New 2020 Tax Deadlines Are Approaching

Reminder: New 2020 Tax Deadlines Are Approaching!

Are you aware of the changes the CRA has made to your tax return deadlines?

COVID-19 has brought about so many changes in our lives. Zoom meetings, physical distancing, homeschooling, stay-at-home orders… it’s been overwhelming for us all. And then, as the cherry on top, we started to get notice of assessments in the mail saying that our taxes were due on April 30th, 2020. Yikes!

Thankfully, the government saw fit to give us all a break in April and moved most income tax deadlines a month into the future. This decision has given Canadians some much-needed breathing room. After all, doing your taxes is stressful enough already, let alone doing them during a global pandemic!

So, here are the dates that you need to know to make sure you get everything submitted to the CRA with time to spare:

Filing Date for Individuals

The deadline for filing your personal income taxes this year was moved a month later, to June 1st, 2020. You’ve likely already done most of your tax prep back in March or April (and if you haven’t, we could probably help with that). So all you need to do is fill out the forms and file online or through the mail.

Another way that CRA is helping Canadians is by delaying the payment dates of your income tax to on or before September 1st, 2020. You don’t need to send any money until that date, with no threats of interest or penalties. This deferral could free up some additional room in your budget over the next few months.

Filing Date for Corporations

Similar to individual income taxes, the deadline for filing corporate tax returns is now on or before June 1st, 2020 for those originally due after March 18 and before June 1. Corporations with a filing deadline in June, July or August is extended to September 1st, 2020. This delay was a big stress reliever for business owners, as many of their businesses had been closed due to physical distancing guidelines throughout March and April. But sadly, the “bill” has come due – if you’re a business owner, you’ll need to get your taxes in by the end of the month!

The payment date for corporate taxes has also been moved to September 1st, 2020. Again, this deferral should free up some much-needed budgetary space for businesses of all sizes during this difficult time.

Filing Date for the Self-Employed

Here’s where things get a little tricky. While the CRA moved tax deadlines for individuals and corporations, the deadline for the self-employed remains on or before June 15th, 2020. We understand that it would be nice to get a bit more time to finish your taxes, but that’s still two more weeks than the other groups!

Much like with individual and corporate taxes, the payment date for your taxes has been moved to September 1st, 2020.

Reasons to File Your Taxes ASAP

Just because you have some extra time to do your taxes doesn’t mean you should wait until the last minute. If you ignore them until a week before the deadline, you’re going to be pretty stressed out. By doing your taxes now, you’ll be taking a huge burden off your shoulders, helping you better manage your current situation.

You should also keep in mind that waiting to file your tax returns could result in a delay of any of your benefits under the GST/HST tax credit or the Canada Child Care Benefit, along with potential refunds.

Take the Pressure Off Entirely!

Way back in March, we had dozens of our clients send us all of their relevant financial documents so we could do their taxes. They told us that knowing they didn’t have to do anything was a massive weight off their mind.

Today, individuals and businesses are back in the same situation, except now it’s even more stressful. People usually dread doing their taxes at the best of times, and this is NOT the best of times!

Fortunately, we can help. Even though our physical location is closed due to COVID-19, we’re still putting our nose to the grind doing bookkeeping and taxes for our clients! If you haven’t filed your taxes yet, you could easily send us all of your receipts, invoices, pay stubs, and other financial documents. We’ll take care of the rest! The best part is that you’ll know that a tax professional is making sure that you get every credit and deduction that’s available to you and your business.

So, if you want to take the pressure off doing your taxes, contact The Number Works today. We’ll take care of your taxes so you can take care of yourself!

Getting Your Business Ready Well *Before* Tax Season

Getting Your Business Ready Well *Before* Tax Season

Did you know that a survey conducted by The National Small Business Association (NSBA) discovered that 33 percent of small business owners spend over 80 hours on federal taxes? That adds up to two full weeks!

Although getting your papers in order so you can file your taxes isn’t very exciting, it’s one of the most important things you can do for your business. Believe it or not, tax time doesn’t have to be a burden so long as you start to prepare well in advance.

So here are four things you need to know to get your business ready and help ease the stress of filing your taxes come April:

What Will My Accountant Need Come Tax Time?

As a business owner, there are no shortage of important forms and records that your accountant will need to properly file your taxes. Pulling all of these documents together can be one of the most time-consuming parts of their job if you aren’t already properly organized. And, as you know, accountants are usually paid by the hour. So if you want to cut down on accounting fees for your business, preparing well in advance of tax season can make a big difference on how many hours you’re paying for – and, trust us, your accountant will love you for being so organized.

