7 Common Tax Blunders
By TEC Member, Ed Scheck (Hogg, Shain & Scheck P.C.)
Owning and running a successful business can be complex, and that’s without factoring in the care and details associated with filing taxes.
Below are a few things small and medium business owners are doing wrong when it comes to the details in filing their taxes.
- Not having a legal business identity (sole proprietor, corporation etc.): know and understand that there are different tax laws and tax rates that apply to each of them.
- Not understanding how to separate your business and personal finances: this will compromise your company and lead to a possible CRA audit, which could damage your relationship.
- Unaware of tax remittance and instalments: once a business is established, there may be a legal obligation to pay tax.
- Lucrative deductions: don’t make the mistake of being overly generous or negate any valid expenses, understand where to draw the line.
- Failure to pay taxes on time: this is a direct result of the location, ownership, size and type of company that is operated. Be sure to know the filing deadlines that apply to your business
- Failing to keep accurate records: when the time comes to file taxes those records will be necessary in the event of a CRA audit.
- Not hiring a professional: having a professional accountant means you benefit from their expertise and knowledge. A professional can keep you alert of regulation changes or indicators from your financial statements which will help maintain the success of your business.
Understanding your reporting and knowing the filing guidelines set forth by the CRA will avoid the above misunderstandings. For clarity on any of these topics, or if you have any further concerns, contact the CRA or a professional accountant.
For more tips regarding a business owners’ financial health visit Ed’s blog.