You’ve done it. The hardest part is over—you’ve finished your taxes for the year. Now the only thing left to do is file them. But what’s the best way to do this? Don’t worry, we’ve got all your options laid out below to help you make an informed decision.
1. By Mail:
We know it’s 2020, but sending your tax return by mail (in Canada or the U.S.) is still a valid option. Some people prefer the familiarity of doing it the old-fashioned way, even though the IRS and CRA are actively recommending that people file online.
Mailing in your return is the best non-online option, although it isn’t the fastest. Note that processing by mail usually takes about 4-6 weeks, so be prepared for the longer wait time.
In the U.S.
Filing online is the fastest way to not only file your taxes but also get your refund. And filing electronically is catching on—the IRS reported that about 137,866,000 million tax returns were e-filed for tax year 2019.
If you’re keen to file your taxes online, consider filing through H&R Block, who offers free DIY options for filing as well as semi-DIY if you need a helping hand.
For those who need some assistance, you can pay a tax pro to help you with filing. Wave Advisors offers personalized bookkeeping and accounting assistance from our in-house professionals.
According to the CRA, more than 85% of Canadians filed their tax returns online in 2019. Using the NETFILE service, you’re able to securely submit your return online by using one of their certified programs. There’s the option to choose between several different free and paid tax programs, as well as options for using an iPad or smartphone.
There are some instances where you’re not able to file online. For example, you’re ineligible if it’s your first time filing with CRA and they don’t have your complete date of birth on record. You also won’t be able to file online if you went bankrupt in 2018 or 2019. Make sure you’re familiar with the full restrictions that apply, so you don’t get stuck halfway through and have to start over again.
After choosing one of the approved tax programs (we recommendH&R Block)and submitting your return through NETFILE, you’ll receive a confirmation number from the CRA. Keep this on hand if they need to contact you for any clarifications. You don’t typically need to provide any receipts or other supporting documents unless the CRA asks to see them. Processing usually takes about 2-3 weeks if everything runs smoothly.
Despite their similar names, EFILE is a different online system used by professional tax preparers who file to the CRA on your behalf. You can’t file your own taxes like this online, however your accountant can—read more on this below.
Auto-fill your return
The Auto-fill feature can be used with NETFILE to automatically fill in certain fields of your tax return and save you some time. To take advantage of this you’ll need to be fully registered with My Account on the CRA website. Auto-fill is optional and only supported by certain programs, so be sure to check before you get started. As always, make sure you double-check that all the information is correct to avoid further problems down the road.
3. Talk to an accountant
Every small business owner has a different relationship with their accountant. Some prefer to consult them on a regular and ongoing basis, while others seek them out only for the tougher tasks like filing taxes and/or getting audited. And some business owners prefer to just do their own research and find out what works for them.
Here at Wave, our goal is to make sure you have the best tools at your disposal to run your business better. And having an accountant weigh in on your books is definitely a valuable tool! But we’ll leave that decision up to you since you’re the one who knows your business best.
One thing to keep in mind is the difference between a normal accountant and a Chartered Professional Accountant (CPA). A CPA has to pass a licensing exam and is required to keep up with current tax laws and regulations. Accountants are expected to follow specific guidelines as well, known as the Generally Accepted Accounting Principles, however, they are not licensed.
Whether you go with an accountant or CPA, remember that you should already have your bookkeeping records in order before paying them a visit. It will make their job a lot easier, and since most of them charge by the hour, you’ll also save yourself a decent amount of money.
Lastly, remember what we said above about EFILE? Decide if you just want to consult an accountant, and then file for yourself, or if you want them to file on your behalf through EFILE on the CRA website. Your accountant will need to pass the suitability screening which can take up to 30 days, so don’t leave this to the last minute if you want them to file for you.
We hope you’re now feeling a bit more confident about how to file your taxes. It’s true that tax season can be stressful if you’re unprepared. But as you gain more knowledge and understanding about your finances, you’ll also benefit from better insights into running your business for the year ahead.
The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.