The end of the financial year is just a peek around the corner and if your business is not getting prepared, then it should. The surest way to make a mistake and have CRA knocking on your door is to conduct a rushed tax filing that contains mistakes and missed taxes.
Here are 4 things your business should do to get ready for the financial year end.
Get Bookkeeping Right
Bookkeeping is the process of recording your financial transactions. This is the first step that you need to conduct to get ready.
Organise your financial documents: Have all your financial documents ready. It would be preferred to separate them into expenses and acquisitions.
Enter Data: Enter the data according to the single entry or double entry system you follow.
Assess your Financial Position
When you have accurate bookkeeping, it will reveal insights into your business’s financial situation.
Balance Sheet: The balance sheet lists your business’s assets, liabilities, and equities.
Income Statement: Understand your profit-loss state.
Cash Flow Statement: A cash flow statement summarises the inflow and outflow of cash.
From this, you will be aware of how much revenues, profit, losses and present assets your business has.
You cannot miss out on tax preparation. If you fail to file your taxes, your business will have to face penalties such as fines (can go upwards of $25,000) and imprisonment.
Pay all the required taxes: From payroll to sales to GST/HST to import/export, your business should pay all the taxes.
Tax Deductions, Relief and Exemptions: Deductions, relief, and exemptions help your business save on the taxes it qualifies for.
Once you have these two things in order, start preparing to file your taxes. If you are a sole proprietor of a business or in a business partnership, you are required to fill in Form T2125: Statement of Business or Professional Activities. If your business is a corporation, you are required to fill Form T2.
Filing your tax through the online process on CRA provides a simpler and quicker procedure.
Evaluate your Goals and Craft New ones
Now is the perfect time to evaluate your year’s financial goals you had set and check if you have achieved them. If you have failed, then it is vital that you assess why the failure occurred. You need to avoid the same mistakes.
Next, ensure that you craft new goals to push and grow your business.
The earlier you get started with these 4 points, the better prepared you will be. If you wait, your business will catch on the year end panic, which includes rushing to fill your tax forms and filing it. For now, all you need is your accountant. If CRA does come knocking on your doors, you may want to get in touch with a tax attorney to represent you in a tax dispute.