Common Errors to Be Avoided by Small Businesses When Filing Taxes

Filing and paying taxes for small businesses is a legal responsibility and not a pleasure. Business owners should be aware of preparing for the deadline all year in order to take the stress out of tax season.

Filing and Paying on Time

Non-filing and late payment incur penalties which can add up significantly if let lapse. By listed percentages, the costs of penalties will grow on a monthly basis. It is important to check with the Canada Revenue Agency to understand these charges well before the Canadian tax deadline of April 30.

When a serious issue arises, you may request an extension to avoid being charged. The recommendation is to prepare ahead of time and not after the tax deadline.

Pay Estimated Taxes Throughout the Year

Small business owners should be familiar with the CRA’s rules for estimated tax payments, ensuring they meet quarterly installment requirements. Estimated amounts expected by the government are stipulated by the government, so you must find out the information. You should work with your bookkeeper to make the proper submissions at the right time.

Business Deductions as an Advantage

The items that are allowed are specific. You may reduce your tax load by applying the specified expenses such as furniture, supplies, equipment and more. Review the list of allowable deductions such as office supplies, business use-of-home expenses, and professional services with your accountant or consult the Canada Revenue Agency’s website for detailed guidelines.

Track Expenses Accurately

Make detailed records of your expenses. Keep all receipts for savings, travel etc. and categorize them. Bookkeepers can help streamline your process by managing your books, categorizing your information and advising you on productive solutions. Such organization can save time with your accountant come the tax deadline.

Business Expenses and Personal Expenses Must Be Separate

Confusing business expenses and personal expenses can become murky and present problems when preparing your tax returns as the deadline approaches. Use separate bank and credit card accounts; keep receipts separate, and pay yourself a salary rather than drawing from business accounts. Get advice from your bookkeeper.

Hire a Professional Accountant

Tax software can be a temptation to save the cost of a professional accountant. For complex business organizations, the price of accounting services can simplify problems. You can avoid errors and use the accountant’s business expertise for greater deductions.

Consider hiring a Toronto-based accountant, experienced with both Ontario and federal tax regulations. Local expertise can be invaluable, especially when dealing with specific deductions or business scenarios unique to the area.


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