Has your local Toronto Small Business Accountant reduced taxes or saved your business any money?  If not, then you should have a candid conversation with your Small Business Accountant and ask the following probing questions:

1.    Ask: Have you put a tax strategy in place to minimize taxes for myself and for my business?

It’s important to have a tax strategy tailored for your business to minimize taxes.  Such a strategy should include basic elements such as the potential tax deductions available to your business, how to shelter profits from taxation, and income splitting opportunities.

2.    Ask: Have you evaluated whether my Mississauga / Toronto based company has appropriate internal controls?

Internal controls are company policies and procedures that are designed to increase the accuracy of your company’s financial reports and financial statements.  An example of an internal control for a small business could be “To review the income statement quarterly for variances in revenues and expenses in excess of 10%.”  

By conducting this review with your Small Business Accountant, you are more likely to catch errors in your financial statements and indentify potential cost savings and opportunities for revenue generation.

3.    Ask: Have you looked at my compensation structure for tax savings?  

As a business owner, you may be remunerated by salary, management fees, dividends or repayment of shareholder loans.  Each of these methods of compensation has differing tax rates.  For example, shareholder loans may be paid tax free to the shareholder and therefore have an implicit tax rate of 0%.

4.    Ask: How often should I speak with you about financial and tax matters for my business?

The number of a times in a year that you should discuss important financial and tax matters with your Small Business Accountant depends on the size of your business, the strength of your company’s internal controls, and the number of major business decision that you make in a given year.

At a minimum, you should speak with your Small Business Accountant 3 to 4 times a year.  By speaking regularly with your Small Business Accountant, he/she can provide proactive advice that could prevent you from making costly errors or help increase your company’s bottom line.

5.    Ask: Why am I paying so much in tax and as my Small Business Accountant can you help me reduce the amount of tax that I pay?

The highest income tax rate is 46.4% for individuals residing in Ontario.  The rich have not gotten where they are today by paying almost half of their earnings in tax.

Your Accountant should speak with you about tax savings strategies that can help reduce the amount of tax that you pay.  

For example, a commonly applied income-splitting strategy is the use of a Family Trust to distribute the profits of a business among family members, as opposed to paying all of the profits to the owner of the business.  By income-splitting, the overall tax paid can be reduced substantially.

The questions above are intended to help you evaluate whether your Accountant is helping you save money and I encourage you to ask them.  If the answers that you receive are not satisfactory, you should consider switching to another Small Business Accountant in the Toronto or Mississauga area that specializes in the unique needs of small business.  After all, you deserve to have an Accountant that will save your business money!

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