Busted! Don’t Believe These Accounting and Tax Myths!
Accurate bookkeeping and accounting play a crucial role at the time of filing taxes as well as managing the financial healthof a business. While many small business owners are reluctant to reach out to an accounting service professional, the truth is establishing a reliable accounting system is an integral part of making your business a success.Ensure that you select a reputable accountant with the qualifications necessary to guarantee you get the most value for your money spent. When selecting an accountant remember that fees should not be the only determining factor. The best accountants will not only make sure your accounting is completed accurately and in compliance with CRA, but will be proactive in advising how you and your business can save money.
However, along the journey to success, you are bound to come across numerous misconceptions about accounting and taxes. Falling prey to any of these fallacies could have a negative impact on your growth and in some cases even warrant the need for an audit by the Canada Revenue Agency (CRA).
To ensure that you do not succumb to these falsehoods, Amanda Upshall Professional Corporation has debunked three of the most widely believed myths about accounting and taxes.
Myth 1: If you own a business you can claim higher vehicle expenses.
This myth has spread primarily due to word of mouth. However, it is not true. The CRA (Canada Revenue Agency) has a specific set of rules for claiming vehicle expenses. Often a taxable benefit can’t be obtained if the appropriate documentation is not kept, which makes tracking your kilometers essential.
Myth 2: Investing in RRSPs reduces taxes.
Although nobody wishes to pay tax at tax time, purchasing RRSPs (Registered Retirement Savings Plan) do not reduce taxes payable on a long-term basis. Most people are better off with just paying their tax bill, especially if cash flow is a concern. There are alternative investment products that are much friendlier with a view on future taxes.
Myth 3: You can use business funds for personal purposes.
You should not! Often, customers commonly use business funds for personal reasons as it is easy to temporarily solve personal cash flow issues when you have access to business funds. However, this can become a grave issue if business funds are utilized for personal gains on a long-term basis. If business funds are not repaid within six months, it can be deemed as personal income which can trigger an unexpected personal tax bill, and potential financial hardship for the company. Budgets should be developed and used for both personal and business finances, and we can help with that.
If you’re looking to maintain the financial health of your business, reach out to Amanda Upshall Professional Corporation. As accounting experts in Mount Pearl, Newfoundland, and Labrador, we strive to provide all clients with accounting and business related services that will help them succeed in their personal and professional lives. The goal of our accountants is to provide our clients with the best possible accounting services we can offer. For a complete list of our services, please click here If you have any questions about accounting and business consulting, we’d love to hear from you; please contact us here.