It’s officially 2024!  You know what that means?! The tax panic is coming.  Tax season often feels like the big bad wolf lurking around the corner, waiting to huff and puff and blow your financial house down.  And I get that, maybe the thought of taxes makes your heart pound.  Or maybe it’s more out of sight out of mind until… wait a minute - things are due next week!! 

Let’s combat the stress that tax season can bring; It doesn't have to be that way, especially if you're working with a bookkeeper or accountant. You can make their life easier (and your own) by following these tips to ensure a smooth and stress-free tax season.

Keep Your Financial Records Organized

You know Ancestry.com?  My Dad became obsessed with it several years ago when he made it his mission to trace our family’s history. Every connection has a story and its pretty amazing to learn where you came from.  This is basically what tax peeps do to prepare your taxes.  We take all the info you give us and try to piece together what happened over the past year (when it comes to money, anyways).  The bigger the mess, the longer it takes, and it can sometimes be really hard to piece the RIGHT story together. You can make our job easier by keeping your receipts, invoices, and financial documents together and organized. For me, personally, I don’t care if it’s organized by dates.  I’m loving the boxes that have notes written on the receipts to tell me what it is, and the ones that ONLY have business expenses – if I have to weed through every paper and decide if its business or personal, it’s going to take a loooonnngggg time.

Want to make things 100% easier?  Consider using digital tools like accounting software (i.e. QBO) or apps (i.e. Dext) to store and categorize your paperwork. These tools can save a ton of time during tax season. [Interested? Reach out – I can hook you up]

Separate Personal and Business Finances

One common mistake is mixing personal and business finances. Create a dedicated business bank account and credit card to ensure clean separation. This not only simplifies tracking business transactions but also makes it easier to claim deductions and make sure we don’t miss out on any credits come tax time.

Stay Consistent with Expense Tracking

To make your tax person’s job smoother, track your expenses regularly and consistently. Use a designated method, whether it's a spreadsheet, an app, or good old-fashioned pen and paper. Be sure to include details like date, vendor, purpose, the amount, and the taxes. Consistency here can be a game-changer when it's time to prepare your income statement. If you collect GST or other sales taxes, its extra important that you’re tracking the taxes separate from the expense amount.  We’ll need those amounts to prepare your GST statement to file with CRA….This is another place that digital apps (i.e. Dext) is super handy.

Understand what’s a “write off”

Don't let tax deductions be a mystery. Familiarize yourself with the deductions available to businesses and use them! You don’t need to know the ins and outs of all these things, but you need to let your tax person know that they might apply to you – every deduction is less money paid to CRA. The common ones to let them know if they apply to you are:

• Do you work from home?

• Do you drive for work – whether to meet clients, deliver goods, pick up supplies – anything?

• Did you buy any computers or equipment over the year?

• Do you have any loans or leases?

Plan Ahead for Tax Payments

Spoiler Alert: Chances are you’re going to owe money.  But it doesn’t need to be a gut punch if you plan ahead for tax payments. Set aside money for taxes in a separate account or make estimated quarterly tax payments, if necessary. Unless I’m required to, I would always rather just put money into my own savings account (rather than prepaying the feds), this way I reap the benefits of the interest earned, not them.  I also like it cause if I’ve “over-saved” it becomes a pretty awesome spring bonus fund!

Meet Deadlines and Be Timely

Tax season is incredibly busy for us tax peeps, and meeting deadlines is important in the world of taxes. Make sure you provide all necessary documents WELL before the filing deadline. Getting things sent in early not only reduces stress but also gives your tax peeps ample time to review your docs and find all the savings. 

Here’s the thing…while deadlines are important, no one is going to come knocking at your door, threatening to take your home if you file late. We’re Canadian after all; we’re much nicer than that! The worst thing that’s going to happen is that if you owe money, you *might get a late filing fee, and interest charged on what you owe. If you don’t owe them anything, chances are nothing will happen.

I understand that there’s a lot of folklore out there about how the tax man will ruin you. I’ve never seen it. So let’s take a collective breath and ease into this tax season with ZERO panic…it’s really not worth your energy. Reach out if you’re already getting night sweats thinking about this, and we’ll get you sorted <3