What You Need to File Your Taxes | QB Online
I know, I know, not the spiciest blog title to exist but we take taxes seriously around here and I wanted you to know what you’re getting into. Around this time of year, you start to hear the whispers of taxes but it’s easy to ignore when you’re trying to finish up your holiday shopping, hit deadlines at work or figure out how you’re going to order a pre-made turkey dinner and pretend you made it.
BUT
I’m the little voice in your head to remind you that year-end is also upon us and while there is no need to stress, it’s important to get your ducks in a row so you aren’t in a panic when you need to file your taxes. It also makes your account’s life a lot easier and I’m an advocate for the mental sanity of accountants.
Let’s dive into what your tax accountant needs from you to file your taxes:
1. Financial Statements
I’m talkin’ about your Balance Sheet and Income Statement (P&L). If you’re a sole proprietor, only the P&L is required. But you’ll need both if you have a corporation. You can easily run these statements from your accounting system.
2. All the docs to back up your financials
Invoices to prove your sales, revenue and all other income you collected from clients and customers AND receipts to prove every single expense and purchase you made for your biz.
Usually, it’s at this step that you realize keeping paper receipts in a bag is not the vibe. Your new 2022 goal is to switch over to a digitized system for tracking your receipts and purchases.
3. Last year’s filed tax return, Notice of Assessment (from the Canada Revenue Agency aka CRA) and a summary of installment payments (if any) that you sent to CRA.
Accountants live in the past (#accountingfacts) and need to know your full life story. Instagram posts don’t count. These documents will remind your accountant (and you) what happened last year so they know what to expect this year. The more info you organize for them ahead of time, the better the experience will be. No guarantees, but it’s worth a try.
Other pro-tips: (so your accountant will love you, ie. save them time so you can save on fees; a win-win amirite?)
Give them access to your accounting system. Add them as an advisor on your Quickbooks Online (QBO), Wave or Xero
Digitized receipts and invoices make accountants happy. A smelly shoebox of faded and folded documents is NOT cool.
No detailed receipt, no deduction! - Detailed receipts are required by CRA to prove reasonable business expenses. This means credit card/bank statements and those receipts that only show how you paid but not what you bought won’t fly. So the next time your barista asks if you want your detailed receipt, say HECK YES PLS.
Bottom line:
Everyone wins when you have an accounting system like QBO, Wave or Xero!
If this entire blog stressed you out, I feel ya. No judgment here! I teach small business owners like you how to get your biz finances in order. If you want to dive deep into knowing EXACTLY how to make tax season stress-free, I’ve opened up the waitlist for the next round of Bookkeeping Bootcamp. Level up your finances with me!