The Pull of Procrastination: Newsletter April 16, 2021

Hello All,

As an accountant and a taxpayer my exposure to tax related procrastination is quite high. Over the years, I have had a small number of clients who are eager and ready to file their taxes as soon as it is possible (CRA starts allowing tax returns to be filed around the last week of February). The majority of us, however, wait until as late as possible .

There are numerous reasons why we delay filing our taxes.  There is a stress associated with taxes even for those who don’t actually have taxes to pay.  Many taxpayers (such as my spouse) have a deep-seated fear of numbers.  Another reason for delaying is that you might not have all your tax documents and it is a bit of a slog to locate them.  Those with complicated situations might have trouble finding an accountant or may have lost their previous accountant and may be unable to find one that suits their expectations.  Finally, many of us tend to procrastinate until the last minute and are motivated by the pressure of a deadline.

Of course my advice (even if I don’t personally follow it) is to do your taxes earlier rather than later. Once they are done, you feel like a load has been lifted off your shoulders.  Even if you owe money, a great deal of the stress comes from the uncertainty of not knowing how much you owe.  Online software allows those with straightforward situations to do their taxes on their own quite easily even if they have used an accountant in the past.  Alternatively, finding an accountant online is much easier than it used to be as you can sift through reviews and many even offer a free consultation.  The best preparation for tax time is to simply put all your tax documents into a folder as you receive them which can greatly simplify the process of doing your taxes. And perhaps the best incentive is that you don’t incur penalties for filing late (money which can be much better spent on something else). Even if you can’t pay on time, you still avoid the penalties by filing on time and you can always work out a payment arrangement with both CRA and RQ.

While I don’t have a new blog post this week, below is blog post I wrote last year that gives those of you who are doing your own small business tax returns guidance on preparing the T2125, which is the name of the schedule that you complete along with your personal tax return. If your situations is fairly straightforward, many of you can do your own business tax return. The benefit of doing it yourself is that it gives you a better understanding of your business and insight into the process. I have a client, who decided to do it herself (with a little guidance from me) and said that she felt empowered afterwards.

For those of you with rental properties, I have also included a blog post about rental properties and has a section on expenses and taxes.

Small Business Articles/Tips

Guide to Annoying Tax Questions : Wealth simple has come out with a comprehensive list of tax questions for 2020 including Covid benefit questions, new deductions and credits for 2020 and other questions that many of us have.

Tax Deadline for Quebec tax returns is May 31st : For those of you who live in Quebec, the tax filing and payment deadline has been extended to May 31st! This means that even tax returns are technically due by April 30th, there will be no penalties if you file or pay by May 31st. Some think that CRA will follow suit, but we have not yet head anything.

QBO Tip : Allocating your tax payments in QBO can be somewhat tricky.

If you are unincorporated, keep in mind that income tax payments are not deductible expenses and therefore should not appear on the profit and loss statement. If you do pay them through your business account you should allocate them to owners equity.

Sales tax payments should be reflected after “filing” your sales tax return in taxes section of QBO by selecting “make a payment” next to the filed return. Instalments should go to a sales tax payable account until you are ready to file after which they should be applied to the tax filing.

Corporate income tax instalments should go to a corporate taxes payable account which is a liability. Once you have determined your tax liability for the year they can be allocated to the income tax expense account.

Products

A standing thank you to everyone who has purchased my ebooks. I really appreciate it and sincerely hope they have been useful

Small Business and Your Dividends: For those of you who are doing it yourself, and have not had time to file your dividends, this book helps you understand exactly how dividends work and how to submit them to the government. There is also a free dividend checklist that you can download here.

Start Your Business: If you are planning to start a business, or already have one but not sure if you are doing everything correctly, received conflicting information etc. my book tells you what every business owner needs to evaluate from a financial and tax perspective.

Both books are also available at Amazon.

Discount: Save 25% on either guide by using the discount code “special”.

NEW: Companion to your small business taxes: My comprehensive guide to doing your own small business/self employed taxes is going through final edits. I hope to have it ready by next week. If you are interested in the guide and/or have any specific topics to recommend please let me know here.

Reviews/Feedback

I have created a feedback form for anyone who would like to provide their insights into existing blog posts, topic ideas for new blogs, feedback on my products/website or anything else. I’m always looking for ways to improve or provide value (to the extent possible) and this will be most helpful.

For anyone who has purchased my books through Amazon, and have found it valuable, a review would be hugely appreciated.

As always, I would like to welcome my new subscribers and of course my current subscribers. I look forward to writing this newsletter and to your comments and feedback.

Hope everyone has a fantastic weekend!

Ronika