We all prefer to do things that we enjoy. For many small businesses accounting tasks do not fall anywhere near the concept of pleasurable and are often pushed to the bottom of the pile. Such avoidance tactics can backfire because eventually there will be some tax return or remittance deadline forcing the completion of these accounting duties. This pressure to 'just get it finished' can cause important information to be overlooked or ignored because it would take too much time to back track and obtain it. And this approach can result in the loss of valuable dollars by missing out on tax deductions and credits for which a business is entitled. While there's not a lot that can be done to increase the fun factor of bookkeeping and accounting duties, when a proactive approach is taken it can make it a lot less overwhelming. So just keep in mind - a little preparation can reduce stress and save you money!

While there's still snow on the ground and time is on your side, here are some tips that should assist you in ensuring that you collect the data you need, so when the first blooms of Spring arrive you are relaxed and ready.

In order to save money on accounting fees you should be organized. That means having your 'shoebox' cleaned up before you get to your accountant's office. If this is more than you face, you may want to hire a bookkeeper, who bills at a lower hourly rate, to get you up to date. Regular bookkeeping keeps you informed on how your company is doing and shows you your bottom line whenever you want to see it. This information allows you to make focused and accurate management decisions that are critical for the success and growth of your company.

There are many deduction opportunities if you know what records you need to keep in order to qualify. Here are some things to watch for:

Any expenses that are paid cash with no receipt can still be deducted as long as you keep a log book. Examples of these are meter parking, car washes, pay telephone. You must state the date of these expenses, the amount and the business related reason that this expense was incurred.

When you use your car for work it is critical you track your mileage for business use. Be sure to note the destination and total mileage for each trip in your car expense logbook. Along with the logbook should be all receipts for gas, insurance, and maintenance. If these receipts are not retained you could be disallowed the total expense and that could be a lot of dollars out of your pocket.

In order to write off any business expenses that are paid by a credit card, you must have the original credit card slip with your signature on it. It's a good idea to jot down on that slip the reason for that expense. If the charge is for meals remember you can only deduct fifty percent and therefore only take in fifty percent of the GST for the company portion.

Be sure to keep all invoices and expenses pertaining to advertising and marketing your business. These expenses are one hundred percent deductible.

There is often a lot of confusion at tax time for sole proprietors, because of the overlap of personal and professional expenses. Here are a few pointers to help clarify these tax issues:

If a business is run out of the home, or if a home office is maintained, many of the related expenses are deductible. A percentage of the expenses relating to mortgage interest, property taxes and house insurance are deductible. Utilities (except phone expenses) are also deductible. To determine the percentage, calculate the square footage of your home and space used for the office. Divide the office footage by the home footage and multiply by one hundred. This will show the deductible percentage of these expenses.

If the following expenditures have been made by December 31, 2000 they will be eligible for 2000 tax deductions: moving expenses, child care expenses, safety deposit box fees, charitable donations, political contributions, professional association membership and medical expenses.

Registered Retirement Savings Plan (RRSP) contribution amounts are noted on your 1999 personal income tax return assessment notices. Be sure to check this before you top up your RRSP, as you don't want to contribute more then you are allowed. You have until March 1, 2001 to make a tax-deductible RRSP contribution for the year 2000. The maximum 2001 addition to deductible RRSP contribution room is $13,500. Therefore $75,000 of 2000 earned income is needed to reach this maximum. Consider contributing to a spousal RRSP to achieve income splitting in the future.

Persons turning age 69 in 2000 must mature their RRSP into cash, an annuity or Registered Retirement Income Fund (RRIF) by December 31, 2000. Certain 2000 excess contributions may be deducted in the year 2001 if contribution room is available.

If you own a business, consider paying a reasonable salary to family members for their services rendered to the business.

Ensure all alimony or maintenance payments were made by December 31,2000 in order for them to be deductible in 2000.

Individuals may claim a non-refundable federal credit of seventeen percent on the interest portion of student loan payments made in 2000.

Health and dental premiums are also eligible deductions for self-employed individuals, as long as the self-employment income is the primary source of income and any income from other sources does not exceed $10,000.


With the holiday season behind us, it is a good time to turn your attention to preparing for your tax return. So start organizing your records now and make an appointment to meet with a bookkeeper or accountant if you need assistance. That way, come April you will have the time to smell the Spring flowers with a bit more money in your pocket.

Courtesy of
Kelly Melanson