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How business owners can make tax preparation a breeze
May 6, 2019 |
The tax deadline is looming and for business owners, that means it’s the most stressful time of year. Most people don’t even realize that taxes represent 20 to 30 percent of all the money that goes out of your small business.
To help ease the stress, here are several things you can do to simplify tax preparation and filing.
Make the most out of technology
Tracking business costs is a big part of tax preparation. It can be hard to focus on this when you have so many other moving parts in your business. Taking advantage of the technology available will help manage your bookkeeping and make the tax process much easier to manage. As an example, e-commerce business owners have access to a comprehensive dashboard on their
account which gives them instant insight into their PayPal sales and spending for the year in an easy-to-read report.
also provides online accounting software that lets you create expense claims, and reconcile your bank transactions effortlessly.
Invest in a bookkeeper
Using the latest software along with a bookkeeper ensures your day-to-day accounting work is up-to-date. A bookkeeper will help record the daily financial transactions of your business such as sales, purchases, payments, and receipts. Without a bookkeeper and the meticulous record-keeping PayPal and Xero provides, it’s easy for transactions to go unrecorded, or worse, left to pile up before you need to prepare your taxes.
Bank reconciliation allows you to double check your bookkeeping, and it’s a great idea to do this on a frequent basis. Plus, you need a fully reconciled record of business income and expenditures to complete your taxes. If you do bank reconciliation daily or weekly, you can clean up and catch any bookkeeping errors instead of having to decipher expenses and receipts months later. The longer you leave bank reconciliation, the tougher and more time-consuming it becomes to catch up.
Check in with the experts throughout the year
Small business owners are often a one-person show, tasked with keeping track of finances, filing taxes and making sure your company stays on the right path. Staying on top of your business finances all year will make your tax prep easier. By regularly checking in with an accountant or bookkeeper throughout the year, you can start planning early for how much taxes you’re required to pay. This will ensure you have enough time to put the right amount of money aside and keep it separate from other business expenses. Leaning on the expertise of an accountant will not only ease your burden at tax time, but will give you an objective view of your business financials and the company’s growth. The more carefully you plan, the easier your tax filing will be. After all, it’s hard to do tax planning if you don’t have accurate information.
By using online accounting software like
, it’s easy to make sure your accounting stays organized and accurate. And when you’re ready to pay your taxes, simply make a payment to the Canada Revenue Agency (CRA) with
PayPal through Payment Source.
Will Buckley is the director of Canada at Xero and a contributing writer on PayPal Stories.
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