Are You Prepared for Your First Corporate Tax Return?
Are You Prepared for Your Corporate Tax Return? For many, filing their annual taxes is a stressful situation, especially for your business. The great news for new business owners preparing for their first corporate tax return is that there is a lot that you can do to reduce the anxiety as well as save yourself some money through some proper preparation. Organization is key The more organized your financial documents are, the easier it is for your accountant to review and identify any potential tax savings you can access. Taking this step pro-actively can also save time and reduce the billable hours required to prepare your return. These simple steps can go a long way to submitting an organized package. Gather all of your receipts and sort them by month. Print all monthly bank statements as well as your credit card statements Attach receipts to the related invoices and/or statements to verify your expenditures. Provide a copy of your monthly income statements and balance sheets Your receipts and statements simply serve as supporting documentation to verify your income statements and balance sheet. Collectively, this documentation serves to illustrate your sales, expenses, assets and liabilities that all factor into your tax bracket and eligibility for various exemptions. What information do you need to provide? Whether you are preparing your return on your own or you are working with an accountant, you will need to include the following information. When working with an accountant, ensuring that you provide this information when you submit your documentation can save delays in preparing your return. Your business registration number The address of the head office for your business The address where your records are stored The fiscal year-end of the business At Rutwind Brar, we work with corporate tax returns for businesses of all sizes and can help you to best maximize your return and retain as much of your income as possible. Before you file your first corporate return, we welcome the opportunity to meet with you to ensure that you are prepared for tax season and are equipped with the best advice possible.
If You Are Newly in Business, Taxes Don’t Have To Be Stressful.
When you have been lured by the romantic concept of becoming your own boss, you will find yourself introduced to much more than you anticipated as it relates to the administrative and financial responsibilities as a business owner. For many, their first tax reporting period can be stressful – ensuring that you have compiled all the required documentation and can safely sign off on your return as complete without any errors can lead to many long hours and sleepless nights. But ensuring compliance with the Canada Revenue Agency doesn’t have to be a menacing obstacle. At Rutwind Brar, we have helped many new business owners just like you to navigate their initial tax filing with ease. How can you avoid the pressure of the annual tax deadline and maintain the focus on your core business where your passions lie? Here are a few simple tips to help you: Early preparation can be helpful While many procrastinate on their tax returns each year, often finding themselves scrambling to get their personal and business returns filed by the deadline, you don’t have to wait until the last minute. As a business person, you know that the requirements are in place, so you can prepare your documentation and file your returns in advance of the deadline. At the very least, you may initiate the conversation with your accountant or tax advisor months in advance to ensure that you are thorough and ready to file with confidence Deductions are legitimate Depending on the nature of your business, any expense that is related to that venture may be eligible as a tax deduction. The advice of an accountant can be a saving grace in this area as they can help you to identify deductions that you perhaps didn’t realize you could claim while helping you to avoid over-reaching by including expenses that might raise red flags with the Canada Revenue Agency. Knowing how to effectively document the real costs of running your business can mean a difference of thousands of dollars to your annual bottom line. Losses are par for the course Most businesses report losses in their first year of operation and it is common that companies may not turn a profit for several years. While it is true that reporting annual losses year over year may seem perilous, a clear business plan which identifies your performance is on target for the long term goal should inspire confidence from the Canada Revenue Agency as well as other key stakeholders associated with your venture. What if you owe taxes? If business is booming, you may find yourself in a situation where you owe taxes to the government. It may seem daunting to file a return which shows that your tax bill puts you in financial difficulty as you try to keep things afloat. It is important to recognize that you can arrange payment terms with CRA that lessens the impact on your monthly cash flow and ensures compliance. If you can’t pay in full up front, know that you’re not alone and others are implementing solutions to help them address the same situation. Getting audited isn’t really that common Ask anyone in business what their greatest fear is and being audited is probably high on the list of worries that many entrepreneurs may identify. In truth, some statistics report that only about 1.6% of businesses ever find themselves subject to an audit. Should you find yourself in this position, the best strategy is to be open and responsive to the CRA and respond promptly to notices, providing the copies of any requested documents. If you should find yourself facing an audit, this may be a time when you want to consult with an accountant if you haven’t already made the sound business choice to retain one to assist with your overall business accounting. A certified accountant can help you to prepare for your audit response to facilitate the best possible outcome. Do you still have tax questions related to your new business? Our team at Rutwind Brar can help you to address your concerns about the upcoming tax reporting period and ensure that the process is as stress-free as possible. Give us a call and make an appointment to talk with one of our business tax experts.
What Should You Hold Onto After Filing Your Tax Returns
What Should I Hold Onto After Filing My Tax Returns? If you have ever been afraid to dispose of financial records because you are not sure about if you might need to draw upon those documents at a later date, you may feel overwhelmed by the sheer volume of paperwork that you have accumulated over your adult life. If you’re looking to de-clutter or downsize, here are some handy tips about what documents you should retain and what you can safely destroy. While it is generally considered that a three year time frame is reasonable to retain your personal tax returns, if the Canada Revenue Agency has a suspicion of fraud, they may elect to look deeper into your past. However, as a guideline, you may consider the following retention schedule for your personal financial records. Completed tax returns If you ask your accountant or tax preparer, they may recommend that you never dispose of your completed tax returns. In the event that there is a dispute at any time in the future about the status of your filing, you have the documentation to prove that you have. If you choose to destroy any of your returns, best practice holds that you should retain your returns and financial records for a period of seven years – and you may be mandated to do so for commercial returns. Supporting documentation The receipts and hard copy invoices and documents that support your annual return should be retained for as long as you hold onto the completed return for that year. When you dispose of your returns, you might also choose to take the same action with your supporting documentation for that tax year. Special circumstances If there is ever an special circumstance in your income tax reporting when deductions for bad debts or securities may be claimed, you should hold onto the paperwork that supports your eligibility for those claims at a later date as applicable. Working with a Chartered Professional Accountant, they can help to identify which documentation may be valuable for this type of scenario. Real estate documents You should ensure to retain documentation related to any property you own for the duration of time that you hold the property. Should you sell the property or dispose of the real estate through any other means, it is recommended to retain the records of that transaction for a period of three years after it has been documented as part of your tax return. As a homeowner, receipts showing investment and improvements in the home or any re-financing you pursue may become relevant at the time of sale for tax purposes, so keep meticulous records of your properties. Investment records If you have invested in stocks and bonds or other securities, you should retain accurate records that reflect any purchase, sale or redemption of these products and ensure timely reporting on your tax returns as applicable by jurisdiction. These records must be retained for at least as long as you hold these assets in your portfolio and for a period of at least three years after the sale or transfer of these items has been documented on your annual tax return. Retirement Savings Accounts There may be tax benefits and implications associated with your retirement savings accounts, so you should retain accurate records of these investments as well as any withdrawals that you make from these accounts which are considered to be additional income for your household. While you cannot often access your locked in retirement accounts, it is important to always have a record of their performance as it may relate to your overall financial picture. If you are going through your records and considering disposal of any financial records, first consult with your accountant to ensure that you are not putting yourself at risk by failing to retain any critical items. Our team at Rutwind Brar can help you identify what you should retain and what might be safely destroyed without compromising your financial situation in the present or the future.
