Everyone makes mistakes, but mistakes with your taxes can have staggering financial consequences. Filing your taxes as a business can be tricky, and landmines exist everywhere. Hiring small business tax experts to handle your taxes professionally is always better to avoid any critical mistakes.
What are the most common tax mistakes small businesses make?
- Not keeping receipts
If anything in your claim seems suspicious to the CRA, they can perform an audit on your return. You would then be required to provide receipts to the CRA as proof. Not keeping your receipts and maintaining them organized can be a huge mistake.
- Claiming personal expenses
If you use aspects of your personal life for business purposes, keeping a proper distinction between what is business and what is personal is crucial. If you cannot do so, filing your taxes can be very messy and confusing.
- Inaccurate payroll records
If you have hired employees to help you run your small business, you may also want to hire an accountant to manage the payroll. Not keeping proper payroll records or not classifying your employees properly can result in hefty penalties.
- Not charging HST
A registered HST number is unnecessary if your small business makes less than $30,000 per annum. However, it is common for people not even to realize when their small business has crossed that $30,000 mark. Registering for an HST number regardless of your annual income is advised so that you are prepared when the time comes, and you cross this mark.
- Forgetting to report cash or trade payments
Many people believe that if a transaction is done by cash, it does not need to be reported. However, this is illegal. All transactions regarding your product or work need to be recorded, and you should keep all the receipts. If you fail to keep a record of all your transactions, the CRA may take hefty penalties, or you may even face jail time.
- Not being organized
Not being organized is one of the biggest mistakes you can make as a small business owner. You should always keep ahead of your record keeping so that you are prepared when it is time to file for taxes.
Get experts to handle your taxes.
Filing taxes is stressful, and one mistake could cost your small business. Hiring tax experts can help you avoid this and will also free up your time so that you can focus on other aspects of running your business. Do not hesitate and talk to a small business tax expert today.