Self Employed? 4 Tips to Stay Sane at Tax Time
It’s the end of March, the days are getting longer and the birds are chirping. We lost an hour of our lives a couple weekends ago.
There’s no sense in avoiding the inevitable any more.
It’s time to clean out the garage.
Oh, and taxes! We don’t have any garage cleaning tips for you because we’re a mortgage and finance blog. Sorry!
What we can help you with is that one night you dedicate to finishing your taxes.
And yeah, sure, maybe it’s also the night you start your taxes. That’s ok too. No matter how you attack it, if you’re a subcontractor or you’re self employed, the more organized you are the smoother the process will be. But whether you’ve spent time keeping yourself organized throughout the year or you’re going to spend time doing that now, you’re going to need to buckle down and get the job done.
You’ve already lost if you’ve started a stopwatch to keep track of how long your taxes are going to take. Here’s the obvious thing: it will take as long as it takes. Again, if you’re not organized to start with, don’t worry about it, but don’t rush that step either. You don’t want to miss anything.
Use Separate Expense Categories
If you’re working for yourself then you’re undoubtedly going to encounter expenses that correlate with your company. Need to buy paper to print menus? That’s an expense. Need to buy specific equipment to get the job done? You guessed it, expense.
But what type of expense?
Here are some common expense categories used by our subcontracting clients:
- Mileage. Do you drive to work? Drive for work? This is an important one.
- Supplies. Like the paper we talked about. If you buy supplies for work, record ‘em.
- Travel. Another expense that will come with a big price tag.
- Professional Development. Feel good about spending money on yourself for a change!
Your expense categories might vary, but the key is to be as specific as possible.
Look, as you’re working through your taxes, you’re probably going to see a lot of opportunity to bend the rules a bit. There’s a grey area, right? Well, if you classify your entire living room as an office even though it’s clearly used for more than that, then the Canada Revenue Agency might take notice and ask for clarification.
It’s just not worth it. Keep everything as honest as you possibly can and then once you’re finished you won’t find yourself worrying about it.
Ask For Help
These are all great tips, right? Sure, but here’s my dirty secret: 500 words of advice written on a blog might not cut it for you when it comes to preparing your taxes this year. I know, blasphemous!
Seriously though, if you find yourself feeling overwhelmed by the prospect of doing your taxes by yourself, it doesn’t hurt to reach out to an accountant. I’ve had phenomenal experiences with accountants who know exactly what to ask and how to proceed.
Keep in mind the onus is on you to be organized before you meet - they’ll charge you by the hour, after all - but you’ve got the organization part covered by this point, right?