This is my third full year in business, and my second year filing taxes for my small business. I’ve learned a few things since last year, and I thought I’d share some of that with you! This year has been a breeze doing my taxes, and hopefully these simple tips can help you hate tax season just a little bit less.
1. Allot Administrative Time
This sounds incredibly boring, but I promise – you will save time in the long run. If you allot a certain number of hours per week or per month to completing administrative tasks, you will have a much smaller headache come tax time when you’re trying to track down invoices, calculate sales tax, itemize expenses, etc.
I try to give myself 3 hours per month to tackle anything and everything administrative. Most times I need fewer than 3 hours, so overshooting the allotment makes me feel better about myself when I finish in less time.
2. Maintain a Spreadsheet
Some folks I know use bookkeeping Xero Services software to track all of their expenses and income; I have gone back to the stone age a bit and maintain an excel spreadsheet. This spreadsheet has been pre-programmed with calculations to account for sales tax (a necessary evil here in Canada), and it pulls information from my various income and expense books into one main book that balances all of it out. It’s glorious!
My spreadsheet goes hand-in-hand with point #1; when I work through my administrative tasks, I populate this spreadsheet as I go. Doing this throughout the year saves a TON of time in the long run. Instead of spending days labouring over my tax forms, I simply pull data from my spreadsheet and toss it into the tax software.
3. Invest in Software
I know I just mentioned going back to the stone age with my spreadsheet, but hey! Excel is software, right? It might not be bookkeeping software, but it does the trick.
When it comes to investing in software, I am specifically talking about tax software. I use H&R Block’s tax software because 1) I don’t have time to manually calculate all of my taxes, 2) it’s free up to so many returns, 3) my refund comes expediently, and 4) they have built in information related to my provincial tax requirements and rebates. Last year I used their software and it was easy peasy!