Attention Sole Proprietors/Self-Employed: Your Income Tax Deadline is Approaching - Tips for Getting Organized

June 15 is the filing deadline for those who have income other than from “T”-slips (for the most part those who are not employees or pensioners).

Bigger businesses have in-house accounting departments and accountants, controllers and CFOs to worry about these matters. Employees have their T4s and file online – real simple.

However, the taxpayers who have the most stress are those caught in the middle. For the self-employed, this is can be an ugly time of the year.

Is this you? Working 6 or 7 days a week to finish the renovation job, looking for a new project and battling your bank manager to increase your line of credit so you can pay the crew that does the heavy lifting on-site while you wait for the client’s cheque to clear?  Oh, your wife is reminding you it is time to pay the HST installment and the kid’s summer camp deposit is due this week!

After 12 hour days (remember it’s you running everything to do with day-to-day business – from wrong supplies delivered to site, to the electrician/plumber/whoever not showing….), the last thing you have energy for is record keeping.  If bookkeeping was your idea of fun you would have become an accountant! 

Look into the cab of the pick-up trucks parked outside Home Depot any early morning and guess what you see – under the fast food wrappers and Timmie’s cups – paper, paper and more paper.

Every one of these contractors is probably great at his trade and simply useless with paper.  Some know what to do but are too overwhelmed to get to it, whereas some are confused by it and never seem to have enough cash to get an accountant.

I know where you are coming from.  Real estate agents, mortgage brokers, drywallers, small business owners, etc., - different way of earning a living = same fear of tax deadlines. There is no short cut - either you are organizing it or you are paying someone else to do it.  Most of us need to turn the final accounting over to an accountant.

Here are some simple organizational tips to help you get things sorted:

·         Sort the pieces of paper by year (if you have more than one business then sort by month).

·         For each year’s batch sort the expenses into types of expenses.

·         You can find your sales through your invoice book or bank deposits or by adding up contracts you did. 

·         If you have a home office you will need to also gather, by year, the utility, repair and property tax bills plus your mortgage statements showing how much interest you paid.

·         For your vehicles that are used in the business get the leases/finance agreements and highlight on the monthly bank and credit card statements the bills for gas and repairs.

·         Go through any credit, store or debit card statements for these years and where you know it was a business expense highlight it.

·         Gather all statements and assessments from CRA and sort by date by type of tax.

·         Look through these organized documents and identify missing documents. If you are missing some bank statements you can print these off the bank’s history enquiry or pay for back statements.  For, say, one month’s missing electricity bill at your shop just estimate it.

You are now ready to do the bookkeeping.  If you have no experience in bookkeeping take these organized papers to your accountant and get it done properly.

If you are missing a lot of information (coffee spills, wind blows through and credit card slips don’t quite look the same after the laundry cycle!), gather what you have and speak to your accountant about how to fill in the blanks. A good accountant has seen worse, and will not judge you but get you on track.

Whatever you do, do not delay filing.  Do not incur late filing penalties or become guilty of tax evasion by being a habitual non-filer. 

If you have not filed for two or more years, before you start on the above get a professional tax solutions company on your side.  Filing a batch of years will likely trigger an audit and in our experience the good accountants are not as good as accessing CRA’s programs that reduce and eliminate interest and penalties as specialist companies that do not do accounting and tax returns.

If you have filed late in the past and are now facing a tax debt as a result, one that grows day by day, please call Tax Solutions Canada - we can help you get things sorted out: 1-888-868-1400.