Using Small Business Accounting service in Canada vs. DIY: Guide for Small Business Owners
Right now, the tax season is on full steam. This means thousands of self-employed Canadians and small business owners are getting prepared for paying and filing their taxes. Are you on the same boat with them? If yes, then you have two choices: Either you do it all by yourself – via a spreadsheet, or by using a small business accounting software package. Or, you hire an accounting professional for using small Business Accounting services in Canada.
So, which option would you prefer? Which one sounds safer to you as a business owner? No more confusion because in this blog, we will be discussing these two options so you could make the best decision for your small business.
Doing it yourself
If you think about the expense, you may find doing it yourself more advantageous since you can save money on accountants’ fees. The basic approach is to use a simple spreadsheet to track incomings and expenses. But every successful business quickly outgrows this procedure.
If you think that you are not yet ready to hire an accounting professional, you can invest in a quality small business software package. But the problem is that the DIY disadvantages are too many!
Time consuming – As a business owner, you know that time is money. Every minute you invest in tax compliance, instead of on business development and customer service has a very high cost. When you do taxes, you will have to account for it.
Blunders – To speak the truth, accounting is a specialized profession. This demands years of education and experience that help you avoid errors that Canadian business owners usually make:
- Forgetting to collect or register for HST/GST;
- Missing deductions, failing to account for depreciation of computers and other equipment. This hampers cash flow and drains a lot of money too.
- Forgetting to claim province-specific advantages such as the New Brunswick Small Business Tax Investor Credit or the Ontario small business deduction.
- Claiming too much in deductions. The Canada Revenue Agency will compare the deductions you claim to industry norms. If you are claiming more kilometres on your car compared to other businesses in the industry, it can be considered a red flag. Especially, keeping a record of meals and entertainment deductions can be really tricky.
Poor organization – Poor organization is the biggest timewaster. Do you think that you are ready to spend hours just to sort out your papers instead of filing and taking care of your business? If you don’t want to be at the risk of having unreadable and misplaced documents, stop using the “shoebox method” for storing business receipts and any other records.
Hiring a small business accountant
Obviously, when you hire an accountant to help you with tax filing and compliance, you will have to pay a fee. But, relax that will pay you off even better!
- They advise you on setting up and maintaining your recordkeeping throughout the year.
- They will guide you on financial management and avoiding commingling of funds.
- They will help you keep pace with the coming deadlines, HST/GST compliance, filing requirements, etc.
Most crucially, accounting and bookkeeping experts save you time. They take care of your books, so you could serve your customers better.