Tax season for Canadian farm and small business owners may be months away, but experts generally recommend that you try to get a jump on at least organizing your records and bookkeeping.
The earlier you get organized – having everything you’ll need for tax filing easily accessible – the better off you’re likely to be when you actually need to file your taxes. However, one misstep many small business owners make, particularly if you’re in charge of relatively small operations, is filing taxes yourself.
The number of problems that can arise from that type of action – even if it’s well intentioned – are significant enough that small business owners should avoid it at all costs.
Don’t Miss Small Business Deductions
Every year, millions of people will likely invest in personal tax software as a means of getting their filings completed as quickly and easily as possible, but the fact is that this isn’t usually advisable, according to a recent news report.
While this might seem to help them to save a little time and money in the short term, it can lead to major headaches later on.
The reason for that is relatively simple: People, even those who have been filing taxes for their small businesses for years, are generally going to make more mistakes or miss tax credits or deductions than a small business tax expert.
That, of course, stands to reason; people whose job it is to prepare taxes for farm owners or even truck owner operators will probably do a better job organizing and filing everything correctly and at the maximum value than they would be able to achieve themselves.
Read: Tax (T1 & T2) Planning and e Filing can Profits Farm Industry
Likewise, a farmer or truck owner would certainly be better at harvesting their fields or delivering a load than a tax specialist would, even if the latter has cared for a house plant or driven a pickup truck on occasion, so usually it’s just wiser to leave things to the tax professionals.
There’s a Simple Reason
Most of the time, small business owners who have filed their own taxes in the past aren’t really going to make mistakes, as per, the report said.
While errors can happen – and often, they result in plenty of headaches and even the need to pay more in taxes than the company should have – they’re usually not so bad that they cannot be fixed quickly and easily.
However, that’s not necessarily doing things correctly, either.
A mistake-free Tax Filing shouldn’t be the goal for small business owners, but rather one that minimizes their liabilities while simultaneously maximizing their deductions or other benefits.
While there’s nothing inherently wrong with not making a mistake on a given tax filing, it can also be the difference between saving potentially thousands of dollars each year that you can use to improve other aspects of your business.
Why This Is Smart?
The temptation for small business owners to file taxes individually, without the assistance of a tax professional, is clear enough, the report said.
It’s cheaper, easier, and often requires less work over a long period.
But indeed, those three things are exactly why it should be avoided in almost every case for any small business.
Are You Really Saving Money?
With respect to the cost, the fact of the matter is that you’re going to get what you pay for in the end, and given that most financial pros would recommend that even consumers work with a tax specialist, the same goes for even the smallest business, the report said.
Again, companies should want to maximize the value on their tax filing as much as possible, and the investment in a tax professional – with whom they should be working year-round, not just during filing season – is likely to pay big dividends when it’s time to submit the necessary documents.
Simply put, they’re going to be able to cover far more bases than someone with no background in tax filings.
Is It Really Easier?
As to the idea that filing by oneself is easier, that’s usually not the case even for individuals, let alone small businesses, the report said.
Tax law is extremely complicated and while the bulk of it remains the same from one year to the next, little bits and pieces of it change either slightly or significantly, and it’s simply difficult for busy entrepreneurs to keep track of all these shifts themselves.
That lack of intimate understanding of how tax rules are altered each year can lead to mistakes and missed opportunities alike, meaning that it’s possible business owners may file once and only be informed of missing data or areas where they should have been able to increase a deduction after the fact.
That, in turn, could end up being quite frustrating, not to mention costly.
But working with a tax pro could end up making things easier, because it will put an entrepreneur in constant contact with someone whose job is to keep track of all these changes.
Further, it would really only require them to get all the necessary data together – and that can be done over the course of a year, rather than in a mad dash at the start of tax season.
With all this in mind, it might actually be easier in the long run to work with a farm or truck tax specialist simply because they’re going to have a much clearer understanding of what is required of each individual client.
Does It Take Less Time?
Any small business owner with a successful company knows that every hour of their time is extremely valuable to that enterprise’s ongoing success.
So while it may seem like a good time investment during filing season to fill out tax forms themselves, using automated software that seems to do most of the legwork for them, that may actually be a waste of time in some ways.
While that will certainly get the filing done, it should once again be stated that it might not be done as well as possible.
But moreover, owners taking time to fill out tax forms online might end up missing out on other aspects of their companies because of the hours involved in devoting that kind of time to making sure taxes are done right.
However, having a tax professional on hand to do that legwork instead – and answer any questions an owner might have about the process – should go a long way toward keeping things humming along smoothly.
And here, too, it’s important to keep in mind that working with a tax pro throughout the year can go a long way for any company, simply because it helps them to better plan for any issues that may arise on a long-term basis.
Consequently, owners may end up devoting an hour or two here and there per month to tax preparation all year long, rather than cramming it all in during just a few months ahead of the filing deadline.
What Can Owners Do?
Of course, the right tax specialist for a given small business is not necessarily going to be the first one that comes along.
For this reason, owners should carefully look into potential candidates for the role and determine which has the best possible backgrounds in dealing with the unique needs of their industries.
A tax specialist with a lengthy background in farm truck and other small business tax issues is likely to know far more about the businesses in question than one with, say, a background in tech start-ups.
That difference, though, can go a long way toward ensuring that any farm owner or truck owner operator is going to be able to get the best and most valuable tax filing possible, while dealing with as few headaches as possible over the course of a year.
No matter how you do your taxes, ultimately it’s your name on the tax return attesting that everything is correct.
Would you prefer to put your trust in just software or in a knowledgeable tax specialist? Accountable Business Services (ABS) ABSPROF is the leading Accounting and Tax specialist firm in Alberta offers services in Edmonton, Calgary, Red Deer and Canada. Feel free to Contact Us for Tax Help
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