A professional accountant is one of the crucial advisors every business owner needs in their team, alongside their banker and lawyer. Your team of advisors are the first people to turn to for advice on how to establish and expand your business successfully. Make sure you hire an accountant as soon as—or even before—you start to deal with investments, business financing or accounts payable and receivable.
The role of your accountant in your team of advisors
Depending on the size of your business, doing your own bookkeeping may be manageable—especially with the help of the accounting tools now available online. But just because you can doesn’t mean you should. A major advantage that comes with hiring any professional is their depth of knowledge. Whether you’re looking for small business incentives, applying provincial and federal tax adjustments or drafting your annual audit, leveraging the expertise of your accountant will maximize your cash flow and get your business moving in the right direction.
Why do I need an accountant?
It’s crucial that entrepreneurs have accurate accounting systems by which to make data-based decisions and comply with the business accounting standards set by the Canada Revenue Agency (CRA).
An accountant is valuable for:
- advice along the way, as you build and grow your business. An accountant provides a good understanding of the health of your company plus explains the story behind financial statements and what you need to address in the future.
- making a big financial decision. An accountant can spell out the picture of financial ramifications of the decision. For example, if you buy equipment and finance it over a number of years, how will that affect the rest of your finances going forward?
- informed advice. An accountant will be able to educate you on business expenses, and what can be claimed and expensed as such.
- tax planning. Taxes can be complex, and if you make a mistake, the consequences can be serious. An accountant can look at your specific situation and identify opportunities to seize and issues to avoid. For example, if a couple owns a business, the accountant can take a holistic approach to taxes—because there are three legal entities there: two spouses and the business—and explain how their taxes are impacted.
An accountant is beneficial all year round—not just at tax time. Find a tax professional with similar values to you.
Did you know…?
The CRA requires all businesses to keep their
accounting records for at least six years—and in some circumstances, even longer.
Your accountant can help with:
- Determining and maximizing use of fiscal periods. For sole proprietorships and partnerships, business income is generally reported to the CRA on a calendar year basis. A corporation’s business income is generally reported on a fiscal period basis. A new corporation can choose any tax year-end as long as its first tax year is not more than 53 weeks from the date of incorporation. If your business is incorporated, talk to your accountant about picking a fiscal year-end that makes sense for you.
- Taxes and GST/HST returns
- Managing cash flow
- Maximizing access to government grants, loans and incentives
- Planning for business financing decisions
The closeness of your relationship with your accountant will depend on many factors, including how involved they are in your day-to-day bookkeeping, how large your business is, and how fast your business is growing. Regardless of how often you need to consult your accountant, it’s important that they have a clear and complete picture of your business’s financials, and that you feel comfortable talking with them, asking questions, and receiving their input before you make major decisions.
Now that you’ve found a lawyer and an accountant, it’s time to choose the last member of your advisory team: a financial institution.