Tax Time – Let’s Tackle It Together
Tax time is here! For numbers-oriented people like me it is actually quite an enjoyable time. Yet the more I speak to people, the more I recognize how daunting and heavy a task this is for many business owners.
Meanwhile, this time of year also represents the perfect time to plan for the future! A good tax advisor will do his or her best to minimize your taxes owed based on what has already happened when you bring your information to them. However, we can often strategize together on even better ways to run your business finances going forward that can decrease your tax bill next year.
Start Planning Ahead – Now
What better time to look at your financial management than with fresh 2017 year end information so you can get things streamlined going forward – right before heading into your summer busy season! Granted not many tax advisors have a lot of time in April, so you might have to wait until early May. But this time of year still represents a great time to plan ahead.
I also cannot stress enough the importance of working with an accounting professional through the year and not solely seeing them at year end. Knowing where you stand financially on a quarterly or better yet monthly basis will allow you to make good decisions on when and how to withdraw money from your business.
Example – B.I.G. Construction Inc.
With a handful of employees and a couple of trucks, fictitious company B.I.G. Construction is starting to fulfill its small business growth dreams and decided the business needed to incorporate in 2016. 2017 was its first full year as a corporation. Despite cash being good in the business throughout the summer and fall, the owner “Bob Gamble” had no idea whether he was really making money. He realized the company would owe money for HST and year end taxes would also be due, although he had no idea how much.
Although Bob needed money personally to live, he took out very little money throughout the year to be sure he was ready to pay the government. At year end, Bob sat down to compile his bookkeeping and realized some good news – B.I.G. Construction had in fact earned big profits. However, Bob needed to withdraw these profits as he was crumbling under personal debt loads from living so lean throughout the year. When Bob’s business then distributed the income to him personally at year end, he was shocked to see the size of the tax bill for a large withdrawal and how little of his hard-earned money he got to keep. Then, on top of that, he was presented with his HST bill.
Could Tax and HST Bills Come At A Worse Time For Muskoka Businesses?
Many Muskoka businesses struggle with the big summer peak of activity followed by the doldrums of winter. I like to work with businesses on strategies that develop a full-year business model of success. But today the fact for many Muskoka businesses is that cash flow is great in the summer into the beginning of the fall and bad-to-horrible in the winter into spring – right when many businesses find themselves owing tax and annual HST!
Personally, I prefer to work with people like Bob and B.I.G. throughout the year. Armed with better knowledge of where the business stands, we would have realized B.I.G. was making good money and perhaps developed a strategy to pull out chunks of money along the way so that Bob could live more comfortably throughout the year and not have as big a tax bill when his business had the least cash.
Get On The List!
Regardless of your circumstances, contact your tax advisor and get on their list! Don’t delay and wait until it’s too late! We know tax time feels daunting for many people. Let your tax professional help take away your pain! I assure you, if you are among those for whom this task feels daunting, it also feels great to put the tax pressures behind you! Contact me for help today!
You may also be interested in these articles by David Perlock –
Business tax season; Let’s tackle it together
It’s easier than you think to go paperless for 2018
Top 5 Signs You Need A New Accounting Professional
Proper tax planning requires professional advice relative to an individual’s specific situation. Information presented in this column is general in nature and does not supercede any advice provided by a professional. If you have questions about small business or corporate tax and finances, contact David Perlock of The Velocity Partners at 705.645.3459, email [email protected] Or visit www.davidperlock.com.
Founder of The Velocity Partners David Perlock has been consulting with clients for over 20 years. In that time he has worked with over 500 clients ranging from gas bars to airlines – independent contractors to home manufacturers – retail stores through wholesale distribution and manufacturers. David attended Wilfrid Laurier University for business administration and is also a graduate of the University of Windsor (Commerce) and the Canadian Tax Academy. He is currently the Treasurer for the Bracebridge Chamber of Commerce, is active on the Board of Directors of the Huntsville Chamber of Commerce, and is a member of the Stephenson Lions Club. David enjoys helping small businesses save money, defer tax, adopt technology and grow!
David W. Perlock, Principal Consultant & Small Business Tax Specialist, The Velocity Partners.
Direct – 705.645.3459
E-Mail – [email protected]