Tax Time for Small Business
Tax time is not too far away, and if you operate your own business as a sole proprietor you know that the time is now to start gathering your paperwork together. Sometime, though, it’s hard to know what is needed, so you toss it all into a shopping bag and drop it off to the accountant’s office. Personally, I like to dig to the bottom of the bag, sort it out and get to work on the data entry; however, this takes time to do and time costs you money. If you want to reduce the amount of time that we spend organizing your information, here are some simple tips to help:
1. If you have a bank account in your business name, please bring us all bank statements for the calendar year. This helps to make sure we can capture expenses automatically paid through your bank account, for which you may not have receipts. If your bank or credit union sends you copies of the cheques that are processed through your account, please include those pages. Otherwise, include the cheque stubs or record book so that we can know to whom and for what the cheques were written.
2. If you purchase items with your debit card for the business, please clip or staple the receipts to the back of each business statement in the order that they appear on the statement. Similarly, if you have a credit card that you use for the purchase of business related items, clip or staple the receipts to the back of the credit card statement.
3. Please put your sales invoices or receipts in date order.
4. For cash paid expenses put these receipts in different expense categories, label each expense then sort them by date.
5. If the use of your personal vehicle is essential to the operation of your business, please send the following information to us:
a. Vehicle insurance cost
b. Fuel receipts
c. Driver’s license cost
d. Repair & maintenance of your vehicle – oil changes, repairs, etc
e. If you are making payments on your vehicle, please bring the bill of sale & financing agreements as we can write off a portion of the interest expense or the lease agreement if you lease.
f. Your driving log book. If your vehicle is used partly for business and partly personal use, the log book is important as it helps to calculate the percentage of your vehicle expenses we can claim on your tax return. If the vehicle is used 50% of the time for business, we can claim 50% of the expenses. Revenue Canada may request to see your log books to back up your expense claim, so keep it accessible in your vehicle for accuracy of recording.
6. If you have a GST/HST account with Canada Revenue Agency, please bring the returns that may have been sent to you with your tax papers.
7. If you have employees, include your source deduction worksheets.
A little organization on your part will only be to your benefit, but if you just can’t find the time to get it all together, don’t worry! I’ll just slip on my diving suit and swim right to the bottom and get started!