- Money and finance
Tax Season Is Here: Advice and Tips For Filing Your Taxes
Al-Karim Moloo, a Business Advisory Partner at WBM Partners LLP, a boutique tax and advisory firm in Burlington, Ontario and Calgary, Alberta, chatted with us about his tips for entrepreneurs during tax season. Keep reading for tips he has for small business owners when filing taxes, and other recommendations that will help make tax season easier.
Can you list your top five tips for entrepreneurs when it comes to filing their taxes?
1) Maintain a proper set of books and records. Try and summarize this monthly as this will give you a regular overview of your expenses and revenues and will also greatly reduce stress at yearend.
2) File your GST on time. This is one easy way to avoid unnecessary penalties
3) Ensure that your payroll reporting and remittances are done monthly, once again avoiding unnecessary penalties
4) Ask your advisor for a guide or list of what expenses you can claim in your business. This will save you time and will help you avoid issues with Canadian Revenue Agency (CRA).
5) Have processes in place to deal with taxes and make this part of your business plan. Planning to pay taxes is actually a positive thing—if you are paying taxes, your business is successful and you are turning a profit. Many businesses take years to be profitable.
6) The most important thing is to find the right advisor. If you are spending your day bookkeeping, you can’t focus on growing your business. Having the right advisor ensures that all the correct processes are in place, leaving you with more time and energy to spend focusing on what you know you need to do to ensure your business is successful.
Can you recommend any resources available for entrepreneurs to help them get through tax season?
The CRA has a lot of useful information on their website that will give you some good guidance. In addition to this, your advisor can provide you with information that is published annually that is current. Your local chamber will have some resources that can be of benefit to you as well.
What do you think the biggest challenge (or mistake) for entrepreneurs is when filing their taxes?
One of the biggest challenges is understanding what you can claim in your business and what should not be claimed as a business expense. Fixing these mistakes can be costly, using up time and resources that could have otherwise been avoided.
What is something that many entrepreneurs don’t realize they can claim on their taxes?
There are a few government programs and grants that are available to assist businesses. One, for example, is the Scientific Research and Experimental Development Program (SR&ED). The CRA Website has information on the SR&ED Credits available and will assist you in determining if you have eligible expenses. This is just one example of what is available, your advisor will be able to assist you with determining if you have SR&ED activities in your business or if there are any other programs available to assist your business.
Taxes can be overwhelming—what is some advice you have for entrepreneurs to follow throughout the year to avoid being overwhelmed come tax season?
I always tell my clients to keep records organized and have monthly conversations with your advisor. In these conversations, discuss your revenues, how your business is doing, and what your tax liability looks like. You should also try and forecast your future revenues and expenses, and compare them to your actual results. This process will help you manage your cash flow.
Anything else you think is important to include/add?
You and your business are unique so you should seek the right advisor. This advisor should be someone you trust, someone who will help you develop a strategy and who will be there to help you navigate through the obstacles. Advice should be tailored for you and for your business. Advice given to one client may not work for another. Everyone’s situations are different and your advisor should be giving you information and directives that are customized to work for you and your business. Most importantly you should feel comfortable enough with your advisor to call anytime you need and to bounce ideas off of them to see how these would impact your business, your taxes and your family.
For more information on filing your taxes as a small business owner/entrepreneur, click here.