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Confessions of an Entrepreneur | Taxes

Small Business, Confessions, TipsLesley Pocklington2 Comments
  Confessions of an Entrepreneur by Swell Made Co. | Taxes

Confessions of an Entrepreneur by Swell Made Co. | Taxes

It's that time of year. Dreaded, dreaded tax time. I'll confess, as a small business owner this is one of my biggest stumbling blocks when it comes to running a business day-to-day. Bookkeeping, accounting, finances -- they all just make me want to curl up on the couch and take a nap. To be even more honest, for the first year of business; I had NO IDEA what I was doing when it came to filing taxes because it turns out running retail business versus (and in addition to) a freelance, low overhead, service-based business is a lot more complicated. So, any flow I had when it came to tax time needed an overhaul and a reality check. 

It turns out, it's not all so bad. Once you have some systems in place, it's not only easier; but crucial for keeping track of the financial health of your business. Staying on top of bookkeeping every month (I personally can't get more frequent than that) will not only help you see trends and help you create goals for your business; but it will make tax time a breeze (sort of) because you're already organized. That's key.

Here are some incredibly useful tips from my friend, Julie Middleton. Julie provides small business support with bookkeeping that helps you set informed goals and focus on your customers (what you do best). From working with Target (remember Target Canada? Sniffle.) to TD Bank, Julie knows a thing or two to keep your small business on track.  

  Tips for getting you and your small business through tax time. By Swell Made Co. and Julie Middleton, Bookkeeper.

Tips for getting you and your small business through tax time. By Swell Made Co. and Julie Middleton, Bookkeeper.

Julie is going to take it from here. I suggest you pay attention, kids. If you still have questions and are operating a small business in Canada, you can get in touch with Julie

How to Make Tax Time Less Painful

As a small business owner, you can file your own taxes; but it often saves money to use a professional accountant. An accountant has the expertise to maximize your deductions and minimize your taxes. Here are some bookkeeping tips to reduce the cost for an accountant to file your taxes and make tax season less painful:

  1. Find out what your accountant needs – Talk to your accountant to get a clear understanding of what they need from you. Do they want the physical receipts, or a summary? Do they have forms for you to complete in advance? What is their turnaround time? Setting up expectations early on will save time for both of you. 
     
  2. Be as organized as possible – Group expenses together and label them with categories (home office, inventory purchases, travel, etc.). The less time the accountant spends figuring this out, the better. It's wise to figure out a system and find tools that work for you early on so it becomes habit. That way, you can track expenses/sales on a weekly, monthly or quarterly basis -- giving you a snapshot of your business throughout the year. Not just at tax time, but it will certainly make tax time less painful. You can go the DIY route and use tools like QuickBooks, FreshBooks and Wave Accounting or even a good old fashioned spreadsheet. If you have the option of outsourcing your bookkeeping, even better. 
     
  3. Take advantage of tax deductions – As a small business owner, you can write off a huge variety of expenses to claim tax deductions. Track business expenses such as inventory purchases, insurance, travel, media/advertising costs, meals, capital property, etc. Don't forget about home office expenses (if your home is your principal place of business or if you meet with clients in your home) such as internet, heat, power, water, and mortgage interest. You can also expense vehicle usage including gas, parking, and maintenance. Here is a great infographic with the top tax deductions for small business owners in Canada. 
     
  4. Summarize your expenses – Add up each expense and double check your results. Keep a spreadsheet with the totals and include this in the file you are sending to the accountant. If you use accounting software like Wave Accounting, FreshBooks or QuickBooks, print a profit and loss statement for the year.
     
  5. Don't forget your personal tax receipts - You need all your personal stuff too! Gather all of your personal receipts for childcare, RRSP contributions, medical/dental, T4s, etc. 
     
  6. Know your business and the deadlines  - Sole proprietors and incorporated businesses will need to provide the accountant with different information (and may have different tax filing deadlines). Know what kind of business you have, and when your deadlines are. Not only does this include the annual income tax deadline, but keep track of dates for HST remittance, instalments (if you utilize them) and RRSP contributions. 

If you are filing your own income tax return, TurboTax is a great tool that will walk you through the process for free (up until you file the claim). So, if you're comfortable with DIY, the tips above still apply to keep you organized and in the know when it comes to your small business. Finally, grab some wine and snacks to get you through the process. It helps!


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