We know first-hand from our clients how overwhelming it can be to get tax return documents ready for your accountant. All too often, we see things get lost or disorganized in the rush, meaning our team needs to spend extra time getting things in order before we can begin our work. While we’re always happy to do so, that extra time also means an added cost to you.

If you find yourself getting lost when you’re preparing documents for an accountant, you’re not alone! Taxes are notoriously complicated, especially when you add the complexities of running a business, buying and selling investments, rental properties and tax credits.

To help you make sense of your documents, we’ve compiled a few tips for getting yourself organized that will save you time, money and stress.

1. Sort it out

Two hands pointing at an array of neatly sorted post it notes.

When it’s time to see your accountant at tax time, there is a lot you can do when prepping your documents to make the process as smooth as possible.

We recommend, first and foremost, that you plan ahead throughout the year. Whether you prefer to give your accountant documents digitally or on paper, the easiest way to avoid the last minute rush at tax time is to organize as you go.

If you’ll be submitting documents digitally, create labeled folders on your computer and be sure to name and save any PDFs or digital receipts you receive into the correct folders. We all know what it’s like to search through an overflowing “Downloads” folder for a receipt named “receipt2.pdf,” and avoiding that rabbit hole can save you a lot of time.

You can also save time by scanning physical documents to your computer as you receive them, so you can save them into those organized folders. If you don’t have access to a scanner, you can also take pictures of the documents and save those for future use, but be aware that referencing image files may be more difficult and time consuming for your accountant than PDFs.

Planning to submit paper documents? That’s also great! Be sure to create a good old fashioned physical filing system to get yourself ready for tax season. Note that your accountant will need to scan your documents themselves, which will incur an extra cost for their time.

Top three pro-tips for organizing your tax documents

  1. Group like documents. If you’re submitting paper documents, clip together receipts of the same type (e.g. medical expenses, charitable donations, etc.). If you’re submitting digitally, save scanned documents of the same type into single PDFs, rather than sending one file per page or one massive file. 
  2. Make detailed labels and notes where possible. Whether it’s giving digital files intuitive names (e.g. RRSP-Contribution-Slips-2021) or using sticky notes to label stacks of paper, the less detective work your accountant needs to do, the lower your fees will be.
  3. Check that everything is legible. As you sort through digital or paper documents, take a moment to make sure your accountant will be able to read everything you’re providing. This is especially important if you’ve submitted scanned or photographed documents.

2. Know what you need (and who to ask!)

The most common mistake accountants see clients make when submitting their tax documents is not including everything the accountant needs to file the returns successfully.

If the accountant is missing information, they will  need to go back to you for what is needed. The more back and forth, the more time the process takes. The more time the process takes, the more cost you will incur.

While what you need to provide your accountant with will vary depending on your situation, here are a few common documents you’ll generally need to include for personal tax returns:

  • Employment and other income slips (e.g. T4s, T4As, T5s, T3s, T5008s, T4A(OAS), T4A(P)
  • Records of your withdrawals and repayments to your RRSP
  • Receipts for your deductible expenses or tax credit receipts (employment, childcare, medical, donations, etc.)

And a few common documents needed to file business taxes:

  • Financial statements for the business including income statement and balance sheet
  • Payroll information
  • Business expenses 
  • Motor vehicle expense information
  • Asset additions or disposals
  • Business use-of-home details including home office square footage versus square footage of home
  • Capital asset purchases or disposal details 

One of the most common mistakes that clients make is providing insufficient information on investments that they’ve purchased and/or disposed of.

Often, clients will provide only with the tax slips they received from their financial institutions related to those investments. But, what is actually needed is a more detailed year-end report. You can obtain this by asking your financial institution or broker for a year-end report that details the information. Alternatively, you can provide your broker’s contact information to your accountant and authorize the broker to provide the information needed to the accountant.

3. Use our complimentary resources to guide you

If you need a hand getting your files in order, we’ve got some resources and worksheets that will help you get started.

Got questions? We’d love to hear from you. This is our area of expertise, and we are always happy to guide our clients through the process. 

Reach out to us any time.

This post has been prepared for general information purposes. It is not advice. The information presented may not fit your unique situation, please consult one of our trusted business advisors at RHN CPA for further clarification and interpretation of your circumstances.