It’s official, we have entered the most stressful season of the year…TAX SEASON. Just the thought of tackling all that paperwork can make a person lose sleep, and nobody feels that burden more than a small business owner. Fear not– we spoke to an accounting expert on behalf of Ablii customers to ask for actionable tips to deal with the daunting task of filing taxes. Here are 4 tips to minimize the stress of tax season for business owners in Canada and the U.S.
1. Keep your receipts
This tip is simple but crucial. There’s no bigger frustration than an impending audit and no receipt backup transactions. The Income Tax Act states that records should be retained for six years ( or 3+ years in the U.S.) from the end of the last tax year, making it very important to have a centrally located database for invoices.
2. Know what is tax-deductible
Deductibles are all about what’s “reasonable”. Keep track of your eligible business expenses and notes explaining the thought process of how you determined what was “reasonable” and therefore deductible for tax purposes. Not only is this good business practice, but it will also limit your exposure to questions from the IRS and CRA.
3. Acquaint yourself with available income tax credits and deductions
Did you know that you could qualify for home business tax deductions, which could include the interest on your mortgage? How about a tax credit of up to $2,000 if you hire a tradesperson working in the first two years of their apprenticeship program? There are a whole array of tax credits available which could benefit your business. Investing time into determining what these are and if they apply to you could be extremely valuable to your business and provide you with quantifiable results.
4. When in doubt, consult
Qualified experts can be expensive but they can also save you money, time and future liability. Finding a trusted advisor is especially important as you grow your business and begin to face more complicated tax issues.
Filing taxes will never be stress-free, but we hope these tips make the process a little easier and wish you all the best this tax season.