When it comes to your business, early preparation for the end of your fiscal year can reduce stress at tax time. And whether you have an internal accounting department or an external resource that supports your business during tax season, there are some easy ways you can get your returns filed accurately and on time.
Gather records
For most businesses in Canada, the tax deadline is April 30. You can cut down on accounting fees by gathering common business records in time, to make sure that your accountant has what they need. These documents include:
• Income statements
• Balance sheets
• Cash flow statements
• Payroll information
• Expenses
• A copy of the previous years’ tax return
The Canada Revenue Agency has resources to help your business navigate filings that have a layer of complication due to COVID-19 including wage and hiring support, and property expenses.
Organize your financial records
Make sure your books are updated to reflect any end of the year transactions in order to get your correct tax records for your accountant. Remember that for a double-entry accounting system, you’ll need to balance the books so that the sum of all credits is equal to the sum of all debits.
If you use a program like QuickBooks, this is completed automatically. Obtain your final bank account statements for the year and make sure your books match the bank records.
Be secure
As you organize financial records and confidential documents, it’s the ideal time to determine what should be kept and what should be shredded. Shredding at the office? Ensure that the documents remain secure and don’t put what’s been shredded all in a single bin.
If you have a large amount to shred, use a shredding service that can drop off at your location which you can fill with documents to shred. They will then come and pick up the bins on a scheduled date and will send a certificate of destruction after the documents have been shredded for some peace of mind.
Locate all receipts
Maintain copies of receipts throughout the year as proof of any deductions. The Canada Revenue Agency (CRA) recommends you keep tax records for a minimum of six years in case of a business audit. To eliminate stacks of papers tucked all over the office and in filing cabinets, consider going paperless and uploading all receipts to cloud storage. Apps like Bench, Dropbox, Google Drive and Evernote support scanning and storing. Organize all receipts by type.
Understanding tax forms
Planning on filing your businesses’ taxes on your own? Make sure to have the right tax forms on hand. The CRA has a complete list of forms and publications online for business use.
Remember to start early to ensure important documents and data are in order and make tax season simple.
