For better or worse, we humans are adept at making assumptions and trusting others, including when it comes to our tax preparer.
On a daily basis, we not only interact with dozens of other people doing their jobs, but we rely on the job they do.
We automatically assume that when others perform a service for us, be it checking the transmission or cooking up our restaurant order, those things are being done properly.
Only when the mistakes are obvious do we question it, and this is often due to the simple fact that we don’t understand the process involved.
Therefore, we put our faith in the result, assuming it’s been done to our standards, the way we would have done it, with the care we would take when doing it for others.
When you’re in business, what you don’t know can hurt your bottom line.
One of the areas this is especially dangerous is in our books.
We assume that our tax professionals know what they’re doing, and that they’re acting in our best interests. Is this always the case? What aren’t they telling you?
Making sure that you stay informed and know the basic rules (like the ones we teach in E-School) are key to making sure you get it done right.
#5: You’re likely doing it wrong.
Lots of people – (as much as 80%, I’d estimate) – simply don’t know what they’re doing. So they bring everything in for their tax preparer to do for them.
When you were an employee working for other people and getting T4’s- so we’re used to just bringing in the papers and leaving it for someone else to figure out. The tax math when you have T4 slips is pretty much the same for everyone.
Once you’re in business, everything changes. You’re in a position to pay more tax, and also write more off. It can be a delicate art to find the best of that world.
For new business owners, it’s easy to leave worries about taxes for tax season, like we’ve always done, but it’s in your best interest to develop a good system for organizing their books.
For entrepreneurs, there’s so much more to know. An tax preparer won’t teach you, but that’s why you need good resources, like Entrepreneurial Intelligence E-School – to help you do it right.
#4 There is a way to pay less tax.
So, you bring in your taxes. Your tax preparer looks it over and knows you don’t have proper expenses claimed. They know that you may be missing vehicle expenses. And that you don’t have any meal expenses claimed, when you could easily have written off about a thousand dollars worth.
They see that trip you took, and things you didn’t write off. Better organization, better paperwork, better write-offs, equals a bigger tax savings.
If you haven’t done this all year, then there is nothing they can do for you. You need to keep receipts all year long, not just worry at tax time.
But it’s not your tax preparers job to teach you—and everyone else they see this season—what you’re missing out on.
#3 All Bookkeepers are not created equal.
You’ve probably seen the ads for bookkeepers in the classifieds, and on sites like Kijiji. And sure, some may actually be pretty good at what they do.
It’s easy to assume they do this for a living, but that isn’t always the case.
The bookkeeper from that classified ad could be that cab driver who took you to the airport last week, the clerk ringing in your groceries, or the janitor at your child’s school.
A bookkeeper can be an accredited IPBC professional (Certified Professional Bookkeeper) with years of training, or a trained professional who works for an accounting firm.
They could also be someone who fancies themselves a whiz at Quickbooks, or someone with prior – possibly outdated — accounting experience.
You won’t know unless they advertise their credentials, volunteer them, or are asked.
There is no regulation in the bookkeeping world.
Unless you ask your bookkeeper about their background, experience, and whether they’re accredited, they have no obligation to tell you.
So, who’s really doing your taxes? Who’s really taking care of your books?
Moreover, an tax preparer may well spot that your bookkeeper isn’t all they’re cracked up to be, and rarely will they warn you.
Your business is your baby. You’d carefully interview a new babysitter, maybe even get a background check.
You can give the same consideration to the tax professionals you entrust with the financial well-being of your business.
#2 You’re not checking their work — and they know it.
Because let’s be honest- unless you’re a tax professional yourself, you wouldn’t be paying them to do your taxes. They know that taxes confound their clients.
When we bring in our taxes, we do so with the expectation that our tax preparer is going to do the right thing.
As I cover in my my Entrepreneurial Intelligence course, if you take your takes to 5 different tax preparers, you will get 5 different results.
At the end of the day, you’re the one who’s liable to the CRA. Even if your tax preparer makes a mistake, they’re not responsible, because they’re your taxes.
You sign for your finished tax return, assuming it to be right, but it’s only as accurate as the information you provided the tax preparer to work with, and how they worked around what you didn’t.
#1 Your tax preparer knows you might not survive an audit.
An tax preparer can see the mistakes your making, and where it could lead to trouble with the CRA. But it’s your responsibility to know the rules, and it’s not their job to tell you what you’re doing wrong.
An example would be vehicle logs. Are you tracking your business-related kilometers?
This is something that is often left up to estimates at tax time. You hazard a guess, your tax preparer fills it in, and you claim the according write off.
Happy days, until CRA audits you, and requests to see that kilometer log you can’t produce. This is an all too common mistake I’ve seen business owners make.
Tax preparers also know that out of millions of Canadians, the odds that you’ll be audited is also low.
When looking for a bookkeeper, accountant, or tax preparer, don’t be afraid to ask questions. Here is a great list of first questions to ask.
Learn about their background, experience, education, and find out if they’re IPBC accredited.
Learning more about your responsibilities to the CRA, how to maximize your return, and organize your books will save you stress and help ensure the longevity of your business.