How to Prepare Tax Records for Your Accountant

What Your Tax Accountant Needs to Prepare Your Income Tax

Young female artist in studio working on laptop
Getting tax records ready for the accountant.. Gary Burchell / Getty Images

For many businesses, having an accountant prepare their income tax returns is the most sensible option. We don’t all have time to become income tax experts and income tax mistakes can be costly. So why not hire an expert to get the job done right and cut down on tax time anxiety?

To do the job right, though, your tax accountant or other income tax preparer will need to have all the right tax records at hand well ahead of time – preferably organized.

You want to maximize your tax deductions and get your return filed before the deadline to avoid penalties.

Here's how to prepare your tax records for your accountant.

Common Business Records Your Tax Accountant Needs

Your tax accountant will also need any tax records such as:

  • Amounts paid by instalments
  • A copy of your income tax return filed last year (if you're a new client)

Other records your tax accountant will need will depend on whether your business is a sole proprietorship or partnership, in which case you will be filing a T1 (personal) income tax return, or an incorporated company, in which case you will will be asking him or her to prepare a T2 (corporate).

 For a T1 return, your tax accountant will also need all the relevant personal information slips and tax-related documents as well as the business ones. Here are some of the most common:

  • T4 slips (if you have employment as well as business income)
  • T4A commissions & self-employed
  • T5013 Partnership Income
  • T3 Income from Trusts
  • T5 Investment Income
  • RRSP contribution slips
  • Charitable donations
  • Medical and dental receipts
  • Child care information

Save Money on Your Tax Accountant's Fees

Accountants get paid by the hour, so the harder you make their job, the more it will cost you.

Summarize and tally records wherever possible. Cheques, invoices, business expenses - all should be categorized and totaled. Sort all your information slips by type. Having your tax accountant do the organizing and tallying is the expensive way to go.

If you have several businesses, remember that you will have to have separate revenue and business expenses figures for each business, as business income has to be listed by individual business on the T1 form.

(See I have several businesses. How do I handle this on my income tax form?)

Be as organized as you possibly can. For example, clip groups of receipts together by type and put a post-it-note stating what the category is on the top. The less your accountant has to figure out, the less time she'll be spending on your file.

And remember, having a tax professional prepare your income tax return(s) isn't costing you as much as you think when you see the bill - it's a legitimate business expense!

Use Accounting Software and Save Even More on Accounting Fees

Accounting software designed for small businesses can simplify many aspects of running a business, as well as saving on accounting fees. With today's cloud-based accounting packages you can have all of your accounting information in one place and give your accountant direct online access to it at tax time. As well as keeping track of expenses and revenue, accounting software can do payroll, time and billing, and generate income statements, cash flow statements, and balance sheets as required. See The Best Accounting Software for Small Business.

For more information on potential business income tax deductions, such as maximizing your non-capital losses and Capital Cost Allowance, see 8 Tax strategies to Maximize Your Business Income Tax Deductions.

See also:

Top Canadian Tax Software Programs

Canadian Income Tax FAQs for Small Businesses

8 Tax Strategies to Maximize Your Income Tax Deductions

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