How to Prepare for Tax Season with a Bookkeeping Manager

December 31 has passed which means year end has begun for many. Trevor Seip, Manager of Bookkeeping here at Ward & Uptigrove joins us again and shares some tips and tricks to help you prepare for and get through tax season as easily as possible.

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Transcript

00;00;09;04 - 00;00;29;10
Speaker 1
Hello and welcome to Integrating for Success a wooden Up to Go podcast. My name is Amy Noonan and I will be your host. Today we have Trevor Sipe, manager of bookkeeping here at Warden up to Grove, joining us again. You can catch his first episode on The Do's and Don'ts of signing bonuses early in the podcast days. Thanks for coming back, Travers.

00;00;30;11 - 00;00;31;03
Speaker 2
Thanks a lot, Amy.

00;00;31;24 - 00;00;59;26
Speaker 1
So I can't believe I'm saying this, but before you know it, it's going to be tax season, year and all that fun stuff. So as a bookkeeping manager, I'm sure you have some really unique insights and experiences as it relates to tax season from a bookkeeping and payroll perspective. What can we do now to be better prepared for the busy tax season?

00;01;01;09 - 00;01;27;05
Speaker 2
Yeah, Amy, the real question ultimately always is, is what are your compliance requirements? I mean, that's really a conversation that we always have to look at about what we have to provide our accountant or our tax preparer in order to make sure we're following all the compliance that we need during the year. I mean, some companies have some businesses just have to put it on their personal tax return.

00;01;27;05 - 00;01;55;03
Speaker 2
And there's there's other businesses that have to do corporate tax returns and other other compliance regulations that that that are really separate and distinct about what you may or may need to provide your your accountant. For example, when you look at a business that has a personal tax return and only puts it on their personal texture, it's really about just an income in income and in profit and loss income and expenses for that company.

00;01;55;27 - 00;02;20;03
Speaker 2
They really look at all of that stuff and make sure you comply with what you're giving your account to make sure they're their deductible expenses. I mean, it's it's one thing to have a conversation with your account to make sure that whatever you're providing as a business expense is an actual deductible expense, because we don't you don't want to get into a habit of just everything you spend is what is actually an expense in your personal life because.

00;02;20;07 - 00;02;21;06
Speaker 2
Right. It's not.

00;02;21;17 - 00;02;23;00
Speaker 1
Yeah. Yeah.

00;02;23;03 - 00;02;54;14
Speaker 2
So yeah. So from a but from a from a personal tax perspective. I mean, the one thing that I as a bookkeeper, you know, one things that are very common things are medical expenses and donation receipts and tea orders and those types. And those are the common things that come up. And my suggestion, as always, is, is take a look at what you had in the prior year and take a make it make an inventory of what you think you should expect for the current year unless something is specifically or massive changed.

00;02;54;23 - 00;02;55;01
Speaker 1
Right.

00;02;55;02 - 00;03;19;28
Speaker 2
You should be you should be seeing the same sort of stuff. And and, you know, you want to make sure you have all of that stuff available to you and one little trick that I like to give some of my clients, some of my clients who I talk to me about, you know, medical expenses, you can go to your pharmacy and get a list of all your medical expenses in one sheet, as opposed to having every little prescription document with you.

00;03;20;06 - 00;03;41;19
Speaker 2
And that makes it simpler for the account because they're sure they're going to take that information as opposed to the some large number of small little items that you have to bat at and manually add up on the calculator. So it's like one of the little tips that I give all my bookkeeping clients who maybe ask the question, Is there certain things that we can do to simplify our life?

00;03;42;02 - 00;04;02;00
Speaker 1
Yeah, yeah, for sure. And I'm glad you actually brought that up because it's really just those little tips and tricks. I know personally, last year I learned I could go to the dentist and get my entire year's dental expenses on one sheet rather than trying to keep safe all of my receipts throughout the year, which I am the worst for.

00;04;02;00 - 00;04;05;12
Speaker 1
So I'm glad you brought that up. Yeah, for sure. Definitely a helpful test.

