While the world has gone through leaps and bounds of changes since last year’s tax season, properly preparing taxes for tax season this year is still absolutely necessary. There’s no way around it. Despite a slow down in COVID-related news and in some cases, a decline in COVID cases, we are still very much in the midst of a pandemic. As such, preparing taxes may look a little different this year, unlike previous years. For the purpose of this article, we’ll be covering how small business owners can prepare for taxes as a sole proprietor. Unless your business is incorporated as of January 2020, you can focus on filling out a Form T2 instead. Preparing Taxes as a Small Business Owner As a small business owner, you start as a sole proprietor. Knowing your business structure goes hand-in-hand with filing taxes. It determines which tax forms are applicable to you and not to mention, it’s likely one of the first questions your accountant will ask you. For Canadian tax returns, small business owners can prepare taxes in two ways: By downloading the online tax return package, or By using a CRA certified software (we recommend Turbo Tax or Simple Tax or visit Canada.ca for a list of free and paid versions of CRA-certified software While the above is meant to guide you to file your tax return, there is an abundance of things that you need to do prior to preparing taxes and meeting your accountant. Many of these don’t just happen overnight – it’s a result of consistent record-keeping and preparation throughout the year. In addition, a pandemic-looking tax season means that you can’t meet your accountant in-person like you used to. And that’s okay. One easy way you can still efficiently preparing for tax season is to use accounting software! Here’s how you can prepare your taxes this year without having to see your accountant: 1. Prepare the right questions While asking questions during tax season is important, so is prior to tax season. Meeting your accountant is a sacred time to ask the right questions. Although meeting your accountant will look different this year, you should still prepare the right questions beforehand to make the most out of your session. 2. Gather your business receipts Gone are the days where you need to save physical receipts throughout the year. Though receipts are important for preparing taxes, you can also take this digital. As soon as an accountant has access to your business via accounting software like TrulySmall Accounting, they have a 360-view of all your business expenses, including any tax deductions that may be accurately or inaccurately filed. The great thing about accounting software is the ability to upload, attach, and store your receipts to their corresponding transaction. If you’ve already been using TrulySmall Accounting already, you would know that you can snap a photo, upload, store, and match receipts to its corresponding transaction. By using a “do-it-yourself” approach, both you and your accountant can review your receipts and transactions together to pinpoint any errors before preparing taxes this season. 3. Invite your accountant to review your numbers beforehand Meeting your accountant will definitely look different this year. We highly recommend that you take the time to invite your accountant to review your numbers before preparing taxes. Though you can’t meet in person, you can do it digitally via an online meeting or phone-call. Screen sharing is one way to show your accountant your numbers. But what’s better is to give them access to those numbers to conduct a full review before you meet. Cloud-based accounting software like TrulySmall Accounting lets you share these numbers (income and expenses), reports (income statements and more), and dashboards to your accountant. By letting them review beforehand, instead of screen-sharing, you’re maximizing your time spent when you actually meet. Since all your financial data is housed in the cloud, both you and your accountant can access these numbers from anywhere! 4. Meet and collaborate virtually The ability to meet and collaborate with remote teams has never been more important than now. Like remote teams, the ability to collaborate with your accountant is equally important, especially during tax season. With accounting software, you don’t need to see your accountant in-person – you can take it fully digital. From seeing your income/expenses to pulling reports like your income statement, cash flow statement, and chart of accounts, your accountant should have access to all of this, with or without you being present. Within TrulySmall Accounting, you can allow your accountant to do all of that, and more. Simply add a user like your accountant to the software under Settings. Once you’ve added him or her as an administrator/editor/user, they’ll have access based on the permission level you give them. From there, ask them to review your transactions prior to preparing taxes and they can even point out areas that you need to fix beforehand, like incorrect expense categorization or reconciliations that don’t match up! Thanks to virtual collaboration tools like Zoom, Microsoft Teams, Google Meet, and more, meeting your accountant has also never been easier. You don’t need to meet your accountant in person Thanks to cloud-based accounting software, it’s clear that small business owners can still effectively prepare for tax season. While meeting in person is no longer an option this year, leveraging accounting software can make the process just as familiar and efficient. Want to prepare your taxes digitally with your accountant this year? Try TrulySmall Accounting’s 14-day free trial today to get prepped for tax season.
