Preparing to file your taxes shouldn’t start days before the deadline; it should be something you work towards throughout the year. Here are some considerations to make tax time painless for you or your business.
The Importance of Planning
Knowledge is power. It’s far easier to be aware and up to date on tax obligations and potential ways to manage or minimize your tax bill than end up with a surprise at filing time. If you are able to take a look at your tax position prior to the RRSP filing deadline of March 1steach year, an RRSP contribution can help lessen the tax burden.Once that deadline lapses, the ability to consider using RRSP contributions an option to reduce tax liabilities is lost.
If you are aware of how much tax you may owe, you can prepare ahead of time.You can start implementing a savings strategy for that liability immediately instead of falling short on April 30thand having to pay unnecessary interest to CRA.
What Planning Looks Like
Early planning involves discussions with us that include getting an idea of your income, expenses, deductions and tax credits anticipated for the year.Oftentimes, this planning is done late in December or early in January when most of your income and other information for the taxation year is known. We can prepare a draft return for review and discussion in advance of the ultimate filing of your return.
Create Good Habits
Good habits involve organized record keeping.For businesses, using accounting software, a spreadsheet or other method of tracking your revenue and expenses throughout the year helps you track where your income level is relative to previous years and signals you if there are significant fluctuations. Tax rates progressively increase depending upon income levels, so keeping tabs on where you are at in advance helps to prevent any surprises at filing time.
We are always available to help clients organize their information. More organized records help us as well!
How Your Accountant Can Help
An accountant can help navigate the tax waters, including advising on ways to reduce your tax liability.By filing and paying your taxes on time you can eliminate costly interest and penalties charged by CRA. By working with us to establish a great record-keeping system and having open discussions about areas of the year-end preparation you need help with can significantly reduce your accounting fees.