00;04;06;18 - 00;04;25;14
Speaker 2
Yeah. So and and the other thing for, for companies, you know, when I see companies, I talk about corporations and not every corporation has a December year end. So I mean, the majority do the majority try to stick with the December year end, but not always choose a December year and fall and when when people want to have their year end.

00;04;25;27 - 00;04;52;01
Speaker 2
So I mean, I know from a work up growth standpoint, we send our clients a list of information requests for every year. And it's nice that those those are reminders of what we should be keeping track of at year ends like inventory and making sure we have our payables lists are up to date and those types of stuff that we only look at once a year or or to make sure they're right.

00;04;52;01 - 00;05;08;29
Speaker 2
You know, some of that stuff, we have to make sure that they're there on track and on target because I mean, that's that's how we look at your statement at the end of the year to to validate to make sure that it's that it's right and complete and effective for the for the corporate tax compliance.

00;05;09;09 - 00;05;34;02
Speaker 1
Yeah, for sure. And you mentioned corporations, but surely there is a difference and you sort of touched on this earlier on, you know, the reporting requirements, but, you know, not something you said to me recently was, you know, not every business is a corporation. So what does that look like? You know, for tax season, what are some of the differences that you need to be aware of?

00;05;35;01 - 00;06;00;24
Speaker 2
Yeah, like some of the differences that you look at. If you have a business in when I call it a business that is only a sole proprietor and that you would put it on your personal tax return, your personal tax return is due June the 15th. That is when your personal tax returns do. Now, any taxes owing are going to be due on April the 30th, the same as any other any other personal income tax.

00;06;01;08 - 00;06;24;24
Speaker 2
The difference is, is that when you have a corporation, your tax return, your corporate tax return is due six months after your year end. So your your corporate tax return could be due June 30th. Your taxes are usually done three months after the year end. So there is subtle differences as to when when you are due and when things are required to be file on time.

00;06;24;24 - 00;06;46;00
Speaker 2
So one good thing about it is that if you have if you have an accounting or you have somebody who you deal with on a normal regular basis and you're not sure what to and not sure what your compliance requirement is, just reach out to them and they will be more than happy to to give you that information to make sure you're filing on time.

00;06;46;12 - 00;07;05;27
Speaker 1
Sure. That makes sense. Do you have any tips for staying organized and making this season a little bit easier? I know personally I am the worst with receipts. They I am embarrassed to say they live in a grocery bag, so I'm sure there's a better system. Do you have any suggestions there?

00;07;07;00 - 00;07;39;04
Speaker 2
Yeah. I mean, some history will always seems to repeat ourselves when we get very busy. It tends to be we'll just I'll deal with that later. And the one thing that has changed over the years is that a lot of companies send receipts and stuff via the electronic. So I mean, you can so the one thing that I do suggest is that if you do if you want to keep your receipts or information electronically, set up a file folder right on your on your desktop that says 2023 or 2024 income tax information.

00;07;39;16 - 00;07;58;11
Speaker 2
And just as you get those invoices or those receipts from your your your barnacle benefits or your TIF or whatever you get, you'll save them as a PDF and drag and drop them into that folder. And then then you can, then you only have to send one folder to your accountant that says, here's all the information that I may or may not have.

00;07;58;24 - 00;08;22;15
Speaker 2
I mean, that's that's the one thing that I do as personally that I try to make sure I do on a more regular basis. And it's and it's as you get it, I mean, it's always easy to say, oh, I'll do that next week or I'll do that next that. You all do that? Yeah. When I come and look at it, I say, I always say take the one minute or the 2 minutes to drag and drop it right away.

00;08;22;15 - 00;08;48;07
Speaker 2
Then you're not then you're not searching your thousand emails to figure out where that receipt came or went or or whatever. So, I mean, everybody's life is busy. So that's one of the trips and tricks that I've done is I put it right on my desktop and drag and drop as I need to. So, so I don't have to worry about searching in and doing all that stuff later in the heart of, you know, winter time when it's it's depressing enough as it is right there.

00;08;49;07 - 00;08;52;13
Speaker 2
It's not it's even more depressing when you're trying to find things you can't find.

00;08;52;14 - 00;09;11;04
Speaker 1
Yeah, absolutely. That's a great tip, actually, in that as you're saying that I'm thinking, oh, I really should do that. That's a great idea. Is there is there anything else that you feel like you want to share? You want the clients to know going into tax season or, you know, into their own personal year?

