The tax season is fast approaching. Much depends on how you approach this; do you pay taxes yourself or use the services of an expert. In order to grow your business, tax preparers can promise you big returns, some of which will be valid, and others may be not.
Read on to find out what you should consider and what to look for.
Can you do it by yourself?
Before I continue to answer this question, I would like you to familiarize yourself with some statistics.
On June 18, 2019, Alexander Kunst published the results of the Survey on Personal Finance in Canada 2019 on the statista.com.
The survey showed that 39% of Canadians are worried about their financial future. While 23% of Canadians said that they could save a lot of money if they took the advice of a financial expert, while 12% of Canadians said that managing their financial affairs is too complicated for them.
So, back to the question – can you do it yourself?
Of course, you can!
If you work in the office and you have a simple tax situation or you have one source of income, and you have no investment. Then you don’t need to worry about spending more money on tax preparation. You can always get the information you need from the Canadian Tax Agency (by phone or via their website). Even if you are self-employed, you can still do it yourself!
How Do You Do It Yourself?
Gather all the necessary documents. Here you can find a full guide and Canada tax checklist of required documents. Download and save it. You will need it in the future.
Go to the Canadian Tax Agency website and select a certified software provider. Choose options that suit your needs. Some software companies offer free registration options, so you need to choose the one that works best for you. The free versions are generally useful for simple tax situations.
When to hire a professional tax preparer
When things get a little more complicated, you must turn to professionals for help or get a tax return preparation service. Turning to a specialist will always help you save time and money. You will need specialist advice or even hire a professional if you are not sure about your needs. Many Canadians seek professional help making tax returns to avoid calculation errors and ensure accuracy.
Difference between a certified professional accountant and an accountant
When hiring a professional you should always know your requirements. Are you looking for a tax return preparation service or are you looking for tax advice as an expert? Can a tax accountant do the work for you? Or do you have to hire a certified professional accountant (CPA)?
Are you confused by the differences between a Certified Professional Accountant (CPA) and an accountant?
They both seem to have the same qualifications and experience, but there are some differences that you would like to know before deciding which one to hire as your tax consultant.
One way to explain the difference between the two professionals is that all chartered professional accountants are accountants, but not all accountants are CPA.
Still, confused? Do not be!
In short, a certified professional accountant is a financial specialist who has passed the state exam for a license. The accountant did not pass this exam and is not certified by the state.
They both perform financial and tax tasks and comply with the rules and regulations established by the Canadian Tax Agency. The term accounting is rather a general term used to refer to a person performing financial work in accordance with the rules and regulations. But only a person who has passed the accreditation exam can use a certified professional accountant (CPA).
Which one to hire?
The questions of which specialist to hire depending on what kind of work you want to do. If it is a tax, audit or financial analysis, then a certified professional accountant is worth the extra cost. If this is routine, reporting and daily financial management, an accountant can do the trick.
Accountants can perform everyday tasks, and a certified professional accountant takes care of tax work and financial analysis. Certified professional accountants can be external consultants who are recruited only for specific needs, projects or periods of the economic cycle.
There are several cases where a certified professional accountant may be a better choice than an accountant.
Why a Chartered Professional Accountant?
The main reason these specialists are highly regarded is the state certification examination. Licensing requires a multi-day exam covering various areas of taxation and finance. To maintain their license, professionals must be aware of tax laws and meet annual requirements for continuing education. Accountants and other financial professionals are not required to do this, and they can only use the knowledge that is available to them from their own experience.
What to look for while hiring a professional tax preparer
Before hiring a tax expert, here are some things you should consider:
- Seek to hire an experienced tax professional. You can expect a higher rate if your tax returns are complex.
- Consider their experience, training, and the rates they charge.
- Ask for their credentials
- Check availability to see if they can help you according to your deadlines.
- Find out if they offer audit protection.
You can also check if the accountant you are considering has experience working in any taxation niche, and whether this can help you. For example, does your accountant deal with cross-border taxation? If so, what is his experience and level of competency?
Advantages of hiring a professional tax preparer
There are many benefits of hiring a professional to prepare tax reports, but three main advantages are:
- In most cases, they will know tax laws better than other financial professionals. They are also recognized by the Internal Revenue Service as certified drafters.
- Financial analysis. Normal financial work, such as entering records and preparing reports, can be done by anyone, but a licensed expert is required to conduct a thorough financial analysis. They can also offer tax and financial advice that others cannot.
- Audit Protection. One of the main benefits is their ability to represent you on the Internal Revenue Service / IRS. If you intend to hire someone to pay taxes, you must make sure that he can represent you if you have passed the audit.
Before the deadline, you will need to review each part twice with or without the help of an expert. Better to do it ahead of schedule. Remember to always read your tax return before signing.
For expert advice hire a tax advisor.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.