Are you a small business owner who's procrastinated to the VERY last minute to file your taxes? Surprisingly you are not alone!
Luckily for you, the CRA has extended the filing deadline to May 5 because of the recent security vulnerabilities caused by the Heartbleed bug.
So to help get you through what's probably one of your least favorite times of the year, here's my top five very last minute tax tips to help you see the light and get you back to business as usual.
Tip #1: Know all the important due dates
Depending on what kind of business you run, there are different filing deadlines you need to be aware of. For example, sole proprietors must file their return by June 15, however they have to pay tax owing by April 30 (or in this year's case by May 5). These same due dates apply to sole proprietors who are annual GST/HST registrants.
For corporations, income tax must be paid three months after the company's year-end. Corporations are flexible to pick a year-end before filing the first year, so speak with your accountant to pick a time that makes the most sense for your business. For example, if you have a pool company, it's best not to pick June as your year-end!
Tip #2: Claim all your business expenditures
The general rule of thumb for write-offs is 'the expenditures you incurred to earn an income for your business and maintain its existence.' Don't miss opportunities to claim business expenses.
While office supplies can be written off, don't forget other expenses such as:
Car expenditures - This includes gas, insurance, maintenance, and depreciation/lease. This is prorated based on business vs. personal use
Home office expense - Rent, interest on mortgage, Internet, property tax, utilities. Again all prorated based on square feet of home office vs. entire square feet of a home -- your accountant will help you calculate this cost.
Dining and Entertainment - If you took your clients or employees out for dinner to bring in new business or raise morale around the office, this is a business expense.
It's very important to take precautions when filing your claims and make sure you don't mix your personal expenses with business. While you may use your bed as your office desk from time-to-time, don't try to claim your new mattress as an office expense!
Tip #3: Hire professional tax help
If you're a small business owner, it means you're quite talented (ideally!) in your field of expertise. It's important to focus on your strengths. So if bookkeeping is a daunting task for you, hire an affordable alternative so you have more time to focus on the growth of your company.
Even though the tax deadline is a week away, it's not too late to get an accountant involved to help organize your books, prepare your taxes, and ensure you have complied with all CRA guidelines.
Tip #4: Understand your tax filing
It's important to understand your tax filing. Work with your accountant to understand what schedules and forms you need to file for your business and understand how it affects your return. Review your forms and check all figures.
Tip #5: Make a tax year resolution!
Taxes have to be done every year (there's no way around it no matter how hard you try) so learn from the previous year! Make a resolution after you've filed your taxes to take steps next year to become more efficient.
Create a better tracking system by:
- Having a well-labeled file folder and separate your receipts by category;
- Opening a separate bank account for all business transaction;
- Signing up for a separate credit card (I recommend one with no annual fees if you're just starting out);
- Using Excel! Start a spreadsheet now to make next year's claims a lot more efficient and dedicate every Friday afternoon to filling in the week's expenses.
Best of luck. The end is almost in sight!