Common Mistakes Small Businesses Make With Their Taxes
Running a small business includes maintaining the books, managing cash flow, and filing taxes on time, which can prove challenging. Therefore, if you’re unfamiliar with bookkeeping, it’s best to leave the process to a professional who can analyze your financial statements and file your taxes accurately.
However, sometimes entrepreneurs try to save money by preparing taxes themselves, leading to mistakes. So, to help you avoid some basic errors that could prove costly, Ocean Breeze CPA has put together a list of the most common mistakes businesses make with their taxes.
1. Not talking to an accountant before setting up their business structure.
Often clients start their business incorporating in the wrong jurisdiction. They also register their accounts with the CRA and choose reporting dates that conflict with efficient business management.
If you want to start a business, either incorporated or not, you should talk with a qualified accountant beforehand. Their quality advice will save you money and heartache over the short and long term.
2. Not filing all of their tax returns promptly.
Compliance includes filing income tax returns (business & personal), GST, payroll, and PST returns. Therefore, filing paperwork late would result in receiving interest charges and penalties from the CRA. These penalties increase in size based on both the lateness and the number of late filings.
3. Failing to claim all available deductions and tax credits.
Sometimes it can be as simple as personal filings with the incorrect marital status. On other occasions, it may include missed deductions, particularly for those with at least a portion of their business operating from home.
4. Not declaring assets accurately.
Business/ non-business owners often don’t make the appropriate declarations to the CRA when they either sell their principal residence or rent it out. However, it’s essential to be transparent.
5. Not Incorporating the business.
Another mistake, although less common, is for some businesses to have never incorporated when it would have been in their best interest to do so, either for tax savings or to make their enterprise more saleable.
Suppose you have a thriving business producing considerable income, and it’s not incorporated. In that case, you should converse with a qualified accountant to understand the positives and negatives of incorporation.
Get in touch with us today!
To avoid these and other mistakes, reach out to the experts at Ocean Breeze CPA. As Tax Accountants in Sechelt, Sunshine Coast, we have over twenty years of experience offering a wide range of accurate services.
Our services include accounting, bookkeeping, payroll, tax preparation, tax filing, tax returns, and business tax solutions. We serve clients across Sechelt, Gibsons, Roberts Creek, Madeira Park, Pender Harbour, Powell River, and the entire Sunshine Coast.