For individuals, the tax laws and regulations can be extremely complicated. The more dependents, claims and investments you have, the more daunting it can become. The biggest tip I can offer you is to seek the guidance of a financial professional. If that isn’t an option or if you are hell bent on doing it yourself, below outlines some “simple” guidelines that will hopefully make it a bit less terrifying.
As a business or corporation, the chances are you have an accountant on site or at least an offsite part-time financial adviser. Due to the mass amounts of information and the fact that your advisers are only human, they may have forgotten to tell you about a new regulation change so check in with them regularly to see if there is anything you need to know for the upcoming tax deadline.
Individuals, throughout the year, should make a habit of filing all paperwork. Early and constant preparation is key. Use physical (e.g. filing cabinet drawer) and virtual locations (computer desktop folders, email subfolders, online financial software programs) for items like receipts, invoices, last year’s filings, bank and investment statements etc. If you’re a Type A personality the chances are you are already doing this type of thing in all aspects of your life without even a second thought. If you’re more of a procrastinator, it would behoove you to develop this habit. Once you’re in a groove, it gets easier, then you’ll know exactly where everything is come file time. If possible, select one person in your house as the main coordinator of these files.
As a corporation, the chances are these steps and more are already in place. Familiarize yourself with the company’s filing system and routine internal audits.
For individuals and corporations alike, setup and contribute to retirement accounts. Individuals can contribute to CRA accounts tax-free. Don’t forget, however, if you withdraw from these accounts early, you will then be charged taxes. For businesses, if you contribute to employees’ retirement accounts, this is a tax-deductible claim.
If you are a business owner, separate your business and personal finances. If you try to make a business claim that is in fact a personal one, you open yourself up just that bit more for auditing and will ultimately end up paying more than what you received back in the claim. It’s just not worth it. Have a separate bank account/credit card for both you as an individual and your business. It makes filing that much easier too.
Business tax deductions are a plenty but don’t forget to track and keep receipts. Claims involve home-office, auto-expenses, travel, business lunches and in some cases, if your line of workrequires you to look presentable and neat, you might be even able to claim a visit to the nail salon for example. If in doubt, ask a pro.
Between T4,T4A,T5018 and a plethora of other forms, finding the right form for you and your claims can seem impossible. Again, if you’re unsure, seek advice from an accountant. Otherwise, you can find more by visiting the federal collections agency (CRA in Canada).
Once you have found the forms and filled them out as accurately as possible, maybe you might want a CPA to give them the once over. If not, the best way to file is online. It’s faster, you get email confirmation of receipt and you can monitor your filings’ status. If you are expecting a refund of any kind, it will more than likely also come electronically, thus making it faster.
Lastly but certainly not least, file on time to avoid any penalties. If you owe money, you will be fined again for failure to pay on time.
There are multiple tax filing software companies available so don’t be afraid to do some research on the best one for you.