With every new year comes that sinking feeling that tax time is just around the corner.When you own a small business, filing taxes is not just a matter of picking up software and plugging in numbers. There are depreciations, exemptions, assets and more to think about.
Unfortunately, thinking about taxes is not many entrepreneurs’ favourite pastime!
Today we will show you the easily avoidable reasons why entrepreneurs file their taxes late,and how to stop procrastinating.
Reason 1: Overwhelmed with Work
Small business owners work very long hours and they work very hard. Quebec alone has more than 200,000small (1-99 employees) businesses, so that means thousands of people putting in45+ hour days doing everything from their own marketing, HR, product development, and sales. The thought of taking hours to organize and file taxes on top of that is daunting.
When customers are waiting for products and sales need to be made, it’s hard to think about tax time.
The solution: Tax time comes up every year, so rather than leave everything to the last minute, set aside time each week to make sure receipts and records are updated and properly filed. At tax time, it will be a matter of simply assembling this information.
Reason 2: Confusion
The Tax Act is lengthy, technical and incredibly confusing. Even CRA has a hard time figuring it out! You are bound to have questions at tax time, but looking for answers on your own can lead to conflicting advice and even more confusion.
The solution: Hire an accountant. It’s the job of an accountant to know the Tax Act and how it applies to you and your business.Accountants keep up with changes to the tax code, allowable deductions, filing deadlines, and more. They also represent your company to CRA if they filed on your behalf, so if CRA comes knocking with questions, they are answered by your accountant, not you. Why stress about a subject you know little about when it’s someone else’s job to do so?
Reason 3: Finances
It can take a while for a small business to turn a profit. At tax time, the thought of an accountant’s bill and your tax bill can seem like an avoidable expense; but is it?
Think about this analogy. You own a car. You know the car needs oil changes. You are broke so you put off the oil change time and time again. You blow the engine. The cost to fix the engine is far greater than the sum of the oil changes you missed. Why didn’t you just budget for the oil changes?
Taxes are the same. You know you need to pay your taxes. You know an accountant is your best bet to file them properly and on time. If you avoid getting the help you need and avoid filing, the cost will greatly outweigh the alternative.
The solution: Plan in advance and factor the costs into your monthly budget. You have a full year to set aside a percentage of each month’s profits for your tax bill and accounting services.
Get Ready for Tax Time with AF Accounting
Ready or not, tax time is just around the corner, but you don’t have to face it alone. Whether you have a box of organized files or shoe boxes filled with crumpled receipts, AF Accounting can help. With AF Accounting, you have no reason to file your taxes late. Contact us today to get started.
Still procrastinating? Here’s what happens when you file your taxes late.
