Getting Organized with your Business Expenses
How to Get Organized and Claim Small Business Expenses
Many Canadian small business owners dread the start of the new year because the start of tax season officially kicks off. Small business owners are plagued with additional filing requirements to stay in compliance with the CRS with no certainty around where their tax burden will fall. However, getting the accounting function organized early on will help you properly claim small business expenses and reduce lingering stress surrounding tax time.
Keep Track of All Business Expenses
The first way to get organized is to keep track of all business expenses. The CRA has a detailed list of what business expenses you might incur, making it a great resource tool to check out. Generally, the cost must be directly related to your primary business activity or service to be deductible. Every purchase that you believe qualifies for a business expense should be documented with a receipt and in an accounting software. Set aside a folder designated for receipts or invest in a scanner to electronically keep track of expenses.
Open Up a Business Bank Account
Another way your small business can get organized to properly claim business expenses is to open up a separate bank account. Your personal and business transactions should be kept separate for liability purposes and to avoid the nixing of any business expenses in the event of an audit. The new account should be in the name of your business and contain only business expenses. Moreover, a business bank account will be necessary as your business grows since monthly bank reconciliations will be a top priority.
Invest in an Accounting Software
Technology has made significant strides in the past decade, allowing business owners to have more control over the organization and claiming of business expenses. An accounting software can not only integrate with your bank accounts to import expenses, but it can also automatically categorize each expense. This can take a major burden off your plate and allows for reduced errors compared to manually recording expenses. Finding the right software for your business needs will be dependent on the industry you operate in and which regulations you are subject to, which is why many businesses reach out to a qualified expert, like Faber LLP.
Enlist the Help of an Expert
Recording and claiming business expenses are closely monitored by the CRA, making accuracy vital. Partnering with a qualified accountant can give your business a go-to expert on all things business deductions and tax filings. Understanding which expenses qualify, bookkeeping best practices and how to claim the expenses are all areas an accountant can help with. Moreover, enlisting the help of an expert can promote business growth through more informed business decisions and proper accounting.
Getting your small business expenses organized before tax season remains burdensome for many business owners. Luckily, the team at Faber LLP is available to help you along the way. Faber LLP has been working with clients to uncover where their expense management function lacks and develop viable solutions to get you back on track. Reach out today for more information on the value we can provide to your business.