To minimize the tax stress burden (and to keep your accountant and the CRA happy) it is imperative that massage therapists be organized and put systems in place to track and manage their taxation matters.
Utilizing a generic accounting system to record and organize revenue, record payments made, log general expenses and the like does not reduce your stress level if it is not part of your day-to-day workflow.
Using a system specifically designed for RMTs will result in your revenue-related treatment data being automatically entered into an “intelligent database” as part of your normal appointment checkout process. Vital revenue-based financial reports are then immediately available to you when they are needed, keeping you far ahead of the game – without any extra effort on your part.
Your practice management system should be easy to use and not require any advanced computer skills to operate. The system should allow you to easily access, store and manage patient treatment history so that copies of treatment receipts can be generated as needed. Better yet, it should allow you to create consolidated historical treatment statements on a per patient basis for a specified period of time (the entire year or more) without difficulty. The system should also securely back up all your data regularly to protect you against disaster.
For clinics and partnerships, your system should allow you to track and report all data related to treatments performed by each practitioner. Independent of your business relationship (employee, partner, etc.), the system needs to allow you to generate financial reports that are meaningful and up-to-the minute. This will minimize your efforts when providing each practitioner with income information at tax time.
Your system should permit you to easily record GST/HST as you collect it. The system should then allow you to track and report your GST/HST collections for CRA reporting intervals, whether that is monthly, quarterly or annually. Imagine having a practice management system that automatically stores and organizes your GST/HST data so that you are able to effortlessly produce a report with a few clicks of a mouse.
From the revenue side, you will want your practice management system to automatically collect and report on information both for tax reporting purposes and for peace of mind. The following “financial snapshots” of your business should be available immediately whenever you need it:
- Billing utility– the ability to generate treatment invoices and receipts instantly, including all the specific appointment, treatment and practitioner information needed for third-party insurance claims. It should also provide easy search options for patient billing history.
- Tax management – automatically calculate and record the GST/HST taxes you collect as you receive them.
- Receivables – manage your business income with a clear understanding of what is outstanding and who has unpaid invoices.
- When received – revenue summary report by date
- Who it came from – revenue summary by patient
- By practitioner – revenue summary by therapist (for clinics and partnerships)
- By modality – revenue summary by modality, giving you important insight into where your business’s revenue is coming from.
How long should you keep your income tax records? CRA states you should keep your supporting documentation for at least six years, whether or not you filed them with your yearly returns. RMTs may also have a requirement to keep patient records for much longer, albeit not for tax purposes.
Using RMT-specific technologies for record-keeping can fundamentally make the difference between having stress-free tax information at your fingertips and having to spend days or even weeks rummaging through shoe boxes and paper filing cabinets at tax time.
Until next time, be well.
Jessica Foster writes on behalf of mindZplay Solutions, provider of massage therapy websites and practice management solutions. To learn more, visit www.massagemanedger.com.