Small Business Taxes
A bookkeeper will be invaluable in keeping track of your accounts and keeping your records in order. Having your records organized and recorded by a professional bookkeeper will make your filing taxes a much more streamlined and less stressful experience. Financial statements at the end of various time periods will help you know the financial health and specifics of your business for that time frame. Those financial statements will help when it comes to filing taxes at the end of the fiscal year. Keeping on top of your accounts receivable and accounts payable balances will make sure you are keeping up with your customers and make sure you have good credit with your suppliers. Here are some things a bookkeeper can do for your small business to help you with your taxes.
Keep Correct Small Business Tax Records
Once you have registered your small business and received your business number using form RC1, you can report business income and expenses using form T2125 to Canada Revenue. In order to do so accurately, you need to keep correct records of all transactions made to support your income and expense claims off your tax. Proper record keeping will make sure your tax claims add up. Having all your records collected, organized, recorded properly and kept for the appropriate amount of time will make filing taxes less time consuming and easier when it comes time to file taxes. A bookkeeper can keep track of the three main types of tax records:
Tax Deductible Income Records
Income transactions can come in multiple forms, invoices, contracts, receipts, bank deposit slips are just some forms. A bookkeeper can collect all the sources of transactions and make sure they are recorded properly. These include sales invoices, receipts, bank deposit slips, contracts and fee statments among others.
Tax Deductible Expense Records
When you purchase something for your business a receipt is invaluable. Recording your expenses with the proper information will make sure your expenses make sense when it is time to file taxes. A bookkeeper will help you make sure all your receipts have the proper information such as the date, name and address of the seller and buyer, what the good and service is, and the business number of the vendor if GST applies. A bookkeeper can also help you keep track of the mileage of vehicles you use for your business so you can claim them and al other tax deductible expenses when tax time comes. Other expense record details necessary to retain are details of the goods supplier/purchaser, vendors name and if they are HST/GST registered and purchase/sale dates etc.
Tax Deductible Property records
In Canada there is an allowance called the Capital Cost Allowance that allows you to deduct from your taxes, property that has depreciated over time. Keeping records of any property you purchase, sell or trade will let you calculate your Capital Cost Allowance. A bookkeeper will be able to keep, organize and help you properly keep track of each property transaction and use those transactions to calculate your Capital Cost Allowance. Additionally, bringing assets into a business can have a variety of implications on HST/GST depending on the specific scenario. Make sure you comply with CRA by having this handled correctly by a professional bookkeeper.
Personal Income Taxes
As the sole proprietor of your business, your business’ income will be a part of your personal income taxes. You need to account for this and budget for taxes you will need to pay when tax time rolls around. A benefit of being the sole proprietor of your business is you may be able to deduct business expenses from your income taxes, things such as travel, rent for your business space, various supplies, etc. At On The Money Books, our professionals can help you budget your revenue properly to ensure you have the budget for when tax time comes and we can make sure you can obtain the maximum deductions on your taxes.
Payroll Taxes
Paying your employees can be complicated especially as your business grows and you provide more benefits to your employees. There is a lot to consider when paying employees, from how often you pay them, to employment insurance, Registered Retirement Savings Plans and the Canada Pension Plan contributions and all taxes associated with those.
A professional bookkeeper will help you design your payroll system, and keep track of benefits. We will help you determine what claims and deductions you can make on your taxes that are relevant to your specific situation. In addition, opening a payroll program account online with the Canada Revenue Agency to pay payroll taxes requires an extensive amount of information; having an experienced bookkeeper will ensure you have all you need to minimize the task as much as possible. Information such as the country of original of the franchiser head office are an example of things many people miss out on.
Tax Planning
We will work with you to make decisions for your business to minimize your taxes and work with the goals you have for your business. We will help you plan your business and look to the future of your business and use our expertise to make sure your future taxes are as low as possible by efficient bookkeeping of all your tax deduction entitlements.
Tax Audits
Keeping your records in order and taxes filed in time will minimize the chance of being audited, but there may come a time when the CRA may audit you. Talking to our professionals we can look at your finances and minimize the chances of being audited, and if the auditors are coming we can be your first line of defense. We will be with you and the CRA to make sure to comply with them and make your life less stressful during this time. Furthermore, something that is not considered by many business owners is how long they need to keep their records. This is something you can find out from your bookkeeper and can be specific to a type of business.
Registering for GST/HST
We can assist you and ensure you are or have been correctly registered for a GST/HST account. It can be quite a daunting task to ensure you have all the correct information and are set up correctly. Let us take the stress out of it for you and consult us on getting your small business registered for tax payments for each fiscal year.
Import and Export Taxes
If you import to Canada or export goods from Canada, accounting for applicable taxes is imperative to ensure compliance with Canada transport laws. Paying duty on imports and reporting exports for taxable purposes are essential components in correct small business tax bookkeeping. Don’t forget to include the tax deductible expenses of imports and what expenses you are entitled to claim.