You're Not a Dentist - Advice for the Self Employed
I don’t do my own dental work for a reason. Actually there are several reasons but first and foremost it’s because I don’t know how. I am not ashamed to admit that I can’t be my own dentist and I happily pay a professional to take care of my teeth because I know it will save me from future problems. As the saying goes, an ounce of prevention is worth a pound of cure. This analogy can be applied to the self employed and is especially true when it comes to bookkeeping and taxes. For financial reasons, many starting their own business attempt to do their own bookkeeping and taxes without the assistance of a professional. In effect, they are attempting to do their own dental work without the proper knowledge or experience.
The best outcome of this strategy is you will learn as you go and muddle your way through no worse for wear except perhaps the loss of your time. The worst outcome is financial ruin. The most likely outcome is somewhere in between. Depending on your skills and type of business, you may need only a few pointers from an accountant or bookkeeper and a couple of meetings per year for tax filings and reviews. Others may need more frequent assistance. No matter what your ability, without seeking professional advice at startup and having occasional check ups, a self employed individual may run into problems such as:
- Non-compliance with government requirements for income tax, employee source deductions, HST, WSIB etc.
- Paying higher taxes than necessary because you’re unaware of allowable deductions or tax strategies.
- Improper record keeping to support deductions.
- Inability to distinguish business and personal accounts and expenses.
- Under or overestimating capital required.
- Delays in implementing strategies to cut costs which will improve the business.
- Incurring personal liability because of the structure of the business
- Failure to keep up to date with changes to taxes and business practice.
- Incorrect pricing of products or services.
The above issues can lead to serious financial problems and in the end cost you more money than you would have spent for an accountant or bookkeeper. When someone else is using their expertise to help you with your paperwork, tax planning and business structure, you can focus your expertise on keeping your customers happy, generating new business and making money to support your family. So instead of wondering if you can afford to hire an accountant or bookkeeper you may want to ask, “Can I really afford not to?”
By: Brenda D. Owens, Trustee in Bankruptcy
Brenda works for James R. Yanch, Trustee in Bankruptcy
215 Simcoe St. N.
Oshawa, Ontario
L1G 4T1
905-721-7506
www.jamesryanch.com
