With tax season coming to an end, you may be breathing a sigh of relief. Tax season can be rough for anyone. If you’re a notorious procrastinator, the last few months might have been stressful and busy as you struggled to get everything in order. Even if you had some systems in place, it might not have gone as smoothly as hoped.
While your accountant is always there to help with easy filing, there’s a lot of work that happens throughout the year. The good news is, there are a few simple ways to ease the burden at tax time. Just a few minutes of setup will save you hours of work when 2019 rolls around.
To make next tax season your smoothest yet, put some of these items into action now!
1. Set up your online CRA account
This gives you easy online access to your CRA account so you can view previous returns. You can also learn more about the credits and benefits available to you.
2. Put a tax strategy in place
If you don’t have any kind of tax strategy in place, you’re like an Uber driver without a GPS system. In order to arrive where you need to be, you need a roadmap to guide your efforts. The term “tax strategy” might sound too complex and high-level for you or your small business, but we assure you, it isn’t!
Be sure to consult with your accountant this year! Get in touch with us to schedule an annual tax review. We’d be happy to show you where you’ll be able to save next year, and for years to come.
3. Review withholdings from your employer
Ask your HR department for a TD1 personal tax credit form. Make sure the correct amount of tax is being calculated. You can also request that extra money be withheld from each cheque. Remember that the more you put away now, the safer you are at tax time. It’s better to get a little lump of money back in a refund than to not have enough.
4. Put a system in place to track expenses (personal or business)
If you’ve spent the last few months chasing down paperwork, you’re not alone. It’s easy to get off track on your bookkeeping. What you need is a simple system that works for you!
If you’re an individual, a simple spreadsheet to track deductible expenses could be a strong enough system for you. If you are self-employed or own a business, an online system like QuickBooks might be easier for managing multiple transactions and tracking both income and expenses.
It can be daunting to set up any bookkeeping system, online or on paper. Schwan & Associates is happy to help you set up a new system and find the best tools that will work with your lifestyle or business.
5. Find an easier way to track mileage
Streamline your mileage logs with tech that can take care of it for you. Check out our review of the best mileage tracker apps on the market.
6. Find out what claims & benefits you missed out on this year
They say hindsight is 20/20. Hindsight can also be extremely painful when it comes to overlooking claims and benefits for your taxes.
It’s always important to know what you can claim when you begin the year so that you can provide the proper documentation. To learn more about what you can claim, give us a call or visit the CRA website.
7. Start saving for business taxes and GST now!
If you own a business and you haven’t been squirrelling away money for tax time, you might be cringing at your tax bill right about now. The best way to ensure tax season doesn’t come with that cringe is to start putting money away now. Think of this as a regular bill you have to pay, and open a separate savings account to store the funds if necessary.
The best rule of thumb is to put away 25% of your revenue. Of course, this percentage may be different for different businesses. Your accountant should be able to help you estimate how much you’ll need for taxes next year.
8. Consider whether you should incorporate your business
If you are a sole proprietor, this is the perfect time to look into incorporating. Incorporating does two things:
* Decreases personal liability by separating the business from yourself legally
* Allows you certain tax benefits
However, the tax benefits gained from incorporating may not be worthwhile for every business. Sole proprietors in certain industries and tax brackets could benefit from remaining unincorporated. This is where the advice of an accountant can truly save you thousands of dollars.
Be sure to contact an accountant before you incorporate. A professional accountant will be able to compare the costs versus benefits of incorporation, and help you decide if it’s the right time for you.
9. Reevaluate your retirement plan.
Get together with your financial advisor to review your TFSA, RRSP, and unregistered investment accounts. Are you contributing enough each year to reach your retirement goals? If not, you’ll want to get back on track right away.
And, last but not least, watch out for scams!
A final word of warning as we come out of the 2018 tax season: Don’t fall for CRA scams!
This is a time when many Canadians will be receiving calls and emails from the “CRA”. Someone getting in touch with you may claim you owe money to the CRA. They’ll typically try to take payment over the phone or via email, and may threaten you with legal action or penalties.
Always verify that you are speaking with a true representative before giving out your financial, banking, or credit card information (or any form of personal information) over the phone or email.
Click to learn more about how to protect yourself from a CRA scam.
We hope this information has been helpful and wish you a happy tax season next year!
Do you have questions about taxes, or do you want to learn more about how to manage and plan your finances? Get in touch with us to request a blog topic, or contact us directly for answers to your burning financial questions.