As a business, you probably rely on your accountant to prepare your tax returns. Most business owners simply lack the time to understand the rules of taxes and learn the mistakes to avoid in tax preparation. Hiring a tax expert to get the job done right and save you time is probably the best bet. However, the expert you hire to prepare your taxes will need your assistance in terms of making sure you provide the proper records ahead of time and in an organized manner. Providing all the necessary records in good time will ensure your taxes are filed on time and avoid penalties.
What Does Your Accountant Need?
Your accountant will need several records depending on the kind of business you’re running. The general business records requested by tax preparation experts include:
- Financial statements i.e. balance sheets, cash flow statements and income statements
- Payroll details if you have staff
- Details on each business expense from travel to rent, supplies, shipping and everything in between
- Motor vehicle expense information such as a driving log with details on the kilometers covered
- If you use a home office, provide details on what you use that earns your business some income such as electricity bill.
- A copy of your income tax filing for the previous year
There are other records that the tax accountant may request for depending on the type of business you’re running such as a partnership, sole proprietorship or corporation. If you are a sole proprietorship, you will need to file a personal income tax return. In this case, you will need to provide some personal details and tax-related documents. Some of the records required for T1 returns include:
- T1 slips (this applies to those who are employed and also earn some business income)
- T4A for those who earn commissions and are self-employed
- RRSP contribution slips
- Charitable donations
- Child care information
How to Make Your Accountant’s Job Easier and Save Money in the Process
- Make sure all your receipts and information is ready when you meet the accountant. This will cut down the time required to complete your returns.
- Make sure all your documents are properly organized. For instance, sort out the receipts and expenses information so that he/she doesn’t have to spend so much time sorting them out.
- Summarize checks, business expenses, and all other slips so that it’s easy to countercheck the results.
- Discuss with your accountant on ways to improve your record keeping and organization in order to make filing easy.
Accountants often provide tax planning advice to their clients so make sure you use the time you have with him/her to discuss ways to reduce your tax bill and boost your business.