The million dollar question, which luckily will not cost you a million dollars.
“If I only knew earlier …” is often the opener when a client calls in with extreme panic in their voice. And you could avoid being that person if you hired an accountant.
Specifically, what does an accountant do?
Taking a step back and explaining what an accountant is, in general, an accountant is a professional well versed in the realm of risk mitigation and financial planning. You may have seen the three letters CPA displayed after an accountant’s name, which stands for Chartered Professional Accountant. The letters signify their professional accountant designation. If ever in doubt, you can verify the Canadian member via each province’s CPA directory, in British Columbia. For example, below is a quick search for Jason Ding, CPA, CGA a Surrey accountant.
CPA’s have gone through rigorous training and abide to a strict rules of professional conduct, therefore you rest assured that a CPA will be practicing in good ethical standards. How this is relevant to you, is that an accountant will utilize their business acumen, expertise in taxation and finance to plan and strategize the best outcome for you and or your business.
What is the difference between a good and bad accountant?
A good accountant will consider your current and future situation and mesh that together with the regulations of legal authorities to determine what you can and cannot do. A bad accountant on the other hand, touches base with you once a year and does only what is asked of them and no more. Although the latter is what most people assume an accountant is used for, the bare minimum compliance, a bad accountant may prefer to help you when it’s too late so they can bill you for time and materials.
A good accountant can help prevent you from getting into sticky situations such as battles with taxation authorities, audits, penalties and interest. You want a good accountant in your side of the ring during any tax battle, but even more importantly you want a good accountant to prevent you from getting into that ring in the first place. For example, a good accountant can advise you on defendable home office allocations for year-end income tax deductions and mitigating getting flagged for audit by the taxman. A good accountant will tell you no from time to time, but it is part of the bigger picture to prevent you from getting into deeper trouble. For example, you may hear from your friend that they wrote off their brand new Tesla S as a business expense, which would result in a large Input Tax Credit (“ITC”) claim on GST filing and trigger a GST audit. And for the record, you generally cannot buy a car for work use and leasing it would be a possible solution. At the end of the day a good accountant will suggest things you have not thought about because they have the rule book on their mind when advising you on big decisions.
A lot of individuals know of the Big 4 accounting firms, Pricewaterhouse Coopers, Deloitte, Ernst & young and Deloitte, however there is no need to commute downtown to visit these accountants. There are many great local Burnaby accountants that specialize from construction accounting to accountants for doctors. Whichever city you are located look up local accountants that offer bookkeeping services to small business accounting to suit your needs.
In conclusion, a good accountant can help you mitigate risk, stay financially organized and help strategize life decisions looking through a financial lens. A quick call to a good accountant can save you money and headache down the road.
I pay so much taxes, what are some key tax strategies to reduce my taxes that I can do now?
In our next series we will take a deep dive into 3 well known tax planning tools that you have probably heard of and one not as commonly known strategy to maximize your hard-earned dollars.
-Jason Ding, CPA, CGA is an author, a loving father, founder and President of Jason Ding, CPA Inc., an Accounting, Tax & Consulting firm. Please contact his Surrey accounting and tax team for help with your small business.