As winter settled in and the holiday season passed, Emma Carlisle, owner of Carlisle Creative, knew it was time to turn her attention to a crucial task—tax season. Tax season can feel overwhelming for many business owners, but Emma was determined to stay ahead of the game this year. After successfully closing out her books with the help of Number Crunchers®, she knew that getting organized early would be vital in making tax season stress-free.
Here are the steps Emma takes to prepare for tax season and ensure everything is in order well before the filing deadline.
Gather and Organise Your Documents
The first step in preparing for tax season is gathering all necessary documents. Emma started by collecting the past year’s receipts, invoices, and financial statements. Although she had diligently kept her records organized, she knew this was the time to double-check everything.
With the help of Number Crunchers®, Emma reviewed her records and ensured she had the key documents needed for tax season, including:
- T4A or T5 slips (for any payments received as a contractor or from investments).
- She had all her business-related income and expense records, including invoices, receipts, and mileage logs, ready for review.
- Home office expenses, which she could claim based on the portion of her home used exclusively for business.
- Charitable donations and medical receipts could provide additional deductions.
Emma ensured all these documents were neatly organized in digital and physical formats, ready for review when tax season officially started.
Tip: Create a checklist of all the documents you’ll need for tax season. This checklist will ensure nothing is overlooked and help you stay organized when it’s time to file.
Separate Personal and Business Expenses
As a small business owner, Emma knew keeping her personal and business expenses separate was essential. Throughout the year, she had worked with Number Crunchers® to track her business spending, but tax season was the perfect time to ensure nothing slipped through the cracks.
Emma reviewed her personal and business bank accounts, ensuring she categorized every transaction correctly. For any expenses that might have been missed—like a business lunch charged to her personal card—she made the necessary adjustments to ensure they were recorded correctly.
Tip: Use separate bank accounts and credit cards for business and personal expenses. This separation makes tracking your spending much easier and avoids confusion during tax season.
Review Eligible Deductions
Emma knew that one of the keys to reducing her tax bill was taking advantage of all available deductions. With guidance from Number Crunchers®, she reviewed the most common deductions available to Canadian creative professionals, ensuring she didn’t miss anything:
- Home office expenses: Emma could claim a portion of her household bills, including utilities, internet, and property taxes, based on the size of her home office.
- Capital cost allowance (CCA): As she had invested in new equipment and software, Emma could claim the depreciation of her assets over time, reducing her taxable income.
- Vehicle expenses: Emma frequently used her car for client meetings and photo shoots. She could claim a portion of those costs by tracking her mileage and vehicle-related expenses.
- Professional development: Any courses, workshops, or certifications Emma took throughout the year were eligible for deductions, which helped her continue growing her skills while lowering her tax bill.
Tip: Review your eligible deductions with a tax professional to ensure you’re maximizing your savings. Many small business owners miss out on deductions that could significantly reduce their tax liability.
Set Aside Funds for Taxes
Even though Emma had made quarterly tax instalments throughout the year, she knew it was essential to set aside additional funds for any potential tax liability. She didn’t want to be caught off guard by a larger-than-expected tax bill come April.
With help from Number Crunchers®, Emma reviewed her profit and loss statement and estimated her tax obligations. By doing this early, she could ensure she had enough money saved to cover her taxes without straining her business’s cash flow.
Tip: Set aside a portion of your income each month or quarter specifically for taxes. This will ensure that you don’t have to scramble to pay your tax bill at the last minute.
Consult with a Tax Professional
As tax season approached, Emma knew it was the perfect time to sit down with her advisor at Number Crunchers® to ensure everything was in order. Together, they reviewed her financials, discussed her tax obligations, and ensured she took advantage of all available deductions and credits.
Emma also learned that Number Crunchers® could handle filing her taxes, saving her time and stress. With their expertise, Emma felt confident that her taxes would be filed correctly and on time.
Tip: Working with a tax professional can save time and ensure your taxes are filed accurately. They can also help identify additional ways to reduce your tax burden.
Conclusion:
As Emma wrapped up her tax preparation, she felt relieved. By starting early and following these steps, she had set herself up for a smooth and stress-free tax season. With all her documents organized and her financials reviewed by Number Crunchers®, Emma was ready to file her taxes on time and focus on the exciting year ahead.
For small business owners and creative professionals like Emma, preparing for tax season doesn’t have to be overwhelming. Gathering your documents, reviewing deductions, and consulting with a tax professional can ensure your business is in good shape and ready for the new year.
Call to Action:
Start Your Financial Journey with Number Crunchers® today and discover how we can support your business’s growth and help you achieve your goals. Whether you need help organizing for tax season or managing your finances year-round, we ensure your taxes are filed accurately and on time.