6 Tips To Filing Your First Corporate Tax Return
If you’ve been running your business for about a year or close to it. Congrats, you’re about to embark on a new journey – filing a corporate tax return. This might seem intimidating at first, but don’t fret!
In this blog post, we’ll guide you through the essentials of filing your corporate tax return, making it a smooth and manageable process. Here are six tips to help you along the way:
Choosing Your Year End
In your first year of filing a corporate tax return, you have the privilege of choosing your year-end date; it doesn’t have to be December 31st.
Ideally, select a time when your business experiences a slow season, and you have sufficient cash flow to cover your taxes. The choice may vary depending on your industry.
For instance, if you’re an accountant, a year-end date between May and September could make sense, since it’s much slower, allowing for more preparation.
Businesses have up to six months after their fiscal year-end to file their tax return.
However, if you owe taxes, they must be paid within three months after the fiscal year-end.
Missing these deadlines can lead to penalties and interest charges. Continuous late filings can even result in increasing late filing fees.
You don’t want that.
Keep Your Records Straight
Before diving into your corporate tax return, ensure your bookkeeping for the entire year is complete.
Also, it’s an excellent time to digitize your receipts in case of an audit.
Here are 3 simple ways to help you with receipt tracking
Option 1: Retain physical receipts – periodically scan and convert them into digital copies. You can use Google Drive to store them. Have folders for each month, and this is optional, try to give your receipts a useful name e.g. Staples 2023-09-28. This is a free and simple way to stay organized.
Option 2: If you have an Iphone, create a new album on your iPhone and capture images of each receipt, ensuring they are backed up to iCloud.
Option 3 (Highly Advised): Utilize specialized apps like Dext or Expensify. These apps allow you to capture images of your receipts and store them as PDF files. Moreover, these apps streamline the process by automatically integrating the receipts into your accounting system, thus eliminating the need for manual data entry.
Use Accounting Software
Manual or Excel-based record-keeping can be inefficient. Luckily, there are cloud-based accounting apps like Xero and QuickBooks Online (QBO) that simplify the process.
We recommend Xero for its user-friendly interface and features.
Some of the benefits include:
- Automated Retrieval of Bank and Credit Card Transactions: The system automatically fetches transactions from your bank and credit card accounts, drastically cutting down on data entry time and associated costs.
- In-App Invoicing: You can create and send invoices directly within the application, eliminating the requirement to manually input invoices into your accounting system. This streamlines data entry and helps reduce costs.
- Real-Time Data Access: Access to up-to-the-minute data is readily available at your fingertips.
Explore Tax Credits, Deductions, and Carryforwards
Take some time to understand the deductions, credits, and incentives available to reduce your tax liability.
Be aware of tax credits and losses that can be carried forward or backward to future or past tax years, as they can significantly impact your tax burden.
Review and Documentation
Before submitting your tax return, review it meticulously for accuracy and completeness.
Double-check calculations, ensure all required schedules and documents are attached, and maintain thorough documentation.
Can I File My Own Corporate Tax Return?
Yes, you can certainly attempt to file your own corporate tax return.
Do we recommend it? Not really. One missed deduction or a simple mistake could cost you thousands of dollars and potentially trigger a CRA audit.
A skilled accountant, like ourselves, can save you more in taxes than their fees while ensuring your tax return is error-free and compliant.
Filing a corporate tax return may seem daunting, but with the right guidance and preparation, you can navigate it successfully. Remember, each business is unique, so it’s a good idea to consult with a tax professional or accountant to tailor your approach to your specific situation.
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