When Is the Best Time to Prepare for Taxes?

Filing your taxes can be a gut-wrenching process. And every Canadian must go through this stressful exercise every year. Small business owners and the self-employed who don’t have accountants to guide and prepare taxes feel extra stress on at tax time too. After all, unless your business specialty is taxes, you don’t have the time nor the expertise to do them properly.

It’s best to prepare for taxes well before the April 30th deadline. In fact, every January, you should begin preparing for tax season by putting processes in place that take the stress out of the deadlines. If you dread the tax filing process and all it entails, enlist the help of TaxAssist Accountants, who can ease the process for you. Your tax accountant not only helps you prepare your documents, but also saves you money with vital tax-saving tips.

Why Must I Prepare For Taxes Early?

It hardly comes as a surprise that about 44 percent of Canadians delay sending in their tax documents until the last minute. The problem with this is that when you procrastinate on such an important task, you often end up missing the deadline, leading to late fees and penalties. In a worst case scenario, you may have filed your taxes with errors that can lead to an audit of your financial records.

Other advantages of preparing for taxes starting at the beginning of the year include:

• Having sufficient time to research the latest federal tax clauses and dig through your documentation to find out if there are any changes which impact you;
• Hiring an expert tax accountant, who sets up the processes and practices early so you have a solid plan of action to reduce your tax burden;
• Getting your refunds and claims, like the GST/HST credit, much sooner in the year;
• Organizing your paperwork at tax time becomes less of a burden and simply a task you get through quickly and smoothly;
• Being able to take all or your allowable allowances.

How Do I Start to Prepare for Taxes?

Preparation is key to eliminating the stress of the filing process. For 2021 tax returns, Canadian business and individual taxpayers get two additional days to file. The new deadline was shifted to May 2nd because April 30th falls on a Saturday.

To start, review your past year’s Notice of Assessment from the Canada Revenue Agency (CRA). Note any recent changes, such as marriage, divorce or the birth of a child. You may even have shifted from being employed in a company to self-employment or decided to start a small business. You must also keep all the documentation for the past six years in case the CRA wants to audit your returns.

Prepare for taxes and associated responsibilities by knowing where to find important documents such as:

• Employment and income slips such as T4s, T4As, T5s and other income statements;
• Receipts for deductible expenses;
• Receipts for medical expenses, charitable donations and childcare expenses;
• Student tuition and interest statements;
• Documentation for Registered Retirement Savings Plan, Home Buyers Plan or Lifelong Learning Plan.

If you need help getting your taxes started, contact TaxAssist Accountants. They can set you up this year and help you prepare for next year’s tax season, too.

Last updated: 13th February 2022