LeCanadian

Top Menu

  • Login
  • Archives
  • Les Actualités
  • Advertising
  • Sexy Pages
  • Contact Us

Main Menu

  • Home
  • Business
  • Entertainment
  • Foodie
  • Headline
  • Health
  • Editorials
  • Lifestyle
  • Sports
  • UFO · Exopolitics
  • City
  • Sexuality
  • Dating
  • Login
  • Archives
  • Les Actualités
  • Advertising
  • Sexy Pages
  • Contact Us

logo

Header Banner

LeCanadian

  • Home
  • Business
  • Entertainment
  • Foodie
  • Headline
  • Health
  • Editorials
  • Lifestyle
  • Sports
  • UFO · Exopolitics
  • City
  • Sexuality
  • Dating
  • 5 ways sudoku boosts brain health

  • 10 tips to successfully market your law firm

  • 7 Amazing Gifts for Kids Who Like to Cook

  • Make Mortgage Overpayments Work for You

  • Son shares warning for immunocompromised after fully-vaccinated Tampa Bay dad dies from COVID-19

Business
Home›Business›Ten common Mistakes That Make Tax Time Worse

Ten common Mistakes That Make Tax Time Worse

By admin
May 7, 2016
1817
0
Share:

Tax time is a headache for most people, but if you are running a small business, it can be even more so. An error, even an honest one, has the potential to raise the ire of Canada Revenue Agency auditors. That could cost entrepreneurs time, stress and money while they would rather be concentrating on running their businesses.

Here are 10 common mistakes that small business owners tend to make.

Failing to keep an accurate log of a vehicle: “It’s one of the areas the CRA loves to audit,” said Toronto-based tax lawyer Dale Barrett, author of Tax Survival for Canadians: Stand Up to the CRA. “They need to know absolutely how much [use] is business and how much is personal.” That means recording odometer readings at the beginning and end of each month, as well as keeping and annotating business-related receipts for gas and vehicle maintenance. While the Income Tax Act doesn’t require a vehicle log, in practice, Mr. Barrett said, “you’ve got to break it down, or they will just deny it all.”

Failing to report cash payments: “One of the common mistakes made by small business owners is not keeping good track of this income,” said Kristin Li, chief executive officer of Tax911Now.ca, based in Markham, Ont. “That can lead to big trouble down the road from the CRA.” Tax authorities expect your business to have a certain amount of earnings, depending on its size and location, so forgetting or omitting revenue could attract their attention.

Having insufficient proof of meals and entertainment expenses: Business owners really need more than just the receipts for these expenses, experts say. It’s a good idea to take a few moments after each event to record who attended and how it related to your business. Keep your bills, records and day-to-day accounts organized. Simply deducting everything could suggest that business owners are including personal expenses as well.

Failing to record cash draws or shareholder loans: “A year or two down the road, you are doing your taxes and all of a sudden this is money missing from the company,” Mr. Barrett said. Simply holding onto it means it’s taxable income. “If the CRA finds out about this,” he said, “they can give you quite harsh gross-negligence penalties for failing to declare it properly.”

Failing to remit money from payroll deductions and the Goods and Services Tax: Collected by the business on behalf of the government, these so-called trust monies eventually need to be paid in to the CRA. “Sometimes a business that is not doing very well will finance or subsidize their operations on these funds,” Mr. Barrett said. “But once you get onto the wrong side of that fence, you get yourself into a position where the CRA can become very aggressive with the collection, including going after your personal assets.”

Neglecting the possibility of income-splitting: Many small business owners don’t know about income splitting, said Ms. Li. “Paying a lower-income spouse or children is a very effective way of reducing whole family taxes and thus cutting overall tax owing,” she said. But, she added, don’t forget to issue those recipients the correct income slips.

