The self-employed, small and incorporated businesses are by far the category of clients that can benefit the most from using professional tax and accounting services.
Top Ten Preparation Tips for the self-employed and businesses:
1- Make sure your Trial Balance, Income Statement, Balance Sheet and all your annual transactions are well prepared and in balance. Paying close attention to identifying asset versus operating expenses.
2- Properly report all your HST charges and ITC transactions for your HST reporting period.
3- Self-employed individuals and smaller business will usually use pre-developed Excel templates (usually available upon request) to do their reporting and medium size operations will use software such as Sage 50, QuickBooks, etc….
4- It is most important that you include all your expenses. For example, a misplaced $1,000 dollar invoice can represent up to $490 in your pocket! and that is excluding the 13% refundable HST.
5- Keep a travel log to record your business KM if you are using your personal vehicle for business. This is most important if you want to be able to report a portion of your vehicle expenses and support your claim in an audit.
6- Compile and report your business-use-of-home expenses.
7- Consider using a payroll processor if you are a small operation. They can be quite inexpensive, accurate and worth the administrative time you will be saving yourself. Beware however, that some providers are more reliable and efficient than others. Ask your CPA accountant for advice and references.
8- Consider precipitating your expenses so that you can incur them before the year-end and minimize your taxes payable in the current year.
9- Don’t wait till the New Year to start your compilation and reporting. Waiting for the busy tax season (March onward) to get started will not do yourself or your accountant any favors.
10- Be organized, attentive to the details and avoid getting stuck in the procrastinating phase. Anything else will cause you to incur unnecessary tax liabilities. Be proactive and you will save yourself a lot of money, time and frustrations! (See Is the use of professional tax services justified?)
Conclusion: One of the biggest challenges for entrepreneur is to stay on top of the administration and financial reporting. Too many, unjustifiably consider it a secondary priority until they are faced with dealing with the reality of the situation.
Word of Advice: A dollar saved is worth more than an additional dollar in revenue!
Work to live, instead of living to work!