Across North America, taxpayers (and small business owners specifically) can generally be categorized in two buckets. You’re either a proactive tax filer or used to procrastination. In the proactive bucket, you’re used to filing early and most likely prepare for tax season throughout the year by keeping bookkeeping records up-to-date, whether that’s using pen and paper, a good ole’ Excel spreadsheet, or accounting software. On the other hand, you could be a procrastinator, where you’re used to filing at the very last minute — scrambling to locate old notes, receipts and emails that can help decipher where all your business expenses lie. Making sense of these numbers last minute is a place you want to avoid and can do more harm (than good) for your time and pockets.
When is the US Tax Filing Deadline?
Though it varies by state, the federal income tax deadline is Monday, April 18, 2022. Be sure to plan ahead by checking with your state department of revenue for your location’s exact date.
When is the Canada Tax Filing Deadline?
For most Canadians, the deadline for income tax and benefit returns for 2021 is April 30, 2022. Because this date sits on a Saturday, your return will be considered filed on time if the CRA receives it or it is postmarked on or before May 2, 2022. But remember, the earlier the better!
Here are the top reasons why you should file your tax return for you and your business ASAP:
Identify Issues with Time Contingency to Rectify
It might come as a surprise for typical non-planners or procrastinators (we’ve all been there), but earlier tax return filing gives you more time to resolve bookkeeping issues. This includes locating missing tax receipts and records and chasing others down for tax-related documents. Even a few extra days can go an incredibly long way for analyzing your records and waiting around for responses from people that you need something from. And yes, this includes your accountant if that’s the route you are going down for tax filing this year!
Improved Cash Flow Management
Filing your taxes earlier can help you manage your business cash flow. By figuring out your tax liability for 2021, you’re much better equipped to calculate what the minimum amount of quarterly tax estimate payments are for 2022. It’s important to stay on top of your 2022 quarterly tax estimate obligation as it may be accumulating.
Allocate Money to Taxes First
Setting cash aside throughout the year for taxes is a must because you don’t want to create the illusion of having “excess” cash. By allocating money to taxes first and foremost, you’re looking at the true reality of your cash flow. From there, whatever’s left is up to you and how you want to allocate it for your business! For example, the leftover capital after tax payment can be allocated to your marketing budget. Had you not completed your taxes earlier, you may not have known exactly how much you have.
Quicker Access to Your Tax Refund
Getting access to your tax refund as soon as possible is an obvious one. The faster you file, the sooner you’ll receive your tax refund — aka more money back into your pockets!
In the USA, the IRS estimates it should take less than 21 days to receive your refund if submitted electronically. Find more information on tax filing with the IRS with what to expect with your refund this year.
In Canada, the CRA will issue refunds to online tax filings in as little as eight business days for Canadians who sign up for direct deposit. For more information about filing your taxes with the CRA, Read how you can get set up online by visiting the CRA website.
Let Kashoo Help & Return Your Focus to Running Your Business!
The sooner you file your tax return, the sooner you can get back to running your business — it’s as simple as it sounds. The hard part is all the prep work that starts much earlier, such as separating business and personal finances and retrieving all necessary documents.
Once you’ve filed your return ASAP, you’re probably thinking: I’m ready to start planning for next year. If that’s the case, be sure to try Kashoo’s 14-day free trial if detailed reporting, a simple user interface and a detailed accounting software is what you’re looking for.
Alternatively, a free 14-day TrulySmall Accounting trial gives you a similar approach to next year’s tax return, with a focus on automating bookkeeping and tracking invoices and expenses!