form.
Be as organized as you possibly can. For example, clip groups of receipts together by type and put a post-it-note stating what the category is on the top. The less your accountant needs to figure out, the less time she’ll be spending on your file.
And remember, having a tax professional prepare your income tax return(s) isn’t costing you as much as you think when you see the bill – it’s a legitimate business expense.