00;09;11;04 - 00;09;55;29
Speaker 2
And yeah, the one thing that I would I did want to mention is so as the federal government put into place in 2023, the Canadian Dental Plan or Dental Care Plan, which is a federally operated dental plan for families who are for families who have a net income of less than $90,000. So one of the concerns that as an if you have employees and you're doing or is there is a requirement in 2023 for a new box, it's going to go on the tea orders and or tea for ace if you are so so having to do those compliance documents.

00;09;56;10 - 00;10;16;07
Speaker 2
So the one thing that I would say is make sure you talk to your your your accountant. If there's somebody who's doing your tea for us or you make sure you take a load of our website or and that type of stuff for those types of things. I think there is going to be something coming in in our newsletter, there is compliance requirements.

00;10;16;07 - 00;11;00;07
Speaker 2
That is a requirement to put on the tax return on your TI forms, whether your employees have the our accessible to benefits at your at your business. So your benefits if your business has dental benefits or a health care spending account and even if the employee doesn't participate in those benefits, but they are actually have the ability to access those there is a requirement on their t for to put a note on their t for and their boxes are I mean, there's five, five different codes that have to be potentially depending on whether it's just you, whether it's just you that has the benefits or the eligibility for them, whether it's you and your spouse,

00;11;00;20 - 00;11;25;25
Speaker 2
whether it's you and just your dependents kids, or whether it's just you, your spouse and your dependents. I mean, there's a bunch of options there, but I do think that, you know, if you're not sure what those regulations mean and how they affect, you know, feel free to give us a call and we'd be more than happy to walk you through how, how and what those informations will be doing.

00;11;26;07 - 00;11;43;18
Speaker 1
Yeah, for sure. I think that's great that you shared that because I know that we've shared information on the dental benefit, but maybe not how it affects like employer's T fours and all that kind of stuff. You know, it's great that it's out there, but people need to be aware how to use it and sort of the rules that apply too.

00;11;43;18 - 00;11;44;29
Speaker 1
So I'm glad that you mentioned that.

00;11;45;14 - 00;12;04;12
Speaker 2
Yeah. And, and the other thing I'll see me, the one thing that I would say from a from a payroll perspective, when people talk about year ends, they don't always think about payroll as a year end. Well, payroll ends on December 31st no matter what your actual corporate, fiscal or your business year end is.

00;12;04;20 - 00;12;04;27
Speaker 1
On.

00;12;05;28 - 00;12;30;15
Speaker 2
Corporate, your tax return or your personal payroll is done December 31st. So you have to four for from January one to December 31st. And those are due on February 28th. So just to make sure that that is another compliance part, when you talk about year ends, you talk about all the great integration of of what that means and what compliance looks like.

00;12;31;09 - 00;13;02;17
Speaker 2
They are due February 28th and and. Right. It would be important to make sure that because payroll is a trust, you are responsible to deduct people's taxes and then withhold them and send them off to the government. It's best that you ensure that you're compliant and make sure that your all the all the stuff that you were supposed to deduct, you didn't deduct and all the stuff that you had to send to the government, you have sent to the government to make sure that there is no concerns or no issues leading up to that February 28 deadline.

00;13;03;00 - 00;13;22;12
Speaker 1
Yeah, for sure. I know that's a that's also a great point because I think well, myself included, you get sort of caught up thinking about like year end taxes, but year end payroll. Equally important, if you are somebody who's, you know, taking care of payroll, you want to make sure that that is all in alignment. So that's super.

00;13;23;03 - 00;14;01;00
Speaker 1
I think that's it. Trevor this is I think this personally has been very helpful and I'm sure our listeners will get a lot out of it because, you know, I know it's not just me out there who have their receipts in a paper bag somewhere. So I think, you know, having the information out there and knowing that there's other options to be more organized and maybe some suggestions, I think, you know, can be really, really helpful because I think tax season can be overwhelming for those of us whose occupation it is not, you know, so we really I really appreciate you taking the time.

00;14;02;01 - 00;14;04;20
Speaker 2
Thanks so much. You.