Brock Health Administration has many clients that operate various types of consulting businesses. Health Spending Accounts (HSAs) are an important service especially for those in the ‘gig economy’ and so are accountants. We thought it would be helpful to provide some guidance about accountants to people who may just be launching their consulting business.
Firstly, we highly recommend you outsource your tax and financial reporting to an accountant. It’s impossible to operate your business and also spend hours reading about tax rules.
Other benefits include:
- You won’t miss valuable tax deductions (like HSAs)
- It will save you hours filing all the various tax returns
- You’ll avoid potential late fees, interest and penalties.
- Accounting fees are a tax-deductible expense to your company
- You’ll never have to buy TurboTax for your family taxes again
To find your first accountant, try looking in local business newsletters, libraries, coffee shops, community centres, neighbourhood newspapers, internet directories, small business forums, or even grocery store notice boards. These small, local accountants may be in your neighbourhood and you can ask about theirs services and fees. They are often stay-at-home parents, part-timers or semi-retired employees with accounting experience. They have no downtown office overhead – meaning lower fees. They will meet you in the evenings, and are very accommodating. Asking around for referrals from peers, trusted friends, and acquaintances, will certainly help too. Keep in mind many people offering tax services do not have any professional credentials. However, in your start-up phase they will be able to provide basic services.
As your business matures you may change accounting services. You may want more sophisticated advice, no longer feel comfortable, or you may just outgrow their skill set. The Big 4 chartered accounting firms are likely not appropriate for a single-person consulting business, although some of the second-tier chartered accounting firms with offices in smaller towns may be cost-effective.
We can’t recommend any method to decide among firms other than trial and error. If you shop around over a few years, you will eventually find a service with whom you’re comfortable.
One tip when talking to accountants is to change your questions from “Can I do this?” to “How can I do this?” You will find their response gives you an idea of how creative or dynamic their services might be.
A typical accountant will charge roughly $700 to $1500 for annual tax returns. You can find some who charge less.
The key things your accountant will provide for this fee typically includes:
- T2 federal corporate tax return
- Provincial corporate tax return
- GST return
- T1 Personal tax returns for you and your family members
- A set of annual financial statements
A consulting business has relatively few revenue transactions in a year and a simple bank account. Expenses will only be 50 to 100 entries a month. Use a spreadsheet, or if you have time you can learn to use software like QuickBooks. Either way, you can export electronically to your accountant and reduce bookkeeping costs. If you show up just before the deadline with your records in a shoebox, expect to receive a bill for substantially more.
Many incorporated businesses select December 31 as their fiscal year end. Keep in mind, business owners need annual discussion time with their accountant. You could consider a fiscal year-end in the summer or autumn. This puts your tax season between August and November. You will have the full attention of your accountant to ask questions.
Other tips to share? Post them below.