Tax season is right in the corner. Are you ready to file your taxes on time? Or are you a few years behind? Have you received letters from CRA demanding you to bring your taxes up to date? If so, what are you doing to clean up your books?
If you have no idea where to start, you have three options.
- Do not take any action until CRA takes it to the next level. Then, you may be levied fines and possibly house arrest by the court. Failing to file tax returns leads to fines, house arrest to convicted Ontario residents.
- Allocate your precious time from doing what you are good at and sort all documents to file your taxes;
- Put all paperwork, relevant documents and your log books in a box and outsource this job to a professional Bookkeeper.
The first option is the worst of all. Why? Because you will have to pay fines ranging from $1,000 to $8,000 based on some individuals who were recently sentenced in Ontario. Unfortunately, there is one repeated offender who is going to jail. Then, you still have to bring your taxes up to date, pay the full amount of tax owing, penalties, accrued interest and any other penalties assessed by CRA. The fines, interest and penalties add up at the end of the day. This option is the most costly and you may end up in the jail for a few months which makes matters worst. What could you do with an extra $1,000 to $8,000 and your freedom? Think of that and start getting your books ready. If you do not have money to pay for your taxes, at least file your tax returns on time to avoid 10% penalty on the amount owing.
The second option will cost income growth for the period you will be dealing with your papers. I understand if you cannot afford to outsource it or if you want “to be in control” of your finances. I can tell you that if you are late, you lost complete control. I can also assure you that without a system you are losing money. When was the last time you reconciled your bank and credit card accounts? Remember we have humans behind the machines. The same way you can make a mistake, expect the same on the other end. Reconciliations are a must. How will you get your paper work organized and compliant to file your taxes? You will gather all papers, separate them all by category and by month, do the data entry and reconcile them. You can check a system 4 tips to file your taxes on time that I have for those who take care of their books.
The third option is better than the first one. Go through the glove compartment in your car, the drawers in your office, over the dining table and under the chairs in your house, etc and put it all in a box. Take all bank and credit card statements, contracts if applicable, deposit books, bank slips, previous income tax returns and its notice of assessments, and anything else pertaining to your business to you Bookkeeper. Be available to answer any questions the Bookkeeper may have. Your taxes will be filed in no time if you cooperate.
Once you are caught up:
- make a date with your money,
- check your numbers on a weekly or monthly basis,
- monitor your net worth growth,and
- consult with your Accountant to come up with tax strategies to save money and make better investment decisions.
If you need to catch up, that is Ok. Take action today and bring your taxes up to date. You will have peace of mind and it is never late to clean up.
If you need any help, please contact us today. We will bring your books up to date, provide you with systems that will help you have complete set of books that are compliant and organized and file your taxes on time.
“Reduce risks, pay on time, be efficient and save money and time.” Renata Magalhaes