Tax time tips: keep up today to avoid playing catch up tomorrow

It’s tax time.  Are you relaxed? Hopefully you have already issued T4s to your employees.  We’re now in that small window of time where you may not yet be feeling the pressure of the April 30 payment deadline (or your June 15 filing deadline if you conducted business and do not owe a payment). Now is the time to start getting your files together. Actually, January 1, 2011 was the time to start getting your files in order, but let’s be realistic, some of you didn’t. 

Time is money in your business; the same is true for your accountant’s business. The more time your accountant spends sorting through your shoebox, the more money you will inevitably be charged for preparing your return.

Here are some time saving tips to organize your files and make your accountant happy at tax time.

Get your files in order

If you are a sole proprietor, your accountant or bookkeeper will eventually sort your files into the categories outlined on page 2 the T2125 form.  These categories are things such as Advertising, Meals and Entertainment, Insurance, Office Expense and Supplies.  If you can work to have a dedicated folder in an accordion file, or paperclip for each category, it will let you get the totals for each category added up in no time.

Simple data entry

If you happen to be managing your own day-to-day bookkeeping in a software package such as QuickBooks or Simply Accounting, you can follow your data entry process to get all your receipts and invoices up to date. Your accountant should be able to take your digital file for processing. If you haven’t invested in a software package, you can still get a good handle on your finances in a spreadsheet. Use a program such as Microsoft Excel to create a series of lists in logical groupings such as:

  • a worksheet for sales including the original invoice number, subtotal and HST collected
  • a worksheet for home office or office expenses
  • a worksheet for vehicle expenses, a worksheet for operational expenses, etc.

Listing the subtotal cost of the items will help the accountant figure out your profit or loss, and listing the HST collected and paid will help to calculate your HST “Input Tax Credits.”

            Summarize your activities 

Prepare a short story for your accountant. While it may seem that your accountant is all about the numbers, the actual activities of the business are important. Did you introduce a new product? Did you start importing or exporting? Did you open a new account or line of credit with the bank? Changes to your business operations can impact your tax return, sometimes for the better, and the transactions don’t always speak for themselves.

Work together with your accountant to understand the process. Your accountant may help you to create a system that you can use in your business, either by creating the initial list of accounts in QuickBooks and providing you with some training, or by assembling the empty accordion file for you to start filling in for 2012. Communicating with your accountant is a good way to ensure that you are not duplicating work.

As with many things in business, it is easier to keep up than catch up. If you are feeling some stress while getting your files ready for your 2011 return, now might be a great time to think about a new proactive system to keep up in 2012.

Need help? Consider booking an appointment through our Access to Professionals Program. The Access to Professionals Program can connect you with a local professional, such as a bookkeeper or accountant, for a free 45 minute consultation.

This entry was posted in Halton Small Business Centre, Tips and Advice and tagged , , , . Bookmark the permalink.

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