Tax Cheat Sheet: Staying on Top of Small Business Taxes

Frost-covered windshields, the sweet aroma of hot cocoa, and beautifully decorated homes that light up the black night with bright, colourful lights. There are certain identifiers that have come to signify this time of year. But as we wrap 2018 like we wrap gifts for our loved ones, many small business owners still have a few tasks to cross off their list, before they can kick back, relax and enjoy the season.

For many businesses, the calendar year-end coincides with their financial year end. If your business falls into that category, it’s time to start preparing your accounting records and documents for your accountant’s review and filing. With budgets tight around the holidays, your proactivity and preparedness can minimize accounting costs, so you’ll want to get on top of things sooner than later.

Now, what exactly does your accountant require to complete the filing process? It can get confusing and as a small business owner, you’ve got enough to worry about. To help, we’ve compiled a Tax Cheat Sheet of the most common records and documents your accountant needs to accomplish the task and set you up for a great start to 2019.

Compile Records

Depending on the categorization of your small business, your accountant will require different records. For example, if your business is a sole proprietorship or a partnership, you’ll need to file a T1 Return (Personal) and provide your accountant with all your personal information slips as well as those relating to your business. The most common are as follows:

  • T3 Slips (income from trusts)
  • T4 Slips (if you have employment income other than your business income)
  • T4A Commission Slips
  • T5 Slips (investment income)
  • Child care expenses
  • Donation Slips
  • Medical and dental receipts
  • RRSP Contribution Slips

File T2 Return

If you are an incorporated company, you’ll need to file a T2 Return (Corporate) and provide the following documents to your accountant if you do your own bookkeeping:

  • Asset additions or disposals during the year (land, equipment, vehicles, etc.)
  • Business use-of-home details (if operating a home-based business)
  • Electronic copy of your bookkeeping records for the year, complete with any passwords required to access the information
  • Financial statements for the year (balance sheet, income statement, cash flow statement)
  • Income tax installment assessments and notices of assessments
  • Motor vehicle expense information (percentage use for business, mileage log, etc.)
  • Payroll records (if you have employees)

Provide All Corporate Receipts, Invoices, and Bank Statements

If your bookkeeping is managed throughout the year by your accountant, you’ll just need to provide them with the final array of business receipts, invoices and bank statements. If your bookkeeping is done at year-end, you’ll need to provide business receipts, invoices and bank statements for the entire year.

Your accountant may require additional documentation or records, so it’s always best to meet face-to-face with them and make a personalized list of what you need. That said, if you prepare the most common records as noted, you’ll be ahead of the game.

The holiday season is one of the most enjoyable times of the year. It should be spent sharing memories with family and friends as opposed to scrambling with paperwork the last few days of the year. Organize your records now, so you can fully participate in the joy of the season. And if you’re unsure about where to start or need help filing this year, Mecklai Tax & Accounting offers tax advice, planning, preparation and filing services.

Happy Holidays and Happy Filing!

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