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Last updated: Jan. 31, 2018
Preparing income tax returns for small businesses can be daunting.
Not only are the tax forms a little confusing, Canada’s tax laws change with great frequency and without fanfare; it’s up to you to keep track of everything going on at the Canada Revenue Agency (CRA).
To avoid tax-related problems, ensure you’re taking advantage of every tax break and loop hole, and maximize your deductions, you should contact tax preparers that specialize in preparing taxes your industry.
Ways Tax Preparers Can Help Small Businesses
Below are just some of the ways a tax preparer can help small business owners come tax season.
Helps Structure Your Small Business
A tax preparer can help you decide the best way to structure your business.
Would it be best if your small business was structured as a corporation, sole proprietorship, or a partnership?
The structure you choose will significantly impact the amount you pay in taxes. An experienced tax expert will look at your small business and long-term goals and help advise you on the best route your small business should take.
Understands How to Apply Tax Deductions
Everyone loves tax deductions! They help reduce your income and the amount of taxes you must pay.
But the CRA is strict about what kind of deductions you can make and how much you can deduct.
If you get creative or make big mistakes with these deductions and run afoul with the CRA, you could end up getting audited. A tax professional can provide you with legal tax tips and help you prevent these common, and sometimes, very costly mistakes.
Helps You Meet Tax Deadlines
There are important tax deadlines all small business owners need to meet. And missing a deadline can take a chunk out of the bottom line.
For example, any taxes owing are due on April 30. If you miss that deadline, the CRA will charge you a penalty and interest on the amount owing.
As a self-employed individual, your filing deadline is June 15, but any taxes owing must be paid by April 30.
Filing your taxes late will result in a penalty of 5% of the amount owing plus interest on the amount owed. That interest compounds daily starting May 1.
The rate of interest the CRA charges can change every month too; the interest rate never goes down.
How to Hire a Tax Preparer
Tax preparers are not created equal. That’s why it’s important to do as much research as you can on the firm you want to help prepare and file your taxes.
Remember, even though they’re preparing your small business taxes, you are responsible for what is filed on your tax return with the CRA.
If the tax preparers make a mistake, the CRA will come after you. That’s why it’s imperative that you use the right tax preparation service.
Are They Experienced?
Your small businesses reputation is at stake, so make sure you only work with a tax preparer who is experienced with small business taxes and your industry.
Are They Available All Year?
In the new year, it seems like opportunistic tax preparation services pop-up all over the place: the mall, big box stores, Walmart, even sandwich boards on the side of the road.
Never use a tax preparer that works seasonally or is unavailable year-round.
Why? What happens if the CRA has questions and the mall kiosk is gone or the sandwich board is nowhere in sight?
Only use tax preparers that have offices open all year long.
What Are Their Fees/Cost Structure?
There are no standard fees for using a tax preparer.
Some tax professionals charge by the hour. Those with little experience can charge as little as $15.00 an hour; that probably sounds like a deal, but if you’re looking for experience, it’s not.
On the other hand, tax preparers with years of experience can charge anywhere from $100 per hour to $400 per hour and higher.
Ideally, you should look for tax preparers that are experienced working with small businesses and offer tax services for a flat fee.
FBC, Helping Canadians Business Owners Stay Financially Fit
If you’re a small business owner, farm operator, or independent contractor, you need to use a tax preparer that understands your unique business tax service needs.
Since 1952, the tax professionals at FBC have worked exclusively with Canadian farm operators, small business owners, and independent contractors offering our unique year-round Membership.
For more information on FBC and the services we offer, call us today at 1-800-265-1002 or submit an online form and an FBC tax specialist will contact you at your earliest convenience.
