How Canadian femmebought Businesses Can Prepare for Tax Season

Guest Blog post by Lina De Luca , edited by Julia Rose

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Welcome to Tax Season!

Have you been procrastinating by sitting in front of your laptop with your shoe box-full of receipts?

Us too.

But don’t panic! There are ways to get prepared and start early.

Follow these helpful tips for a stress free tax season.

When Are Your Taxes Due?

In Canada, the deadline for individuals to file their taxes for the previous year is April 30th. If you have are self-employed, (like most of you are!) the deadline is June 15th.

The tricky part to remember is that income tax payments are due on April 30th for everyone, so if you haven’t calculated and paid your income tax by then, interest will start accruing on the balance owing from April 30th.

Long story short: Ignore the June extension, and file with everyone by the end of April. It will make your life easier!

How Do I Track Income and Expenses?

Income first.

When it comes to reporting your business activity on your return, sole-proprietors are responsible for an income statement. This includes your income and expenses for the year, with expenses summarized by category.

Usually, summarizing your income is the easy part - get all your invoices into a spreadsheet and use your sales program to generate a report. If you had a separate business bank account, tally the deposits from customer payments.  

Expenses are a bit trickier.

If you’re keeping a lot of paper receipts, I always recommend filing them by category in an accordion folder as you get them.

Common Expense Categories:

  • Advertising

  • Travel/Auto

  • Rent/Home Office

  • Insurance

  • Interest/Bank fees

  • Phone/Internet

Keep in mind that for Home Office expenses, you’re tracking all your home expenses but then prorating them for your office portion ie. 10 to 20% of total space.

The best expense-tracking method is recording them somewhere during the year like in accounting software or in a spreadsheet. This way, you’re not left with a mountain of receipts to go through later.

Record the date, description, category, HST, and total amount paid for each expense. If you’re not registered for an HST number, another way to put all your expenses together is to pull them from your credit card/bank statements.

For emailed receipts, labelling the emails as you get them is your best option to file those expenses. Lastly, be sure to keep your receipts and supporting documents for seven years in case the CRA asks you to support your expenses claimed.

What About HST?

If you are registered for a number, you’ll need to settle up what you owe.

If you’re not registered, and are about to hit 30K in revenue, here’s where to do that in Ontario.

HST return filing and payments are due the same date as your taxes (April 30th for individuals or 3 months after a corporation’s year-end).

What Kind of Accounting System Should I Use?

Software, software software!

If you’re a corporation, you’re responsible for an income statement AND balance sheet.

So, you’ll need to report the balance of your corporate assets and liabilities at the year-end date (bank accounts, loans, credit card balances, accounts receivable/payable etc.).

Sole-proprietors can use spreadsheets, accounting software, or anything in between. Keep in mind: every business is different!

Automation is the ultimate goal to reduce time & costs spent on accounting during the year.

Hot Tip: We love And Co because it helps entrepreneurs track expenses and income easily!

What’s The Good News?

You can file your tax return online from the comfort of your home. Whew!

Plus, the Canada Revenue Agency gives you the option to allow direct debit deposit the payment from your bank account.

If you’re entitled to a refund, the CRA’s preferred payment method is direct deposit into your bank account.

We hope these tips help you get ahead of the game, be less stressed, and more organized.

Happy filing!

About Lina de Luca

Lina is a Toronto accountant with over ten years of experience in public accounting.

Lina's practice provides tax and accounting services for small businesses, as well as personal tax services for self-employed individuals and others. Her goal is to help people and their businesses get organized with customized accounting solutions and automate their accounting system. Lina is based in Bloor West Village in West Toronto, which is also where she lives with her husband and young son.

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