Chartered       Professional      Accountants

 Accounting,       Tax,        Business Advisors

Ph. 780 863  2224,    info@taxcounting.com

5 Mistakes to Avoid When Filing Taxes as a Small Business and How a CPA Firm in Edmonton Can Help

Two tax accountants creating business tax assessments at an office.

 

Tax season is the collective whimper heard around the globe. Filing taxes is a critical process for every business, more so for small businesses.

Managing your business taxes is more than maintaining accuracy and accountability. Tax regulations are complicated, and it's easy to make mistakes when filing returns.

If you're running a small business, you don't want to pay higher taxes than you owe or worse; make an incorrect filing to draw your business's tax department's attention.

Here are five some common mistakes to avoid when filing taxes as a small business:

 

Mistake#1: Not Taking Advantage of Business Deductions

 

Canadian tax law allows companies to make several deductions to minimize taxable income.

These deductions include, but are not limited to, disabilities, education, pension and saving plans, climate action incentives, and other employment expenses.

Small companies who don't take advantage of business tax deductions end up paying more tax than required.

 

tax-accountant-MacBook

 

Mistake#2: Using incorrect employee's work status

 

Many small businesses make errors when calculating payroll deductions, resulting in inaccurate tax filing, exposing them to potential fines and penalties.

Companies must make a clear distinction between contractors and employees to report accurate wages paid in the tax year.

It's essential to refer to Canada's statutes regarding employees and payroll before filing a business tax to avoid making this mistake.

 

Mistake#3: Not Separating Personal and Business Finances

 

A business is an entity that runs separately from the owner. Many small business owners mix up personal and business finances, which can lead to tax complications.

Canada Revenue Agency (CRA) expects clear segregation between personal and business transactions to ensure an accurate and fair picture of your business records.

If you mix them up, you can overstate or understate your business income and expense, resulting in accurate tax payment.

 

Documents for preparing tax assessments of a business with a calculator, a pen, and paper clips.

 

Mistake#4: Not filing and paying taxes on time

 

Filing and paying taxes late is the most significant tax blunders small businesses make, which subject them to penalties and fees—unnecessary costs that can easily be avoided.

Always try to file and pay your tax on time. Submit quarterly filings to keep up with the payments. You may even end up receiving a refund.

Keep tabs on the filing due date. If your small business is struggling and you can't file on time, ask for an extension.

 

Mistake#5: Not Tracking Expenses Accurately

 

Last but not least, inaccurate records of expenses can lead to erroneous tax calculations and incorrect financial reporting, leading to adverse consequences.

You must keep detailed business records and ensure every expense is correctly entered into the system to avoid reporting inaccurate tax figures.

The problem is usually faced by small companies that don't employ accountants due to financial constraints, but it can hurt their business in the long run.

 

How a CPA Firm in Edmonton Can Help

 

Having a reputable CPA firm in Edmonton by your side can help your small business ensure accurate accounting and tax records.

Professional accountants will avoid these mistakes when filing taxes for your small business and use smart strategies to minimize your tax liability.

If you are looking for a professional CPA firm in Edmonton, get in touch with Duggal Professional Corporation today! We're a full-service accounting firm that focuses on providing all accounting, taxation,business reporting, and consultancy services to small businesses. Call +1 780 863 2224 to get started.