Tax Preparation & Small Business Owners: Should You Hire a Professional?
Are you a small business owner who is starting your Tax Preparation this year? If you are, you may be wondering whether or not you should use the services of a Tax Professional. When it comes to determining whether or not you should use the services of a Tax Preparation expert, you may want to think about these pros and cons.
When it comes to getting your Tax Preparation done by a professional, one of the many pros to having your small business taxes done professionally are the end results. Most Tax Preparation that is done by a Tax Professional has higher returns and more deductions, because of their years of experience with preparing taxes. This experience is what often guarantees that you will get better and more accurate results.
Another one of the many pros of having your small business Tax Preparation done for you is the knowledge of new or more obscure deductions that you qualify for, but are unaware of. All our Tax Professionals have up-to-date Tax Preparation training. This current tax training often means that they are aware of any new small business deductions that you may be able to qualify for, as well as more mainstream deductions. This is nice because most small business owners, like you, who do their own taxes, actually end up missing out on multiple opportunities to save money on their returns. Time is another huge factor for small business owners. Even if you have some Tax Preparation experience, you end up taking time away from either what drives your business which is sales, or punishing yourself and your family by doing your taxes at night, or on days off. You then have to go back and recheck your forms and submissions to ensure that your Tax Preparation was done correctly to avoid getting audited.
Professional Tax Preparation and Auditing Liabilities
Auditing liabilities, when hiring a Tax Professional to do your small business Tax Preparation for you, are greatly lessened for Tax return errors, or Tax Fraud. This is due to the fact that those who file their own taxes are often held under suspicion for any mistakes that are made. The view is not the same as when a professional Tax Preparation expert is used. Most Tax Professionals do not make mistakes often, but if they do make one, you won’t end up being held responsible or liable for that mistake.
As we have demonstrated there are a large number of plus sides to doing business with a Tax Professional, there only one true con, or downsides to doing so.
Perhaps, the only con is the costs to getting your small business Tax Preparation done for you. It is no secret that there is a cost associated to hiring the services of Tax Professionals, but what price will you pay if you don’t hire one. We at Tax Professionals always give you a FREE consultation on your present Taxes with an up-front price quote, and we also review your last year’s return to verify you received your maximum deductions!In most cases, the amount of money that you are charged has a direct correlation to how complicated and involved your returns are. The harder they are to do, the more money you are likely to be charged. With this in mind the more complicated your Tax Returns are the longer they will take you and the more likely you will miss deductions and make mistakes, which will cost you money and possibly get you audited! Just to be Free of these concerns are worth the investment in a Tax Professional.
The decision as to whether or not you want to have your small business Tax Preparation done professionally or by you is yours to make, but, as outlined above, the pros far outweigh the cons. If you are interested in having one of our Tax Professionals do your Tax Preparation please call the number on this site to set up your FREE No Obligation Consultation.
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RRSP Contribution Deadline For 2011 Tax Year: February 29, 2012
The RRSP Contribution Maximum Limit For 2011 is $22,450
♦♦♦NB: If you did not use all of your RRSP Contribution limit for the years 1991-2009, you can carry forward the unused amount to 2011. With this in mind, your RRSP Contribution limit for 2011 may be more than $22,450.
Withdrawing Money Early From an RRSP Can Be a Taxing Proposition
There will inevitably come a day when you need to withdraw funds from your RRSP. However, there are a few things you should know before you take out that money. Some options are going to be more expensive than others. Don’t be one of those people who take money out of their RRSP to buy the latest toys or gadgets.
If you take money out of your RRSP before you retire (Withdrawing RRSP) , Canada Revenue Agency will punish you (RRSP Withdrawal Tax) for doing it with what is called a Withholding Tax. Actually it is the Tax Professional or financial institution that has your RRSP that takes your hard earned money and remits it to the Canada Revenue Agency. The Withholding Tax Rate really depends on the amount that will be withdrawn.
- For amounts up to $5,000, the Tax Rate is 10% (21% in Quebec),
- Amounts $5,001 to $15,000, the Tax Rate is 20% (26% in Quebec)
- Amounts over $15,000 the Tax Rate is 30% (31% in Quebec).
The percentage used depends on the amount at the time of the withdrawal. This is not a cumulative amount based on total withdrawals for the year.
If you withdraw money for a house, then there is no withholding tax. This is called the Home Buyers Plan and under this plan an individual can withdraw up to $25,000 tax free. When you report the RRSP withdrawal in your return, you will be required to include the gross amount of the withdrawal in income and the withholding tax will be recorded as taxes paid. You end up paying tax on the withdrawal at your marginal personal rate.
The restrictions under the homebuyers plan are:
- Must not have purchased a house in the last 5 years,
- Intend to live in the house as a primary residence
- The home buyers plan balance must be zero on January 1 of the year of the withdrawal.
- Money must remain in the RRSP for
- Must be a first time home buyer
- Must be a resident of Canada
- The house must be located in Canada
- All withdrawals must be done in the same calendar year
- Maximum $25,000 withdrawal
- Have up to 15 years to repay the loan
Before you withdraw any money from your RRSP, look at your other sources of savings like stock purchases, mutual funds, bonds. When you withdraw money from these sources it will be more tax efficient. Use the RRSP money as a last resort especially if purchasing a house or for more schooling. You may want to use this opportunity to sit down with your Tax Professional to explore a more tax efficient strategy.