Steps To Take Now To Make Next Tax Season For Your Business A Breeze

This year’s tax season has wrapped up and you’ve had a nice break where you didn’t have to think about taxes and the necessary forms. So now is the time to start getting ready for next year’s tax season so you’re fully prepared and everything can go as smooth as possible. The more you leave to the last minute, the more you’ll be scrambling to find the necessary receipts and documents and calculations. That’s the kind of thing that can lead you to making mistakes and getting your business audited by the CRA. We’ve created this short guide to help you get started on what steps to take now so your next tax season breezes by.

business tax

Prepare & Organize Your Records

One of the biggest and most frustrating time sinks is being able to find all the necessary records and financial documents when you need them during tax season. In an ideal world, the originals of your records should be organized, safe and easily accessible and the important data should be accurately entered into whatever database and accounting system you use. This should include records like:

  • Invoices
  • Bank statements
  • Receipts
  • Tax forms

All your records for accounts payable and receivable should be organized and digitized in this manner, including all necessary records and documents for past years as well just in case. When you wind up needing them next tax season, you’ll be extremely thankful that you put the time and effort in to organize everything now.

Analyze & Revise Your Finances

Once all your records are organized, the next step is to analyze all your finances to ensure that they are up to date and accurate. You can perform an internal audit of your own if you want to be thorough, but otherwise all you really need to do is review the above records to make sure all the numbers add up. Specifically, you should be analyzing the following:

  • Financial accounts
  • Liabilities
  • Inventory and equipment
  • Equity

It’s a good time to reconcile your bank account and statements with what you have in your internal accounting records. Make sure everything is balanced, and that you investigate and resolve any errors or discrepancies. The last thing you want is to be hit by an audit by the CRA because you did not realize your accounts were not balanced.

Research & Learn New Tax Laws

Every year, both the Provincial government in British Columbia and the Federal government in Canada make revisions to current tax laws and occasionally make new ones. It is important that you are aware of these changes each year so you are following proper legal procedure I filing your business’ taxes. As an example, here are just a few changes to business tax law from last year:

  • Employment insurance premiums were increased
  • Tax benefits for small businesses were revised and made more strict
  • Various professions (e.g., doctors, lawyers, accountants) were no longer allowed to exclude work in progress
  • Business fees for government services increased

Depending on your business, some of these could have affected your tax filings for that year. Next year you can expect more changes and revisions, so it is in your own interest to be aware of them when they happen so you can both take advantage of the opportunities they afford but also to make sure you are following the up to date laws.

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