Brooks (Rural Roots Canada) – Tax season is upon us. Are your records in order to help you put together your income tax paper-work or are they a pile of receipts in a shoe-box?
Tony Benevides is with Farm and Small Business Consultants.
He says you can really reduce the workload come tax time if you plan ahead.
“I’ve always suggested is to keep it really, really simple, put aside 30 minutes per month, get yourself an accordion folder and then put the expenses in the different compartments,” Benevides said.
He says if you do that once a month for 30 minutes, you will at least have everything categorized so that at some point, you can go ahead and put them in a spreadsheet in some sort of report.
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Benevides says the Canada Revenue Agency doesn’t accept a shoe-box full of receipts anymore.
“They bought it in about five years ago, set up a what’s called a minimum records rule.”
It states that they need to be in some sort of spreadsheet file of some kind at year-end.
“They’re still allowing manual records, but at the end of the year, they need to be in some sort of tally.”
He says in the event of an audit having good records is really what will protect and save you.
- Take out your receipts – The shoe box or glove compartment, and wallet.
- Organize them into your accordion binder.
- Go online and get your credit card transactions to your tax organizer – You’ll see that they kind of categorize your expenses now. So it really, really helps with your tracking of expenses.
- Put it all into a bookkeeping software
- Keep them for six-years
Benevides says that following these simple steps will make sure you have a fail-safe back-up in the event of an audit.