Tax season is here again and your business has to file its tax return. If you are wondering how to prepare your business for tax season, we can help. Filing taxes might seem daunting, but it is not as difficult as you think it is. Even so, the process can be challenging. The first step to filing taxes for your business is to understand what type of company you have and which tax obligations apply to you. The second step is understanding your accounting requirements and reporting processes. There are many small things that you need to take care of before tax season begins; this blog post will help you accomplish that and save you time later on.
How To Prepare Your Business For Tax Season
Tip 1 – Conduct An Audit And Understand Your Financial Information
The first thing that you need to do before you can start filing your taxes is to conduct a thorough audit of your financial information and data. You have to take a look at your expenses and sales figures and compare your data with the previous year to get an idea of your accounting needs. This information will be helpful while you are filing your taxes. You can easily keep track of your financial information by using a spreadsheet or accounting software. These tools will help you track your business expenses, income, and other essential information. You can also opt for an online accounting software, which is hassle-free and easy to use.
Tip 2 – Know Your Tax Obligations And Deadlines
As soon as your business crosses a certain threshold and becomes a legitimate business, you are meant to pay taxes on your profits. The tax laws for small businesses are very different from that for corporations. You need to figure out which type of tax obligations apply to you. The CRA offers a variety of tax breaks for small businesses and startups. You can claim a deduction on your business expenses, which can help lower your tax bill.
The first step towards claiming deductions is knowing which expenses are deductible. There are also certain deadlines for when you have to file your taxes. You should, therefore, start to prepare your small business for tax season as soon as you arrive at year-end.
Tip 3 – Find A Certified Accountant To Help You File Your Taxes
You can file your taxes on your own, but you will have to spend a lot of time and effort to do so. If you are starting a small business, you might not have the time to spend on filing your taxes. Therefore, hiring a certified accountant can be a good option. You can find a professional accountant near you by using an online search engine. Make sure you check the credentials and experience of the accountant before hiring them to file your taxes. You can also find out whether the accountant offers any discounts or special packages for startup businesses.
Tip 4 – Check Your Employee Data And Information
If you have hired employees for your business, you have to pay taxes on their wages and other compensation. The taxes that you need to pay include federal income tax, Canada Pension Plan contributions, Employment Insurance premiums, and provincial or territorial income tax. You need to figure out how much money you will have to pay in mandatory taxes for your employees each month. You can keep track of all your employee data by using an online payroll software. These types of software will help you calculate taxes and other payroll deductions, and will also guide you through the process of filing your taxes online.
Tip 5 – Determine Which Deductions Are Available To You
While filing your taxes, you should know the deductions that are available to you. Your gross earnings will be lower after claiming these deductions. Since you are filing your taxes as a small business, you can claim deductions for business expenses such as rent, salaries, fuel, travel, and more. You can use a tax deductions calculator to find out which deductions are available to you. You can also ask your accountant to guide you while filing your taxes.
Tip 6 – Decide Whether You Want To Pay Quarterly Or Monthly Instalments
After filing your taxes, you will have to pay a percentage of your earnings as taxes. You have the option to pay quarterly or monthly instalments for your taxes. Many small businesses prefer paying taxes quarterly, as you can then claim a reduction in taxes. You can also opt for monthly instalments if you want to pay less money in taxes. Whether you decide to pay taxes monthly or quarterly, you have to estimate your taxes and make sure that you have enough money in your bank account to pay the instalments when they are due.
Tip 7 – Organize And Track Receipts For Any Deductible Expenses
One of the most important things that you need to do while filing your taxes is to keep track of your expenses. You have to prove that the expenses are business-related and that they should be deducted from your taxes. There are many ways to organize receipts for your expenses. You can simply use an Excel spreadsheet, or you can use accounting software. You can also opt for a cash receipt book, especially if your business accepts payments via cash or cheques. This will help you keep track of all your receipts and expenses.
Conclusion
The CRA expects you to be honest and pay your taxes. However, there are ways to lower your tax bill. You can do this by claiming deductions and following other tax rules for small businesses. You can start preparing for the upcoming tax season as soon as your fiscal year comes to an end. Conducting a thorough audit of your financial information, knowing your tax obligations, and keeping track of your expenses will help you file your taxes successfully.
For help navigating your tax obligations as a business owner, call Intrepidium at 778-800-7976, or click here for a complimentary consultation with the Intrepidium Team to learn how preparing for tax season doesn’t have to be stressful!
