Three Reasons Why You Pay too much in Taxes
Death and taxes – the ultimate certainties in life, right?
Yes, we all pay taxes and we’ll all die someday. But no one wants to die today. Or pay too much in taxes.
When the latter happens, we tend to get frustrated and blame the CRA. Or the government for setting taxes that are much too high.
This isn’t the place for political controversy. And, even if it were, there is little you can do about the Canadian financial laws.
What you can do, however, is make sure that you don’t pay more than you have to.
After we’ve spent years helping businesses in the Greater Toronto area with their financial needs, we can easily spot the top three reasons why some companies pay too much in taxes.
Check them out:
- You Hired the Wrong Accountant or Accounting Firm
A lousy accountant is one that appears to be working for the CRA, not you. You can easily spot them: they’re always grunting, telling you what you can’t do and shaking their head.
A good accountant, on the other hand, will always take a pro-active approach. They don’t wait for you to call them asking about tax advice. They tell you what you need to do to pay less in taxes.
At NS Accounting, we work side by side with our clients to figure out the best way to keep them compliant without over-burdening them with taxes. We know that filing paperwork quickly can mean less to pay in taxes and we also know which business category is exempt from which taxes.
This is what you should be looking in your accounting firm: willingness to help and the knowledge to do it!
- You Don’t Plan Ahead
If you’re only meeting with your accountant a week before the end of the year, you’re not making the most out of their services.
Your accountant needs to know what is happening with your business and what new changes have appeared since you last spoke. If you last spoke a year ago, it may be too late for them to help you with your tax issues.
However, if you meet twice or thrice every year, your accountant can take a look at your quarterly data and make appropriate and timely suggestions. For instance, they can adjust your estimated taxes and help you reduce your tax liability. Better yet, a good accountant can easily spot potential liabilities before they turn into real problems.
If you meet with your accountant regularly, then they’ll have plenty of time to come up with the best taxation solution for you. If you only meet at the end of the year or during the busiest season, they won’t be able to do anything else than file your forms.
- You Don’t Pay Enough Attention
Why should you care about taxes if you’re already paying someone to do it for you? Well, because they are your taxes.
We work with a lot of busy clients who don’t have time to spare. And we get that. In fact, we encourage them to take care of their core business while we help them with taxation and accounting issues. DIY never works well when you’re an entrepreneur wearing multiple hats.
But keep in mind that your accounting firm can’t be up to date with what’s happening in your company if you don’t inform them. Keep an open line with your accountants and make sure you know what taxes your company has to pay and when. That’s it! A good accountant will never ask you to do the paperwork yourself! You just need to pay a bit of attention.
All in all, reducing your tax burden is a responsibility that falls primarily on your accountant’s shoulders. But remember that success in this field is a two way street – saving money requires you to have a minimal involvement.