Why Clients Need Detailed Records Come Tax Time

 

Accounting and bookkeeping are intimately linked and bookkeeping is the art of keeping detailed records. Dedicating resources to proper bookkeeping is essential to understanding one of the core elements of your business: how much money is coming in and how much money is going out. That should establish that it’s important to keep detailed records at all times, but it’s especially important around tax time. Why?

 

It Ensures You Get All The Tax Breaks You’re Entitled To

That business lunch you took while you were at a conference? Could get a tax break on it. The money you spent on gas driving to that conference? Might be tax deductible. Office supplies, insurance premiums, the anti-virus you installed on all company computers? All of this might entitle you to some tax breaks. There are so many different things you can get tax breaks for it would be impossible to list them all here, but if you’re spending money in order to grow your business, it’s important to keep a record of them. Remember to always use your business bank card for business only or things get really messy, and mess is the enemy of proper bookkeeping.

 

You Won’t Have To Scramble

Tax time is stressful. You want to do everything you can during the rest of the year to reduce your burden around this time; that way, you’re distributing the work throughout the year instead of having to slog through it all in a short period of time. When you’re keeping detailed records and you have a system for sorting them, you’ll be able to easily access all of your records for the year when the time comes. You don’t want to leave your accounting team waiting and you certainly don’t want to leave the CRA waiting, so keep detailed records all year round.

 

You Avoid Mistakes

So far we’ve managed to avoid the much dreaded “A” word – audit. Realistically, though, the most important reason to keep detailed records is so you don’t make any mistakes on your taxes and end up overpaying – or, worse yet, underpaying. When you’re stressed and scrambling because you don’t have detailed records ready, you’re more likely to miss something. Should the CRA opt to audit you, you’re in an even stickier position because you don’t have the detailed records they might be looking for. Taxes and accounting are games of precision – don’t end up stuck up a creek without a paddle.

 

All of this can seem a little daunting – the rewards for proper bookkeeping are high and the penalties can be steep. Fortunately, there’s help. Your Winnipeg CPA accountant can help you with bookkeeping. Once you have a system in place, they’ll be able to work through your detailed records to ensure you get the most out of tax season. They can also help you set up tax software so you can go digital – just remember to always have both digital and physical backups of all of your records!