A New Plan for Tax Time

April 30 is looming. You’re on a treasure hunt and you have no clue where you stashed the receipts for all your business expenses last year.

Well, you know where some of them are because you started a great system last May! That plastic folio with monthly compartments was a great idea! All the gas and car wash receipts, the office supplies, customer coffee meeting receipts are all there… up to June 15th. The mileage logs you finally started, it’s great that there are all these free apps available, and you’ve tried three, but damn! How do you get the data out of that there app so that you can use the numbers?

Why is the bookkeeper so busy? You would think that by April 26 they’d be caught up and have room to work on your year’s worth of books. The accountant isn’t returning your calls… it’s tax time.

The thing about tax time is that it’s THE deadline to file most tax returns and pay the tax you owe on the personal income you earned last year. Those of us with incorporated companies are all rushing to get our T4s, T5s and those RRSP and investment slips to our tax preparers so that we can have our personal returns filed on time. Others of us are Sole Proprietors and need our business income and expenses for the previous year all tallied so that our income from self-employment can be calculated, and from there, our tax bill. While self-employed people and their spouses have until June 15 to file, they still must pay any taxes they owe by April 30! Our government is counting on us, and the interest and penalties for late filings and payments start as soon as the deadline is missed.

So, if as tax paying citizens we are very concerned and go through great stress to be sure we don’t miss the tax filing deadline, what is holding us back from taking care of this business accounting as it is going on, rather than months after it has occurred, when we can’t use the information for anything other than paying the correct taxes? Who are we in business for? Ourselves and to better the circumstances for our families, or to simply get the money to the government on time?

 

Why We Wait and Why Changing Up That Strategy Can Benefit Us

 

There can be a lot of reasons why a business owner will wait to the last minute to get the accounting records up to date for tax filing. Some common ones:

  • Busy! No time to organize and regularly post or pass the info on to a bookkeeper
  • Cash-strapped! Living invoice to invoice and feeling unable to put away and plan for business and personal expenditures
  • Money Guilt! It may be surprising, but we all have our feelings about money that could get in the way of reaching high enough to become successful. There may be baggage about what the money means (what it meant in a family while growing up, how it affected life circumstances since then, not feeling confident in how to manage it can be overwhelming)
  • I’ve always done it this way. I’ll just manage that tax bill and stress in April and pay for it over May and June (or however long that it’s going to take) and move on.

 

Changing a system that we’ve used for years is going to take effort! For most of us, the need for change becomes real only when the discomfort from staying in the same habit is now becoming greater than the pain of putting the effort in to get to a new system that works better. We don’t change for the sake of change (well, I might rearrange the living room furniture from time to time, or change my hair style), we change when we see that we could benefit from the change. What could the benefits be to shaking up our business accounting schedule from year-end madness and excitement to regular updates monthly or quarterly in the year?

  • Regular review of current numbers can help you identify trends in your business, regular seasonal busy and lean times
  • Comparing the expenses you incur to the income that you bring in can help you make business decisions on just what you may target to spend less on, what type of sales you feel you can increase
  • Comparing this year to last year and help you create targets for what you want to accomplish next year. Having a target that ties to your financials is a clear way to measure how successful you are in your efforts to reach your goals.
  • You can make a conscious decision on just what it is you will be paid for your work in your company. There is a reason you went in to business – you have a value you want to bring to others –you also want to make a living at it or you will not be able to continue.

 

So, tax time stress is finally over for most of us. We turn our focus back to running our businesses and our personal lives, looking forward to the bright sunny days ahead. We can put the nightmare back to bed for another year. Or, we might just try to do it different this year. Get past June 15th with our brand-new systems. If you want to set up a new way, reach out to your trusty bookkeeper. They can help you make the new system work!

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