I believe business owners should focus on their strengths and delegate weaknesses. It allows you to do what you do best and leave the rest. Choosing to perform tasks you don’t enjoy (or, worse, don’t understand) may cause disasters for your business.
Accounting, record keeping and reporting may be one of those functions within your company that are best assigned to professionals such as an accountant. Here’s why:
1. Tax rules are complicated. A full understanding of Canada’s taxation system requires years of professional training. The rules change often and can be subject to interpretation. Accountants understand the current tax rules so they may supply insightful financial advice to their clients. He or she can help you to decide the best course of action on matters such as leasing versus buying, deferring income, incorporating a company, taking income as salary or dividends, and techniques to maximize allowable expense deductions.
2. Accountants save money. Some entrepreneurs believe they can’t afford to pay the fees charged by an accounting firm. While professional fees may seem high, you may actually be saving money if you calculate the amount of tax savings an accountant finds for you. A good accountant will create tax-reducing strategies and identify eligible tax deductions you might otherwise miss.
3. You can authorize your accountant to deal with CRA. It can be a mistake for business owners to deal directly with the Canada Revenue Agency (CRA) because we don’t speak the same financial language. In fact, dealing directly with CRA can land you in some trouble if you are unclear about your expenses, invoices and other supplied information. Let the professionals at CRA speak directly with your professional by authorizing your accountant to communicate with the tax agency on your behalf.
4. You should be doing other things. Accountants are paid to help you manage the financial side of your business. Let the accountant work the long hours required to analyze your financial data, prepare your business and personal tax returns and handle any inquires from tax agencies.
Let the accountant do those things and others so you may focus on what you do best – which is running your company.
When shopping for an accountant, consider one who has been in practice for awhile so you may benefit from their experience. Check to see if the accountant has other clients in your industry to indicate some familiarity with your particular business.
Check references, where possible. Ask for list of other clients and call two or three to discuss their experience with the accountant or firm. You can find help from the Canadian Institute of Chartered Accountants.
Also consider the size of the accounting firm. While a one-person firm may deliver high personal attention, you may benefit from a larger firm offering the collective experience of a number of in-house experts.
Before you hire, sit down to discuss rates and billing. Be clear what you’ll get – for example, a year-end corporate tax return may be quoted at a flat-rate but any consultations surrounding that return may cost extra. Also, understand when fees are due.
Are you working with an accountant? What advice can you share with business owners who may be considering hiring one? Please comment below.
By Roger Pierce