Common Mistakes People Make When Filing Their Taxes
Whether starting a new business venture or managing an existing enterprise, a competent accounting firm’s expertise can help not just in accounting but also in financial planning, taxation planning, business strategy, cash management, and mergers and acquisitions. An experienced accountant can efficiently audit financial information, prepare accounts, generate reports, and create meaningful presentations that help you understand your business’s financial health and where you could improve.
However, in today’s world of online accounting programs, we have the option of doing things a little differently. We can sit in the comfort of our homes or a coffee shop, update our accounts, and make significant business decisions. Unfortunately, using these programs without proper training can lead to inaccurate bookkeeping and financial mismanagement.
To help you avoid some basic errors that could prove to be costly, GenNext Chartered Professional Accountants have put together a list of the most common mistakes people make when filing their taxes.
1. Not signing up for Canada Revenue Agency (CRA) login services
Thanks to advancements in information technology and online bookkeeping solutions, we can pretty much be aware of tax deadlines and have all kinds of financial information at our fingertips. We often see entrepreneurs forgetting to utilize the government provided services, resulting in them not getting emails or updates, missing the deadline for filing their tax returns, and incurring penalties and interest.
2. Falling behind on filing tax returns
Apart from the obvious advantage of ensuring you don’t miss the deadline for filing your taxes, a conscientious and diligent approach to bookkeeping can add the benefit of saving you actual money in the way of GST, child benefits, and other credits. In our practice, we have helped families recover significant amounts. For example, a client recently received a $43,000 cheque from the CRA entirely in benefits.
3. Not working with a registered CPA that has detailed knowledge of your province
Each province in Canada has different laws and regulations that must be followed as per the Income Tax Act and other legislation. These prerequisites make it necessary for the CPA in question to have adequate knowledge of the province they serve and have an aptitude for understanding and carefully analyzing all financial records to determine the relevance of rules for each client-specific situation. A qualified CPA is also governed by the ethical and professional laws of conduct of their regulatory bodies.
4. DIY financial planning
Nearly every life event has tax implications that should be noted. In our practice, we see clients who prefer to see their accountant just once a year and often miss the presented tax planning opportunities. It is paramount that you realize, securing living benefits is as essential as planning for your retirement and saving for your future. The skills and knowledge of a competent CPA certainly go a long way in making sure you never miss an opportunity to save and are always on top of your tax planning.
5. Not filing receipts
Storing all your receipts in a shoebox stuffed in the attic is a sure way to have a jumble of ruined, misplaced, and unorganized receipts on your hands come tax time. Filing all receipts as and when they are issued makes sure you have them all, all are eligible, and you know what expense they pertain to. Additionally, saving and diligently providing all receipts ensures that during an audit, the CRA accepts the claimed business costs and offers significant tax savings.
6. Not recognizing that financial health impacts overall health and wellness
Taking control of your finances and prioritizing diligent bookkeeping practices undoubtedly leads to a balanced work-life, peace-of-mind, and all the health advantages such positivity brings. On the other hand, procrastination in business and financial issues hurts the organization’s overall health and, in turn, is known to have an adverse effect on the well-being of the individuals involved.
To avoid these and other mistakes, reach out to the leading accounting firm at GenNext Chartered Professional Accountants. Our highly qualified professionals are here to guide you through all your tax and accounting needs. Our ‘whole’ financial wellness approach means we collaborate with relevant experts to provide you one-stop total care for your legal, real estate, mortgages, investments, and other financial products. We serve clients across Mississauga, Oakville, Brampton, Toronto, Milton, Burlington, Hamilton, Vaughan, Markham, Kitchener, Guelph, Cambridge, Caledon, Halton Hills, Ajax, Oshawa, Whitby, Uxbridge, Newmarket, and surrounding areas.