Tax Tip Thursday

Organize Your Tax Papers

This week, let’s talk about the challenges of doing taxes and what people can do to make their lives more organized, easier, and less stressful come tax time! This will make things a lot smoother for themselves AND their accountant!

Personal

The biggest problem we have is that people think that their return is easy and so they come in at the last minute.

In theory – many times they are not wrong (although some people’s idea of simple versus mine are significantly different)

Their return may indeed be easy, but what they had not considered is that we also have 500 other easy returns to do, with the vast majority of them coming in during the month of April.

So while your return might not take much time, it is at the bottom of a very long list.

Since the return is so easy, if you gave it to us the 2nd week of March, it would have been done, you would have your refund and both of our lives would have been less stressful.

So what can you do as an individual help both yourself and your tax preparer?

  1. Get an envelope or file folder (or create a folder on your computer)
  2. Write the tax year on it that the papers will apply  (not necessarily when you put it in)
  3. Every time you get a piece of paper (or email/invoice), put it in the folder
  4. If you are not sure if it is applicable – put it in anyway
  5. Feel free to ask your tax preparer for a list of pertinent documents (we would much rather be handing out lists through the year than having to help you try and figure everything out in April!)
  6. When you get to the end of the year, make a list on the front of the envelope of all your documents.   If you have a lot of donations, medical or other expenses, add them up and put the total.
  7. If you have questions, ask them in January and February
  8. 1st of March, bring everything into the office or upload it to the portal!

Self Employed

For those of you that are self-employed and show up in March or worse yet April, this is generally problematic if you do not have your bookkeeping completed.

I offered all self-employed people a $100 if they brought it to me by March 1.  We had about 2 people take us up on it.  Next year, I will have a stack of $100 bills I think to make it more real for people.  I will happily hand them out for any sole prop clients that bring their paperwork to us early.

So the problem with self-employed is that they almost always need some amount of bookkeeping completed.   We have over 150 Sole Proprietor clients, so you can imagine what happens if they all show up in March and April to get their taxes done!

Bookkeeping is the key and unfortunately, nobody wants to do it or spend the money to have it done.  It is a necessary evil if you are going to own a business and you should allocate about 5% of your sales as a budget for bookkeeping, accounting, and taxes.

We have amazing bookkeeping programs, some for as little as $200 a month.  If you are not a candidate for monthly bookkeeping, we can also provide you with bookkeeping on a quarterly basis.  This will allow you and us to spread out the bookkeeping (and the costs) throughout the year rather than having to deal with it all at the end of the year.  We are putting together new and improved packages for clients, that are available in May!  If you have a small business this is something you need to put in place to alleviate stress and higher bookkeeping costs at year-end!

The other benefit of keeping your bookkeeping throughout the year is that you know where your business stands financially, and what your tax burden may or may not be through the year, and if you have HST, you can pay that along the way!

These are critical to helping you keep on track.

So what can you do as a business to help both yourself and your tax preparer?

  1. Hire us as your bookkeepers and will provide you with all the guidance you need!
  2. Organize your files and a daily/weekly basis – being up to date is absolutely key to not losing receipts and having accurate books
  3. If you are not a monthly/quarterly program, you should be, it really makes your life a lot easier at year-end (and ours too).
  4. Reconcile your bank & Credit Card accounts every month (make sure you have receipts for all charges on your credit card and bank statements)
  5. Put aside money for your HST and Taxes every month!

The key to taxes is not to wait until the end of the year.  We just cannot handle the amount of work that is required to complete a whole year’s worth of work in a few weeks.

Schedule Your Bookkeeping Appointment Now

While we are currently closed to new clients, we will be accepting new appointments again starting in May! Book today to save your spot.

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.