Bookkeeping not only saves you money and time but also plays a vital role in tax planning and saving. In this article, we will explain how bookkeeping ties into your tax planning and preparation.
Maintaining accurate books is critical to have a foundation that will assist you and your tax advisor make important financial and tax-saving decisions. Efficient bookkeeping allows you to effectively manage your business., identify cash flow issues ahead of time, and implement proactive tax planning strategies throughout the year.
Your tax preparer and bookkeeper should be working together as it is stated “teamwork makes the dream work”. This is especially true in tax preparation and bookkeeping. Small businesses benefit most when their tax preparers and bookkeepers work together. This alliance provides the best financial management and tax planning for your business.
Although bookkeepers and tax preparers differ in scope when it comes to your finances, their services are strongly associated and can benefit one another. Skillful bookkeepers must understand tax even if it isn’t their core competency. For instance, if your bookkeeper is unaware of the CRA’s rules for the disability tax credit, or what documentation is required to claim a capital loss, you can miss out on tax-saving opportunities.
As for tax preparers, they need to understand the client’s transactions and cash flow to appropriately plan and prepare their taxes. If the income doesn’t align with the tax return, this triggers the risk of being reassessed by CRA.
Understanding one another’s duties do not mean undertaking the other professional’s tasks. Bookkeepers and tax preparers work on the financial aspect of the business but from different perspectives. They contribute at different levels, bookkeepers dive into details whereas tax preparers are very into the big picture. The collaboration of bookkeepers who understand taxes and tax preparers who understand bookkeeping, can save client’s time, money, and mitigate business risks.
You have a broader range of support by enlisting the services of both tax preparers and bookkeepers. When these experts work together to analyze and find solutions for the same issues, the result can be astounding. Bookkeepers and tax professionals aid small business owners in two ways:
A good bookkeeper gets you ready to meet with your tax preparer and keep your books updated and reconciled throughout the year. Your tax preparer can then use these books to prepare your taxes efficiently. Having both bookkeepers and tax preparers for your business makes it easier for everyone to meet deadlines with fewer surprises.
If you are looking for both, the accountant and the bookkeeper then it is best to hire an accounting firm that will handle both of your work.
If you are looking for bringing on this collaboration of accountant and tax preparer to benefit your business, we can conveniently work with you. By using secure, cloud-based technology we can provide bookkeeping and tax services in Oakville and beyond. We have experience working with clients in a variety of industries, giving us valuable insight into the needs of small and medium-sized businesses. We provide across Canada, reach out to us from wherever you are for your bookkeeping and tax preparation services and much more. Feel free to reach out to Filing Taxes at 416-479-8532. Schedule an NTR engagement appointment with us and take the first step towards proper management of your finances.
Disclaimer: The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Salman Rundhawa and Filing Taxes will not be held liable for any problems that arise from the usage of the information provided on this page.