Tax-time Trauma and the Single-Person Business
It’s tax time and you are panicking; you grab the shoebox from under your desk (or even under your bed) and there they are, thousands of receipts, some bearing Starbucks coffee stains of meetings past, others with stick figures in bright coloured crayon. Others torn, or screwed up into a ball.
Your bookkeeper/accountant needs them now, but you know if you supply them as is, there will be a cost. Darn it, if only you were bigger and had employees to keep proper records. As it is your $35 an hour remote accountant will need to sort through the mess of torn, faded paper that represents the history of your company over the last year.
And it’s not just the receipts; you will need to pull together invoices, cheque stubs, deposit slips, invoices, bank statements, credit card bills, line of credit statements, GST statements/requests, other random documents from CRA and probably a whole lot more.
If only … if only, you’d entered each receipt into a program like QuickBooks, or even a simple Excel spreadsheet … if only. If only you’d even kept ALL the receipts. But alas, you are a small business person trying to keep your company’s head above water, and doing paperwork doesn’t pay the bills. But now, it’s that time again and your acid reflux is rising to whole new levels and the stress is showing, and not in a good way. Man, you hate the CRA!
What’s worse, you know what’s coming; the questions: where is the receipt for the lunch at Tim Hortons on May 16th? What did you purchase online on January 8th last year that cost $150 USD? Have you an invoice for the deposit for $450 made on July 4th? What was the amount for that you deposited into an ATM on September 30th? The questions keep on coming and you don’t have the answers – aargh!
Have no fear, you are not alone and it will all be over soon. First things first, find a board room table or a dining-room table if you work from home and grab all those receipts. Grab them one-by-one and put them into piles: office supplies; hardware; auto expenses; postal (not going postal!); insurance; professional services (like that darn accountant); entertainment – ask your him/her what categories they like to work with.
This will only take you an hour or so, but might well save you a hundred bucks, and what’s more you’ll get an idea of where all your money went this year. It just keeps on getting better doesn’t it? At this stage ensure you have every monthly statement you need. Think bank, credit card, cell phone; wherever you need 12 (or thirteen if the bill splits a month) statements and invoices make sure you have them all. If the accountant has to chase you, you know it will add to the cost.
Okay, done? Now pop along to an office supplies store and buy an expanding file. The plastic ones are best, as when your bookkeeper returns all your accounts he/she will use the same folder which you can then store easily and securely, just in case the CRA ever … okay enough said. Make little tags for each category and then put the receipts into each section. If you have time, organizing them by date might be useful, but ask whether your bookkeeper needs this before making the effort.
In the same folder put all the other stuff you have gathered (invoices, bank statements – remember?). Now everything is all in one place and sorted. Not only that, it’s now easy to quickly add up all your invoices and see what your revenues were for the year and how much GST you collected. Add up all the receipts and you’ll have an idea of your costs and from that you can estimate the GST paid. Do some simple math and viola you now have a rough estimate of your financial situation.
Next year? Hire someone to handle the monthly input. It’s only inputting so a young teenage son, or daughter could do it for some extra pocket money. Or perhaps find an accounting student – it needn’t cost a lot and it’ll save you the tax-time trauma.