Tax season is fast approaching. As it does, Canadian taxpayers, especially first-time business owners, scramble to ensure they submit the correct requirements for the upcoming assessment.
However dauntless it may be, filing taxes is an essential process ensuring your business complies with the latest regulations imposed by the Canada Revenue Agency (CRA). In line with that, it’s best to learn a few tricks on how to file taxes correctly to help prevent any issues during tax season.
Read below for helpful tips on preparing your business for tax assessments.
Separate Personal from Business Expenses
Note that if the CRA discovers personal expenses mixed with those of your business, they will audit your accounts, even if you submitted the correct requirements. Separating these costs will help prevent any complications during your assessment.
To do this, create designated bank accounts for all operational and personal expenses. Once you do, ensure you use these accounts for their specified purposes and nothing else.
Meanwhile, there are cases where this factor can have a legal grey area—for instance, running your business mainly in a home office. It’s best to note how you attain these expenses to ensure a more accurate record.
In Canada, businesses can deduct expenses for using homes as workspaces. That is if they meet one of two criteria. One is if it’s the primary location of the company. Another is if they use it solely for earning income and meeting clients or patients.
Maximize Every Help
A disorganized record will subject your business to deductions or, worse, an audit. Fortunately, various accounting tools are now available to help companies document their expenses. Some of the best programs you can try include Quickbooks, Zoho Books, and Oracle Netsuite.
Meanwhile, you can further strengthen your record by hiring a tax professional to help you. Working with an accountant is ideal, not just near tax season. Experts can help you throughout the year to help track your company’s income and spending. They can also help you understand all the tax regulations in the country. The best thing about it is that you can easily find tax assessment help in Canada with a quick online search.
File Taxes Before the Deadline
In Canada, the deadline for tax season ends on May 1, 2023. Knowing the particular date is vital so you can file your company’s taxes on time. Note that late filing will result in a penalty of five percent of your owed balance in the previous year. Plus, you must pay an additional one percent each month after the due date.
The key is to be organized with your filing. Now that you know the exact deadline, set a calendar reminder weeks ahead to help you prepare early. Doing this also enables you to determine and address issues on your record before the assessment.
Prepare for Tax Season
Filing taxes is a critical factor in running a business. Besides being a legal requirement, it’s also a vital element in financial management, regardless of company size. Miscalculating or misfiling yours could result in penalties significantly costing your business.
Ensure a clean and organized record not just for tax season but throughout your company’s lifetime. Maximize every tool and professional help to avoid any issues in your books.