Yep. It’s tax time. And this year, I’m ALL over it.
I’ve been chronically late sending my accountant our tax prep info for all my years of being self employed. Not because I’m unorganized. But because I procrastinate until the cows come home, leaving everything to the last minute. And then it’s a huge pain in my ass.
And then I’m late. I feel bad for my accountant, Darlene, but she’s been absolutely fantastic at picking up the pieces of my mess each and every year. Thank heavens LOL.
2017 is different. My husband Jarrett started freelancing in January 2017, and just completed his first year of being formally self employed.
More drama at tax time? Definitely.
Here’s what happened…
*Note that we are Canadian so if you’re in the States, this next bit will make little to no sense to you LOL.
- He didn’t have a spreadsheet or any software to track anything and I forgot to ask if he needed mine. Now he’s having to go back through a full year of receipts and bank and credit card statements to find out what he spent on his own dime in his business. Thankfully the expenses were not crazy, as he is lucky and has very little overhead costs.
- He realized that he needs to charge tax on revenues from all Canadian Clients. Thankfully CRA is the best, and they set him up so that he’ll have no late charges to get caught up, and his clients are happy to be back charged. Phew!
- He didn’t claim back the tax spent on his expenses, so we are also getting caught up, as per the statement above, with no penalties.
- I definitely was on top of tracking my revenues and expenses (and no HST collected since I only have US clients at the moment!), and claimed back the tax spent on my business expenses.
- Together, we had to go through all of our household expenses to make sure we were tracking things like electric, water, gas, house alarm system, mortgage interest, property taxes, and all the other things that you can claim back a percentage of when you have a home office. So boring but so necessary.
- We had to recalculate how much of the above household expenses we could claim, since now there are two of us and two offices to contend with.
- I had to build a fun new spreadsheet that organized everything for both of us, and had a nice summary sheet to hand over to our awesome accountant Darlene.
Improving Our Process For 2018…
- In 2018 I’m going to make sure we are BOTH tracking everything at least on a quarterly basis on the snazzy new spreadsheet I built for us.
- Jarrett will have the following three business related bank accounts to keep himself organized:
- Business Savings Account: Where ALL his revenue comes into from ALL clients.
- Business Income Tax Savings Account: Where he will set aside 30% of his revenues for income tax time.
- Business GST/HST Account: Where he will put any GST/HST collected in 2018, to be paid out to CRA.
- I will have the same 3 accounts, plus the following:
- Business Account for US dollars, where all my US client payments will be deposited. Always good to have US cash on hand.
- I’m going to take the lead on our quarterly responsibilities to CRA, blocking out time on both our calendars every quarter, to go through the process together and make sure everything is ready to go.
- We are requesting feedback from our accountant on our 2017 spreadsheet to make improvements for next year, because I have a goal to be her favourite client LOL.
If you are a Canadian and you’d like a spreadsheet template to help you and your partner navigate your business financials, I’m happy to share mine! Note that I’m NOT an accountant and you should definitely go get one! Just email me at firstname.lastname@example.org and I’ll hook you up 🙂
I’d love to hear your tax time stories, and any tips you have for keeping on top of things!
Comment below, friends! Let’s make tax time fun again!