Paying oneself a dividend when the business owes taxes: “Business owners can put themselves down as a salaried employee, or pay themselves in dividends,” Mr. Barrett said. But there’s a problem with dividends if your business owes taxes. Dividends are considered transfers of business assets, not income. As a result, he said, “the CRA can say, ‘Well, you didn’t pay your income tax at the corporate level, therefore you should not have given that dividend. And we want it back.’”

Not paying taxes at all: Some entrepreneurs pay their taxes only when they can afford it. “But it’s illegal not to file if you owe, and can generate big late-filing penalties,” Mr. Barrett said. If taxes are due on a quarterly basis, Ms. Li said, failure to do so will also result in penalties and interest charges.

Being poorly prepared: Showing up at the accountant’s office with a jumble of receipts and invoices is not a good idea. “No shoeboxes,” said Wayne Buchanan, who handles small business taxes in Stratford, Ont. “A tax preparer dreads seeing bundles of paperwork accompanying a tax file. Your tax prep costs will go up if the paperwork is not organized and recorded on a spreadsheet.”

Not hiring the right kind of accountant: One of the most common errors with small business taxes occurs when people hire an accountant who is unqualified to help them. “I get a tremendous amount of business coming to me because someone’s accountant screwed up,” Mr. Barrett said. “If you are doing more complicated things, you have to make sure you’ve got the right accountant.”

Read More..

Post Views: 2,006
Previous Article

Meetings, Meetings, Meetings … and How to ...

Next Article

New Tax Rule Will Fight Corruption, Help ...

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0

Related articles More from author

  • Business

    Bagnall: Capital region job market weaker than it seems, but budget could hold fixes

    March 28, 2016
    By admin
  • Business

    Why Lululemon Has Stayed Sweet: Olive

    December 23, 2016
    By admin
  • Business

    Online banking: How to protect yourself from fraud

    January 17, 2021
    By admin
  • Business

    New jobs available in rural communities

    January 19, 2021
    By admin
  • Business

    Do you have what it takes to manage your own investments?

    December 21, 2018
    By admin
  • Business

    SEC Advises OSC to Protect Whistleblowers From Retaliation

    November 2, 2016
    By admin

Featured Petition

  • Bell Baker’s John Summers – Stop a Crime Against Humanity – What would his Mother think?
  • John E Summers: Ottawa Lawyer Attacks Motherhood and Civil Rights – Support His Disbarment
  • Stop Ottawa Lawyer John Summers’, Marcella Carby-Samuels’ & David Tenenbaum’s Ab
  • Week
  • Month

Week

Sorry. No data so far.

Month

Sorry. No data so far.

Popular on The Le Canadian

  1. AgoraCosmopolitan
  2. Agora Publishing Consortium
  3. Le Journal Canadien
  4. Dominion: Food News
  5. LeCanadian.com
  6. The Ottawa Star
  7. Capitalistocracy.com
  8. Agora Books Author House
  9. First Nations Press
  10. The Etiquette Show
  11. Ontario People's Front





Mark's



Recent Posts

  • 5 ways sudoku boosts brain health
  • 10 tips to successfully market your law firm
  • 7 Amazing Gifts for Kids Who Like to Cook
  • Make Mortgage Overpayments Work for You
  • Son shares warning for immunocompromised after fully-vaccinated Tampa Bay dad dies from COVID-19
  • Catching Covid-19 after being vaccinated isn’t a myth. It happened to me
  • My COVID Story: “I got COVID after being fully vaccinated”
  • Albertans fully vaccinated for COVID-19 urged to stay cautious during pandemic’s 4th wave
  • I got the vaccine – and then I got Covid: Readers share their stories
  • Brazilian minister tests positive for Covid after meeting maskless Johnson

Most Viewed Posts

No Posts found

Visitors

  • Home
  • Business
  • Entertainment
  • Foodie
  • Headline
  • Health
  • Editorials
  • Lifestyle
  • Sports
  • UFO · Exopolitics
  • City
  • Sexuality
  • Dating