As June approaches, so too does the income tax filing deadline for individuals/small business owners. For most small business owners, staying on top of your taxes may seem overwhelming.
This process can be made easy and pain-free when included as part of your daily operations. With proper time and attention, you will be prepared to file on time and be able to spot any possible issues before getting offside with the Canada Revenue Agency (CRA).
Here are four simple tips to keep your small business on top of your taxes and avoid getting into trouble with CRA:
1. Don’t Miss Deadlines – File Your Taxes on Time!
Know the deadlines that apply to you and your business. Along with filing your annual personal income tax return, there are other filing and payment deadlines to be aware of, such as for HST and payroll. One source of confusion is the deadline for personal income taxes. The filing deadline for a self-employed individual is June 15th, but if you have a tax liability owing it should be paid by April 30th to avoid interest charges accruing.
2. Keep Your Paperwork and Records Organized
Have a system in place to stay organized including having easily accessible records. Organization is key to efficient recordkeeping and will ensure all expenses that could be used to reduce your tax balance are included. To save time, there are various software and apps available to help keep you on top of administrative work and to store your records electronically.
3. Manage your Cash Flows Wisely
Throughout the year, put money aside for remittance to CRA. In general, employees of a company or organization typically have various payroll taxes withheld from each paycheck; however, a self-employed person (or independent contractor) is responsible to submit any taxes payable directly to CRA. The same goes for HST; while you collect HST on your invoices, you may have to remit a large portion of that HST to CRA at some point in the future.
4. You Don’t Know What You Don’t Know
When it comes to accounting and taxes most of us are out of our element. One of the best things you can do is to work with a bookkeeper or accountant. With some guidance and ongoing oversight, you will be able to stay on top of your taxes throughout the year and do as much (or as little) of the accounting work yourself. Investing in doing your taxes correctly the first time, can save you thousands of dollars later in taxes, interest and penalties.
As Licensed Insolvency Trustees we frequently see the fallout where contractors and other tradespeople have failed to give attention to the above points. If you’ve missed tax deadlines or you are behind on your payments to CRA or your creditors, our best advice is to consult with a debt professional right away. Regardless of the size of your business, we can help you find an immediate solution to get you back on track.
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Brief & Associates Inc. is a Licensed Insolvency Trustee firm in Ontario that has been helping individuals and small to medium sized businesses overcome debt problems since 1980.