Tis the season... tax season!
This can be a daunting time of year for many business owners and frustrations arise because of the big question of what can and cannot be written off. Below are 6 common tax mistakes:
1. Missing deductions, such as car and house expenses.
* Suggestion: Keep a log of how many kilometers you drive for business, so you can write of a portion of your vehicle expenses. A great app for tracking mileage is Everlance. If you work from home, make note of the square footage of your office space and you can write off a portion of property taxes, mortgage interest, hydro and water.
2. Misplacing or losing receipts.
* Suggestion: Use a credit or debit card for business expenses, so you can cross-reference your receipts against the monthly bills, and file receipts in a folder or use an app like Receipt Bank to store all your receipts in the cloud.
3. Forgetting to charge GST / HST.
* Suggestion: Register for your GST / HST number. Registered businesses have important responsibilities including filing returns on time, collecting taxes on taxable supplies (services), and remitting owed taxes to the government.
4. Not being aware of changes to the tax laws.
* Suggestion: Consult with a tax advisor, to make sure you are claiming allowable expenses (and not missing those that you are able to claim).
5. Missing the Big Picture.
* Suggestion: Make sure your company is set up in the most efficient way. If family members are helping out in the business, pay them a wage. This can reduce taxes.
6. Not paying your taxes on time.
* Suggestion: Make sure you always file your taxes on time, even if you don't have the cash to pay the taxes owed. Pay taxes by April 30th, because on May 1st interest will start accruing. Not paying your taxes can result in serious repercussions, such as CRA garnishing your income or seizing your assets.
Here is a useful link that will help you put together your tax checklist: