As a small business owner, you rely on your accountant to get the numbers right. But here’s the truth; we’ve reviewed hundreds of tax filings, and in over 70% of cases, we found mistakes that left serious money on the table.
Some errors are simple. Others are flat-out head-scratchers. But the good news? Once you know what to look for, you can avoid them.
Here are the top 5 tax filing mistakes we regularly uncover when reviewing the work of previous accountants.
1. Missed GST/HST Input Tax Credits (ITCs)
One of the most common slip-ups? Not claiming the full GST or HST you’re entitled to recover. If your business makes taxable sales, you’re likely eligible to claim input tax credits on expenses like supplies, equipment, software, rent, and more. If your accountant didn’t track this properly, you could be missing out on thousands in refunds.
💡Pro Tip: Always separate personal and business expenses in your accounting system, especially when using credit cards. It helps ensure you don’t overlook recoverable taxes.
💡Pro Tip: If you’re using multiple tools to track receipts, make sure they all sync with your accounting software to avoid gaps in your GST/HST claims.
2. Misclassified Shareholder Contributions & Loans
We often see shareholder transactions recorded incorrectly. For example, a shareholder loan might be accidentally treated as income, or vice versa. These misclassifications can create tax headaches and even trigger CRA audits.
In some cases, repayments to the owner were coded as business expenses. Ouch.
💡Pro Tip: Keep clear documentation for every dollar moving in or out of the business, especially when it involves you, the shareholder.
💡Pro Tip: Work with a professional who understands how to manage shareholder equity and loans properly. This is an area where mistakes are easy to make but costly to fix.
3. Unutilized Losses That Could Trigger Refunds
Did your business operate at a loss in the previous year? That’s not always bad news. Those losses can often be carried back or forward to reduce taxes in other years.
But if no one’s checking your carryforward balances or retroactively applying losses to profitable years, you’re leaving cash on the table.
💡Pro Tip: Ask your accountant whether they reviewed prior-year returns to determine if any losses can be applied to get a refund.
💡Pro Tip: Even if your business wasn’t profitable last year, filing your taxes correctly can lead to a future tax break. Don’t skip the details.
4. Sloppy Accounting System Configurations
Accounting software is powerful, but only when it’s set up right. We’ve seen default settings that were never updated, charts of accounts that make no sense, and integrations that caused more harm than good.
Bad configurations can result in income not being reported, expenses duplicated, and taxes miscalculated.
💡Pro Tip: Run a software checkup at least once a year. Make sure tax codes, bank feeds, and automation rules are all working the way they should.
💡Pro Tip: Choose an accountant who understands your specific system, whether you use QuickBooks, Xero, Wave, or something else. Not all software is created equal.
5. Year-End and Prior-Year Adjustments Ignored
Your year-end file should include cleanup entries to reflect accurate balances, things like depreciation, loan interest, and corrections from prior years. Unfortunately, many previous accountants skip this or don’t communicate what’s been done.
The result? Financials that don’t match reality.
💡Pro Tip: Always request a year-end adjusting journal entry summary from your accountant. It’s your right to know what changes were made and why.
💡Pro Tip: If your accountant only talks to you once a year, that’s a red flag. Year-end is important, but it should not be your only touchpoint.
Don’t Let These Mistakes Cost You
Tax filings are more than a checkbox; they’re a snapshot of your business’s financial health. If no one has taken a second look at yours, it might be time.
At Vistance Accounting, we specialize in uncovering these kinds of issues through our proactive approach. Whether it’s cleaning up your books or digging into old filings, we’ve helped countless entrepreneurs recover missed refunds and avoid future headaches.
In fact, we’re providing a free assessment to determine your likelihood of getting a tax refund and highlight where you could be saving. Contact us for a complimentary, confidential review of your past filings and system setup. At worst, you confirm everything is solid. At best, you could recover thousands that should have been in your pocket already. Click here to learn more.
