Common Mistakes People Make During Tax Season
Accounting has become a vital part of our day to day lives. As business owners, we strive to maintain a record of all our transactions to keep CRA inquiries at bay. We also need to make sure that we file error-free tax returns. However, this is a tough task, and as no one really enjoys doing their taxes, it’s put off until the deadline is near.
Pressured by the deadlines of filing returns, several people commit costly mistakes that result in penalties. As experienced accountants, we understand the pressure you feel as tax season approaches, and want to help you file your returns without any errors.
To help you enjoy a tax season that is as stress-free as possible, we’ve compiled a list of two of the biggest mistakes you should avoid when paying your taxes.
1. Claiming personal expenses as a business expense. Clients make this mistake as they feel that because it costs money to have a job, they should be able to claim it as a deduction on their returns. However, the amount you spend for personal or family reasons is not a deductible business expense. It’s crucial to separate all your legitimate business expenses from your personal expenses.
If you are doing business from home or have a family business, then it’s essential to separate your phone and internet bills. You need to maintain a mileage book to track expenses of your personal vehicle used for business purpose. You also have to separate your grocery bills.
2. Not having the cost of investments. One of the best ways to grow your money is to invest it. However, when you spread your money across different types of investments, it’s mandatory to keep track of all your investments continually. We suggest that you get a gain and loss report from your financial planner or bank at regular intervals.
To avoid these two common mistakes as well as several others, reach out toRamsey & Mahajan Accountants & Consultants. We provide a wide range of services from business start-up, bookkeeping, financial statements, payroll services, corporate tax planning, corporate tax returns, goods and services tax (GST) returns, and corporate reorganization. To learn more about services we provide, please click here. If you have any questions about accounting, get in touch with us by clicking here.