When a business is in its early stages, tax filing is often seen as nothing more than an annual formality; some entrepreneurs may even manage their own taxes without seeking professional help. But when those businesses begin to grow, filing taxes should become more of a strategic task, that with the appropriate guidance, helps reduce their taxable burden while ensuring that they’re always compliant.
If your business is planning for expansion, Langley accounting firms can help you hold onto more of your profits, file your taxes on time, and stay on the right side of the CRA.
The value of a proactive tax approach for growing businesses
It’s not uncommon for businesses in their early stages to focus solely on tax compliance and staying under the CRA’s radar. While this isn’t necessarily an issue, when the business begins to get bigger and grow stronger, it will definitely become a problem.
So what should growing businesses be doing instead?
Planning strategically.
Instead of merely reacting to deadlines and notices from the CRA when they arrive, growing businesses should be learning how to make informed financial decisions that don’t impact negatively on their tax situation. This means making smarter decisions around hiring, investing, restructuring and expanding.
What is involved with strategic corporate tax planning?
Meeting with your accountant and tax expert days before the end of the year is not the way to plan for your taxes effectively and intelligently. Instead, you should be doing the following:
- Organizing income and dividends in a way that is the most tax-efficient for everybody involved
- Maximizing available deductions through the timing of capital expenditures and investments
- Working with a tax professional to forecast your liability during the year so that you don’t get an unpleasant surprise when filing
- Reviewing credits and incentives eligibility with guidance from a tax expert who has specific knowledge of your industry or niche market
Companies who don’t heed the above advice, will likely see themselves scrambling to file their taxes at the last minute, have lower effective tax rates, and experience any number of issues at the years end.
The benefits of working with a tax accountant
As your business grows, you understandably want to keep more of the money that you’re now making, but without the right tax guidance and support, you could be giving more to the CRA than you need to, especially when it comes to such things as negotiating financing, adjusting departmental budgets, hiring, or preparing for an acquisition.
The knowledge and experience of a company tax accountant can help you take advantage of tax-friendly opportunities, and avoid unnecessary risks that could jeopardize the financial future of your business. What you pay them to help you, would more than likely be put right back into the coffers by way of a reduced tax burden, or even tax credits that you might otherwise have been clueless about.
Those businesses who manage their taxes effectively typically have ongoing relationships with their tax accountants; meeting with them on a regular basis, much more than once or twice a year. This enables the tax professional to contribute positively to the growth of the business, and help it go on to experience profitability that is much easier to sustain.