What Mistakes Will Cause Problems During Tax Season? | FBC, Canada's Farm & Small Business Tax Specialist

What Mistakes Will Cause Problems During Tax Season?

Each year, millions of Canadian farm and small business owners may struggle to make sure they're doing everything they can to be fully prepared for tax season.

Part of the reason for this is the fact that many people, including businesses owners, simply don't adequately prepare themselves throughout the year, meaning that the final few months before the April 30 filing deadline are often quite hectic.

As such, it may be wise for small business owners, including farmers, and independent contractors such as truck owner operators, to do all they can over the course of the entire year to ensure proper organization of their records and bookkeeping that will make tax filing go as smoothly as possible.

Fortunately, there's good news for people worried about running afoul of the government with a sloppy, inaccurate, or problematic tax filing: The mistakes people make are usually quite common, and as such, they're easy to plan for and avoid.

Keep Organized Supporting Records

When it comes to mistakes of this type, perhaps the most common relate back to farm or business owners simply not doing enough to properly save the documents required for tax filing.

For instance, keeping receipts, pay stubs, and other data that the government will likely want to see as part of a tax filing or audit is often scattershot, meaning that things aren't all concentrated in a safe and secure place.

Experts generally say that this is a huge mistake, because it often leads to entrepreneurs or independent contractors scrambling to find something they need to back up an item of their filing, but not necessarily being able to find it.

As a consequence, that can lead to major filing problems, but again, this is an easily avoidable mistake.

It is actually quite easy to take some simple steps here, including making a small investment in software that saves important documents digitally, the report said.

Whether it's a scanner or a smartphone app that allows for greater convenience will be up to the individual needs of the business owner, but in either event, this can be crucial to successfully maintaining a good situation.

Others may simply find it easier to buy a lockable, fireproof filing cabinet.

Part of that kind of preparation, too, comes in the form of actually being diligent about saving and organizing these documents in some way.

Experts generally recommend that small business owners or individuals take at least a few minutes each day to make sure they're putting all their documents in the right place and organizing them appropriately, so that they're easy to track down months later when they are needed.

Proper tax preparation even in this regard takes hours of work, but if it can be spread out over the course of months or even the entire year, it's usually time well spent.

Truck Drivers May Need More Tax Prep Help Than They Think.Truck Drivers May Need More Tax Prep Help Than They Think.

Work With a Small Business Tax Specialist

In addition, it's usually a good idea for business owners to work with a tax professional over the course of the entire year to make sure they can understand the tax credits and deductions for which they may be eligible.

This is something that may seem obvious to many who have long histories of paying their taxes and being fully prepared to do so, but there is still a mistake that many people make here.

By waiting until just a few months before April 30 to start looking at tax status and other things that are going to impact eligibility for various deductions, people may be in such a rush that they miss a potentially valuable deduction. Or you may find that you've not done enough over the course of the year to qualify for it.

Talking with a farm tax or truck tax specialist not only during filing season, but also throughout the year, may go a long way.

These people tend to have a lot of experience when it comes to finding every possible tax credit and deduction for their clients, and are likely to be more than capable of helping them achieve any goals they can set out.

However, this means that clients are going to have to work with these tax professionals throughout the year, so that they can set goals and regularly check in to measure their progress toward reaching them.

With these facts in mind, the benefit to long-term tax planning becomes both obvious and quite significant, as it could help truck owner operators or farmers reduce their tax liabilities by thousands annually in some cases.

Tax Planning For More than Just This Year

In addition to the tax goals small businesses in particular should have in any given year, it's probably also a good idea to consult with tax professionals over time when it comes to more long-term, multi-year goals.

The fact is that many small businesses - including farms - probably have plans such as when they're going to buy more equipment, how they're going to expand or change the way in which they do business, and so on.

With this in mind, it's something that you can plan for tax-wise, and ensure that all future issues are accounted for.

Business Succession Planning

It's also important for these business owners to work out plans and examine tax benefits of them when it comes to things like succession plans and their estates.

The fact of the matter is that many small businesses struggle when the owner either retires or passes away, simply because there were no clear plans for how the enterprise should proceed in their absence.

Another reason it's important on an ongoing basis, though, is that a person's situation changes over time.

For instance, if they have a child at some point in their careers, they should be prepared to make the necessary changes to their succession and estate planning that will help to incorporate them into the future issues that may arise.

That's also likely to be true of business partners that come and go, long-time employees, co-owners, and so on, in addition to new family members.

The number of things that can go wrong in the cases when clear plans are not in place are significant, and owners will therefore need to work closely with a tax preparer - among other professionals - to make sure everything runs as smoothly as possible.

Summing It Up

Taxes need to be addressed at many points throughout the year, not just during tax season.

The more people can do to stay abreast of all the ins and outs of their tax filings - and what they can do to more easily improve their personal and business situations - the better off all involved are likely to be not only now, but potentially years down the road as well.

All of these issues paint a clear picture of what farmers and truck owner operators, among others, have to do to adequately prepare for their taxes well in advance of the tax filing deadline, and for years to come.

The additional money they save as a consequence of this could all be put toward better improving their overall business prospects or personal bottom lines going forward.

The first step toward that kind of financial reality, though, is finding the best possible tax preparer with a background in their field, who can understand the unique problems and other issues they face, while also dealing with them on a more direct and personal level of understanding.

Field Brafton id
40088456
"Without continual growth and progress, such words as improvement, achievement, and success have no meaning." — Benjamin Franklin