Here’s a list of common business records you’ll need to give your accountant for tax season:

  • All of your business’ financial statements, such as income statements, balance sheets, and cash flow statements.
  • If your business has employees, your accountant will need your payroll information.
  • Your accountant will need the receipts from your travel expenses, advertising expenses, rent, utilities, office supplies, maintenance, telecommunications, internet costs, raw materials, shipping, etc.
  • If you have a company car, you’ll need motor vehicle expense information, such as your business’ use of the vehicle, operating expenses, vehicle driving log with business kilometres driven, etc. 
  • Having asset additions or disposals during the year, including land, buildings, vehicles, machinery, etc. is also crucial.

Lastly, your tax accountant will require your tax records including:

  • Last year’s Notice of Assessment
  • Amounts paid by instalments
  • A copy of your income tax return filed in 2017 (if you’re a new client)

Phew! So now you see why it’s important to get your business ready for tax time before you end up in a time crunch!

By preparing well in advance, you won’t feel the stress of having to gather all this information at the last minute. If you have any questions about these forms or receipts, your accountant will have ample time to answer them before they’re drowning in a mountain of paperwork come March.

How Can I Legally Deduct My Business Expenses?

This is where preparing well ahead of tax season can really benefit you and your business.

In order to maximize your deductions, you must have all your business-related receipts. In fact, the Canada Revenue Agency (CRA) requires that all of your business expenses be backed up by receipts, and you actually need to keep these receipts for at least six years, as the CRA can ask to see them again if needed.  

To prepare your business for tax season early, you should get in the habit of asking for a receipt after every transaction, no matter how small. Train yourself to look at your receipts when you first get them to ensure they clearly show what the purchase was for and that they include a legible vendor’s name and date.

As our experts here at The Number Works know, illegible or incomplete receipts are a hassle when it comes to accurate record-keeping, especially if you or your bookkeeper are trying to record what an incomplete receipt was for months later.

Creating a habit of checking all your receipts as you get them is a crucial first step to maximizing your business income tax deductions.

What Else Should I Do Right Now to Prepare My Business?

Get organized! Being as organized as possible will ensure a stress-free tax filing for both you and your accountant.

If you’re looking for a place to start, try creating a system where you clip groups of receipts together by type, using post-it-notes to show each category of receipt on the top. If your accountant isn’t wasting their time trying to figure out what the receipts are for, you’ll actually be saving money!

It’s essential that all your records are accurately summarized and tallied. Cheques, invoices, and business expenses should all be categorized and totalled. If you have a system where you sort all your information slips by type, you’re bound to save more time come tax season and, therefore, more money!

Ask your accountant what will make their job easier. Trust us, they will have lots of ideas! Together, you can find ways to better organize your records and documents based on the type of business you run. By figuring out potential problems with your accountant in advance, you’re sure to have their full attention and work out any kinks in the system well before it’s too late.  

Remember, your accountant is here to help by giving you tax planning advice such as how to maximize your credits or deductions or ways of restructuring your business finances to reduce your tax exposure. So don’t be shy to pick up the phone!

What Kind of Income Tax Return Does My Business Need to File?

It’s important to determine which form you’ll be filling out well in advance because the paperwork you will need can change based on how your business is structured. For example, if your business is a sole proprietorship or partnership, you must report your business income on your T1 personal income tax form because, in this case, your business is you. For a sole proprietorship or partnership, you’ll want the T1 income tax return package, which includes Form T2125 (Statement of Business or Professional Activities), for you to report your business income.

What if your business is incorporated? In that case, you will report your business income on a T2 corporate income tax return. By law, your incorporated small business is a separate entity, thus it needs to complete and file its own Canadian income tax return. However, don’t forget to file your own separate T1 personal income tax return. If your business is incorporated, then you as a person are a separate legal entity, and that’s why you’ll need to fill out both the T1 and T2 forms.

If your business needs to file a T1 return, your tax accountant will also need your relevant personal information slips and tax-related documents in addition to the business ones.

Some of these forms may include:

  • T4 slips (if you have employment as well as business income)
  • T4A commissions & self-employed
  • T5013 Partnership Income
  • T3 Income from Trusts
  • T5 Investment Income
  • RRSP contribution slips
  • Charitable donations
  • Medical and dental receipts
  • Child care information

How Can I Save Even More on Accounting Fees?

Another great way to prepare your business well before tax season is to start using cloud-based accounting software (if you haven’t already).

With current cloud-based accounting packages, you can have all of your accounting information in one easy to access place, and your accountant can even access it online at any time.

Not only will cloud-based accounting software keep track of your expenses and revenue, it can even do payroll and time and billing, as well as generate income statements, cash flow statements, and balance sheets as needed.

By switching over to a cloud-based system now, you’ll have ample time to get used to the new system and test out all its features long before tax season, making tax time even easier!  

The Bottom Line

So, what are you waiting for? If you want to make sure that all of your tax documents will be in order with every form filed on time, don’t hesitate to contact us today! Here at The Number Works, we’re more than happy to answer any and all of your tax-related questions to help you get your business ready well before tax time.