April 30th has come and gone, and the collective sigh of relief from entrepreneurs everywhere is all too real. Nothing can make a business owner long more for the days of a normal 9-to-5—or a refund, for that matter—quite like tax season.
It’s easy to want to close your books and shift focus to anything but your finances at this point. But the truth is, next year’s tax season is something you can (and should) be prepping for early and often this year.
Doing so is not only smart business. It’s self-care.
Do yourself a favor and learn from the headaches associated with this year’s filing process. Take these year-long steps to prevent tax season stress in 2020.
Find an Accountant Early
One of the easiest ways to ease the hassle of tax season preparation is to hire an extra set of hands to help. After all, your finances will only get more complicated as you take on more business, hire employees, and expand your service offerings.
Don’t wait until January 1st to start searching for an accountant. Reach out to your network for referrals and get some introductory calls on the calendar. The sooner you can bring someone on to manage your finances, the more confident you’ll feel going into tax season 2020.
Separate Out Your Expenses
If you aren’t doing so already, start separating out business from personal expenses. Better yet, consider getting a business credit card.
It’s important to make the tracking of business-specific expenses—mileage included—a habit. They factor into potential deductions during tax season, as well as the overall health of your business throughout the year.
Additionally, keep track of your receipts as you go. In the event that you’re audited by the CRA at any point in time, it makes life easier to have an organized system of documentation to fall back on.
Review Financial Statements Quarterly
If you have an accountant on staff, they’ll work with you to review finances and estimate taxes due quarterly. If you don’t, then it falls on you to make reviewing financial statements an ongoing priority.
Keep tabs on your income as invoices are paid with an accounting tool like QuickBooks. These types of systems typically make it easy to build out automated reports around profit and loss, cash flow, expenses, and more.
Make Sure You’re Compliant With Tax Filings
If you have a large customer base, make sure all of the necessary paperwork is in order before you begin work. Provide them with a T4A and save a copy for your records.
In the event that you have employees on staff, you’ll also need to make sure the necessary employment tax forms have been filed. Gather all of this documentation upfront so you’re not held up, scrambling to track down a freelancer for their information at the start of next year.