Common Mistakes to Avoid When Preparing your Taxes
Just the mention of the word “taxes” can cause stress and anxiety in some individuals and small business owners. If you want to get through tax season without a hitch, avoid these common mistakes people make when preparing their taxes.
Not filing by the deadline. A common mistake self-employed people make is not filing their tax return by the due date. They file late because they do not have the funds to pay the taxes due. Not filing by the deadline (June 15 for self-employed individuals), you will be assessed a late penalty. Whether filing a personal or corporate tax return, the late filing penalty assessed by CRA is 5% of the balance owing, plus an additional 1% for each additional month late up to 12 months. So if you file one year late, you just cost yourself an additional 17%. Whether you can pay or not, you should always file on time.
Not maintaining financial records. Another common mistake, especially among new entrepreneurs, is not entirely understanding their responsibilities when it comes to keeping business records. People do not get into business to keep track of their business's activity; they have an idea that will make them rich! They should look to correct this over sight because the success and growth of any business requires accurate income and expense information. If you’re struggling with maintaining proper records, you can correct this by utilizing a bookkeeping service.
Not maximizing deductions. Many people assume they do not qualify for certain exemptions and deductions, but this assumption could be leaving valuable dollars on the table. Transit, disability, medical, education expenses are just a few things people can miss when filing their taxes. Take the time to research which deductions you or your business may be eligible for. If you don’t have the time, employing an accountant can help you find deductions and exceptions you may not have considered.
To help you avoid these common pitfalls when preparing your taxes, J.M.J. Accounting and Tax Services provides quality tax preparation at affordable rates. J.M.J. Accounting and Tax Services Inc. is dedicated to helping small and medium sized businesses manage and grow their businesses in a timely and cost-effective manner.To learn more, please visit www.jmjaccounting-tax.ca.