Start by thinking about the time needed to prepare your annual financial statements. For example, if it takes you 20 hours to generate financial statements, then to prepare the year-end tax returns; suppose each hour is worth $50. For 20 hours of your time, the cost would be $1,000, and that too, not counting any errors, would risk exercising a few more hours.
As a self-employed or a small business owner, you may find that you cannot afford to hire an accountant. But if you are not familiar with the basics of accounting and business taxes; here is the real question i.e. when is the right time to hire an accountant? We've highlighted some of the key points so you know when you should hire a Chartered Professional Accountant for your business.
Set up Your Business
Not all companies have the same legal structure. There are many types of corporations and each business structure has its own merits & demerits. Your CPA accountant will enlighten you on the business structure that best suits your business. You ought to seek the help of the accountant to set up an appropriate legal structure for your business.
Validate Your Business Plan
Your CPA will assist you in the creation and validation of your business plan. To assess the feasibility of your business and the reliability of the business model, your accountant must be able to alert you if he considers your project to be risky. He will define your needs based on your financial forecasts and will direct you to the appropriate solutions to make your business profitable and sustainable.
For Optimized Tax Methods
Your accountant should be able to advise you on the choice of tax methods. From the start of your business, your accountant should be able to recommend choices that will be profitable for your business. In Canada, you have the option to change the HST filing method from Standard HST Method to Quick-Method and vice versa to optimize the HST payable.
Hire an Accountant if you are Subject to a Tax Audit
If the tax authorities need to inspect your accounts, it is better to have all your accounting and tax documents streamlined because you will have to present a lot of documents to complete the assessment process. In terms of presenting all the required documents in the most efficient way possible, it is safer to be helped by an expert who explains the situation to you, what the administration requires and who carries out all the steps for you.
When your Business Grows
Businesses don't always grow at a steady pace. If a client calls on you for a large project or your clientele starts growing faster than expected, it is recommended that you hire an expert to make the transition as smooth as possible.
For example, you will need to start employing more people, and with that, you will incur more payroll expenses. Why not outsource these tasks to keep growing your business, rather than getting caught up in red tape?
Before Making Important Decisions
If you've been working on developing your business for several years, it would be surprising if you've never hired an accountant. If so, it is more than recommended that you hire one before making tough decisions for your business's future.
Making your brand to become a franchisee, sell or buy back a business are different examples of decisions you may have to make. An accountant will analyze the different possible strategies, the companies' financial situation, and then recommend you the most beneficial path.
Conclusion
An accountant can accompany you throughout your business life. Outsourcing of accounting and tax matters to a professional firm can be very beneficial. Hiring an accountant can greatly simplify your life, both for setting up your business and also enabling you to face possible inspection of your business by the tax authorities.