It’s tax season!
It’s the time of the year you start seeing tax preparation kiosks popping up at your local shopping mall.
As a small business owner, are you considering using one of these “pop-up tax professionals” or will you go it alone?
Or, perhaps you're expanding your search for tax help beyond the mall. Perhaps looking for more small business tax expertise and tax planning.
If you decide to take on board a tax expert to prepare your income tax return (or if you are currently working with one), here’s some timely advice to help you make the most of the relationship.
1. Choose your tax professional wisely
Did you know that anyone can be a tax professional or that anyone can call himself/herself an accountant? It's true.
These professions in Canada are self-regulated, which means you are on your own to determine whether what you are getting is what you think you are getting. To make matters worse, in the eyes of the law, you are on the hook if the “tax professional” you choose makes a mess of your tax return preparation.
So, how can you protect yourself?
Start by asking the prospective tax professional the right questions:
- How long have you been in business?
- How many clients have you served?
- Do you guarantee your work?
- Will you represent me if I am audited?
- How do you stay on top of the latest tax rules?
2. Take a long term view of the relationship
Treating your income taxes as a once-a-year activity may mean that you're leaving money on the table. Once-a-year pop-up tax professionals typically do not offer long-term tax advice that could help to maximize your tax refund over the long term.
By engaging in a year-around relationship with your tax professional you can take advantage of tax optimization programs, advanced tax planning, and service guarantees that could include audit protection.
By working with the same tax professional each year all-year-round, you benefit because they become familiar with your situation and can quickly spot discrepancies, changes, and opportunities to help you save.
In other words, you end up with more money in your pocket.
3. Keep your books and records organized
Your tax professional can only report on what you bring up in your discussions and the documentation you provide. The more organized you are recording your expenses and income the less opportunity for errors or that something is missed.
To help you keep your books organized, some tax professional also provide bookkeeping services. Some will even come to your home and take care of that mountain of paperwork right at your kitchen table.
If you choose to manage your own bookkeeping, be sure to get the latest accounting software. With some software you can even do your bookkeeping on your iPad or mobile phone.
4. Don't make assumptions
Tax rules are complex and ever changing. In fact, at last count, the Canadian tax code weighed in at well over 3,000 pages.
Making an assumption that a rule has or hasn't changed is one of the chief causes of paying more tax. Don’t assume.
If you have chosen your tax professional well, you can be confident that they are on top of the latest tax rules and can recommend the best course of action for your business.
5. Consult with your tax professional before making any business decisions
A good tax professional should provide tax planning.
Tax planning can advise you on the best way to structure your affairs so you can minimize tax while still achieving your goals. There are actions that can be taken and deadlines that if missed could prevent you from taking advantage of certain credits and grants.
Having a tax professional working for you year-around gives you an expert to consult with before making critical decisions.
FBC has been providing tax services to farmers and small businesses since 1952.
We complete close to 50,000 tax returns every year all backed by our service guarantee which includes our Audit Protection:
Should you ever encounter an audit, as a member with FBC we will represent you – all the way to tax court if warranted, and we’ll cover the costs and legal fees.
Whomever you choose to take care of your income tax planning and preparation, you’ll be better off if you heed these 5 simple tips for a profitable relationship with your tax professional.