Tax season is a stressful time for anyone, REALTORS® included. From searching for months-old receipts and calculating GST/HST deductions to coordinating expenses and printing off bank and credit card statements, it’s usually a mad dash to the deadline. I’ve seen it time and again but, fear not! It doesn’t have to be like this forever.
Let’s get honest: the biggest tax-time pain isn’t generally income reporting, it’s coordinating those pesky expenses.
And, although every business is unique, the Canada Revenue Agency (CRA) recommends keeping all tax-related documents, including receipts, cancelled cheques and bank statements, for six years.
What can you do? Rather than saving receipts in a shoebox, Ziploc bag or sock (yes, this is a true story), there are now smartphone applications and online resources available to help collect data and coordinate expenses throughout the year.
While it may take some specialized knowledge to ensure the app or software is set up correctly, once up and running, most are very easy to use.
The idea behind many of the applications is:
- You incur an expense;
- You snap a photo of it;
- The software then processes it. By processing, it reads the receipt and pulls out the relevant information, like vendor, subtotal, HST and date; and
- If you invest some time to build some rules, you can even instruct the app to automatically categorize recurring transactions, like meals and entertainment, gas, software or membership dues.
So now, come tax time, you can simply export a report and your expense listing and breakdown is done! Easy. And, although credit card statements are not considered sufficient proof of expenses by the CRA, according to this guideline, digital copies of receipts are.
The best part? Your receipts are archived online and easily searchable in case you or the CRA ever needs them.
For tech-savvy REALTORS® looking to analyze their data more closely, there are also ways to integrate your receipt-management application with online accounting systems.
You’ll have easy-to-use weekly/monthly/quarterly reports that can help you assess your performance. This provides you with the opportunity to break down your performance, budget for the future and assess where you need improvement. You’ll also have a running tally of what you owe to the government for GST/HST so you never miss a payment.
While some of this may seem overwhelming, so is tallying up dozens or even hundreds of receipts each year. Technology is here to help. Take your time and understand what options are available. It may end up saving you hours and days each year, which could result in more time for you, your family and your clients!