We all hate paperwork, especially when it comes to taxes. But filing and storing important documents is something that we all have to do whether we like it or not. If you don’t want your business to get in trouble with the CRA, find out everything you need to know here about what you should keep in terms of taxes and what you can do to make the filing and storage process a whole lot easier.
What You Need to Keep:
What to Store
When it comes to your taxes, the more information you keep, the better. And as a rule of thumb, you always need to keep receipts, bank statements, invoices, payroll records, and documentary evidence that supports the income, deductions or credits reported on your tax return.
Any supporting documentation should also be kept and safely stored, including any bank statements, credit card receipts, cash register tapes, petty cash receipts, deposit information, cancelled checks, expense reports, accounts payable, accounts receivable and payroll reports.
It’s also important to keep on hand any previous tax returns, your business license, contracts you have signed, property records, company motor vehicle records, as well as any audits and annual reports to present to the CRA if requested or if you are audited.
For How Long
In most cases, you must keep all your required records and supporting documentation for a period of six years from the end of the last tax year (the fiscal period for corporations). This also pertains to any corporations that have amalgamated or merged to create a new corporation. Even if you have filed your income tax return late, you must keep that file for six years from the date that you filed it.
If you plan to dissolve your corporation, you shouldn’t toss away all your paper documents as soon as you close shop. All records must be kept for two years after the date of the dissolution.
Where to Store
You must keep records at your place of business or your residence in Canada unless the CRA gives you written permission to keep them somewhere else.
How You Can Better Organize Your Paperwork
Establish a Plan
When you’re doing business with a number of clients, it can become extremely difficult juggling all the various accounts, especially when every client runs their operations differently. If you don’t have a plan in place you can end up spending hours every week chasing down invoices and organizing documents to ensure they are paid on time and properly rectified. If your firm is spending days on end organizing all these accounts for tax time, it might be time to sit down and create a list of tax strategies that you could standardize and automate across your client base. Having a plan in place that works for everyone can save you both a lot of time and aggravation come tax time.
If you hate paperwork, then it’s time to go paperless. By storing everything electronically in a cloud you can free up space on your desk, get rid of all that paper clutter, and get access to your documents at any time from anywhere. You’ll also be able to easily find something in seconds – something you can’t do in a filing cabinet. Cloud-based accounting software like Xero can help you streamline all your accounting processes and automate everything. With Xero, you can send invoices, create expense claims, reconcile accounts and view reports from anywhere. It will also notify you when invoices have been opened and provide daily updates from the bank accounts and credit cards. You can even invite your tax advisor to collaborate with you, making it super easy for them to do their job come tax time.
Use an Accounting App
Imagine if you could access all your accounting documents in just one click? Imagine if you didn’t have to run back to the office every time your accountant or CFO needed something? With today’s accounting apps, these dreams are now a reality. The Xero accounting software also comes with an app that you can install on all your devices. With just a click of a button, you can access all your documents, send invoices, reconcile accounts and view reports from home, a restaurant or even on vacation.
Hire a Firm Do It for You
Efficient accounting and tax preparation can require a small army. If you and your team are tired of spending countless hours tracking, organizing and managing all your paperwork, let us do it for you. At Envolta, we will manage all your bookkeeping and accounting processes so that you can hand off these tasks and get rid of all your papers once and for all. Our cloud-based software and apps make it easy for you to get access to all your tax and accounting documents from anywhere.
Find out how our expert team of accountants and bookkeepers can help your business with all your tax and accounting needs. Contact us today!