As a top tax planning company in Toronto, our team helps individuals and businesses prepare and file their yearly taxes. A common problem we see is that many people don’t start getting organized until well into April.
Although you only have to file once per year, that’s not where your tax planning should end. Here are the top 3 reasons why you shouldn’t treat tax planning as only a yearly task:
1. You’re more likely to lose important documents
How many times have you intended to save a receipt for tax purposes, only to lose it by the time April approaches? This is a common problem among individuals and business owners alike.
It’s nearly impossible to keep track of every receipt, invoice, and other tax-related document if you wait until the very last minute, or even the last month before the deadline. To stay on top of your taxes, you should develop a system of organizing your records.
This can mean anything from maintaining a labeled filing cabinet, to tagging or starring emails that contain important tax information. The key is to develop a system that works for you, which will ultimately allow you to save time and avoid headaches when it’s time to call your tax preparer. This may also help you or your tax preparer easily discover deductions or credits that you’re entitled to.
2. You may incur penalties
Are you self-employed or a contract worker? If so, it’s important to know that you should be paying your taxes on a quarterly basis. While you generally have until April 30 to file and pay your taxes, not paying quarterly means you may face a huge tax bill in April.
At our Toronto tax planning company, we often see self-employed individuals make this costly mistake. In some cases, people end up not being able to pay the entire tax bill on the deadline, leading to expensive penalties. Even if you are granted an extension, you may find yourself in a cycle of always being behind, on top of trying to stay afloat with the current tax year’s quarterly payments.
Paying quarterly will help you avoid these problems, and it will allow you to budget your finances more responsibly.
3. You may have to wait longer to receive your refund
When it comes to filing taxes, sooner is usually always better. If you’ve carefully planned your taxes throughout the year, and you have an organized record-keeping system, then it will make tax time a breeze. You can simply hand off your documents to your tax preparer, and in most cases, you can expect to receive a refund in a couple of weeks after filing.
Don’t forget that you are not your tax preparer’s only client. The more organized you are, the faster they can get the job done. If you have to sift through a year’s worth of documents come April, you may face longer filing times and possible delays in receiving your refund.
Speak with a tax planning expert in Toronto
We understand that tax planning is something most people don’t look forward to. With our help, we’ll make sure you stay on track throughout the year. We can also help you discover deductions or credits that you didn’t realize you were entitled to.
To get started, contact us today and schedule a free consultation.