3 ways to ensure your next tax season is pain free - a guide for Canadian entrepreneurs
If you are like most entrepreneurs we have worked with, tax season is not your favourite season. Preparing for tax season is synonymous with stress for many of you out there, and the pressure increases when you don't have the right information on hand and the tools and skills needed to handle your business taxes.
We are here to tell you that it’s not your fault. You are not a bad business owner because you struggle to keep up with your business finances. We don’t remember being taught anything to do with money management, taxes, or entrepreneurship in school. Our school system doesn’t leave us well-equipped to handle our personal finances, never mind business finances. If you also consider that most of us are running around with major money mindset issues (“I’m not good at money” being the most common), it’s no wonder that tax season can be a stressful time for business owners.
Good news - just because it has always been this way doesn’t mean it has to stay that way.
One of the most underrated skills in business is being able to see your blind spots. To say with confidence - “hey, I can really improve in this one area, I’m not strong enough there.” Then being willing to go and do the work required, or finding a trusted professional to outsource to. It’s a powerful mindset shift from thinking you should be good at everything to realizing that it’s impossible to be.
If you are in a post-tax season funk, here are three things you can put into motion today to set yourself up for a stress-free tax season next year.
1. Get organized
If there is only one thing you take away from this blog and implement immediately - this one is it! The power of getting your finances organized goes way beyond making sure you have everything you need for tax season. You should be keeping an eye on your numbers all year round. Ask yourself:
➡ Do you have quarterly goals?
➡ Do you know how much money your business is actually making?
➡ Do you know if you have the budget to hire?
➡ Can you invest in a new _________ (< insert your goal here)?
You can’t answer any of these questions unless you know what your money is doing. Financial insights are a big deal, and it’s imperative to a successful business that you have your numbers organized. It’s the difference between you running your business and your business running you.
Quick wins to help you get financially organized:
Open your calendar and pop in a monthly, recurring meeting with your money.
Set up a system for keeping track of all your business transactions on a regular basis, not just at tax season. This means you will not only be ready and reduce that tax season stress BUT you will also be able to benefit from knowing your numbers all year long!
Learn how to interpret the results of your bookkeeping: it’s one thing to stay on top of your bookkeeping, but learning how to interpret key information from your financial inputs is key to identifying areas for improvement. Stay tuned for our blog post next month where we teach you how to read your financial statements.
Need a plug and play financial transaction tracking system? Check out our smart- bookkeeping tool that helps you stay on top of your business finances.
2. Start early
You can alleviate so much tax season stress if you don’t wait until April to get your $&%! in order. This tip seems obvious, and yet few actually do it. We recommend that you begin gathering the information you know you will need starting in January.
Begin by logging into your CRA account and ensuring that deadlines and time to gather your information is scheduled in your calendar. Start a file folder to keep your slips organized as they arrive in the mail. During this time you are gathering all those receipts in the car, in your purse, lost in your inbox and storing them safely should the CRA ever ask to see them.
Baby steps add up when you start as early as January. When business owners leave things to the last minute, they either miss the deadline or miss out on tax-savings opportunities because they are in a rush. So do yourself (and your business) a favor and pretend tax season starts in the new year.
3. Shift your mindset
Money is a loaded topic. We all have very different and complex relationships when it comes to the all mighty dollar, and sometimes we are not even aware of it. When business owners are not on top of their finances, there can be shame wrapped around that whole part of their business. Perhaps you attach labels to yourself like - “I’m not a numbers person.” or “I’ve never been good with money.”
The whole process of preparing for tax season and taking a look under the hood of your business can be triggering for people. Mindset makes the list in this accounting blog because it is just that important. Before you can file your business taxes, you have to know how to file business taxes. But before that, you have to believe that you can learn this new skill and be good at it.
Say it with us - “I can learn the skills I need to manage my money”. You have acquired so many valuable skills leading up to this point which have allowed you to venture out into your entrepreneurial journey. A lot of those skills probably required hours of studying and practice to obtain. You’ve proved to yourself time and time again that you ARE capable of so much. Managing your money and learning how to keep yourself organized in your business is just another skill that can be learned. We get that it’s intimidating because of the culture that surrounds it, but we promise you it’s possible.
The good news is, your actual annual tax filing is made much easier with the many intuitive software options available that do the heavy lifting for you. You don’t even have to calculate anything! You just have to be organized and committed to acquiring the knowledge you need to make sure the information you're inputting into that software, or handing to your accountant at year end is accurate.
So where do you learn these skills? We’ve created a program for you to do just that. This is the one course you wish you learned in school! Check out Solopreneur Tax Academy if you are ready to learn everything you need to know about small business taxes.
The bottom line
Here’s a simple math equation to wrap all this up in a bow:
Organization + Knowledge + Mindset = Stress free business finances.
It’s never too late to start cleaning up your financial mess. We believe (and see it all the time) that you can choose your way out of the tax stress cycle that sneaks up on you year after year. You can get rid of that insecurity and level up your knowledge in this area of your business.
This is your year!
Interested in learning more from us? Follow along with us through our social media accounts (find us on Instagram @growcpa) and sign up for our newsletter for more educational and fun financial content.
Wishing you success in your business,
- Martina + Ashli
Date published: May 1, 2022
Disclaimer - The information provided in this blog is general in nature and solely for educational purposes. Readers use and implementation of the information comes at their own risk and is their own responsibility.
