Busted! Don’t Believe These Tax Myths!
The business and tax environment has become increasingly complex. Most business owners cannot maintain the expertise necessary to ensure compliance in all tax disciplines.
Everyone wasn’t made to understand the financial system’s functioning, so there are CPAs to assist us. Chartered Professional Accountants (CPAs) are trusted professionals. They help businesses on a full scope of financial and tax issues, including accounting services, auditing, tax planning, preparing financial statements, developing budgets, designing accounting systems, and much more.
However, there are a ton of misconceptions circulating about taxes and returns. Without the right guidance, you could easily fall for them and put your financial status in jeopardy. To help you steer clear of misconceptions, Darren Bruce, CPA, Professional Corporation, has debunked three of the most widely believed myths about taxes.
Myth 1: RRSPs will save you taxes
Well, this can be true for some, and for others, it is not. If you contribute to your RRSP while you are in a higher tax bracket than when you take it out, you will save taxes. However, for some, when they pass, and all of their RRSP (Registered Retirement Savings Plan) or RRIF (Registered Retirement Income Fund) is taxable, it is being taxed at a much higher rate than the tax savings they received when the contribution was made. Planning must be done to minimize the chance of this happening.
Myth 2: Incorporating is not going to save me the taxes to warrant the costs
Yes, incorporating comes at a cost, but the tax savings can easily far outweigh that cost. For example, if the tax rate in a corporation is roughly 10% and your marginal personal tax rate is 40%, then the 30% difference in tax savings can result in a $3,000 benefit by simply leaving $10,000 of income in the corporation. It doesn’t take much to have the tax benefit offset the administration costs.
Myth 3: I can do the bookkeeping myself
Yes, you probably can, but how much time are you being taken away from what you do best. And more importantly, if it is not done in a way that the CRA can understand or will accept, the deduction may be denied costing you tax dollars. Bookkeeping is a service that can be easily outsourced and save you time and, ultimately, money.
If you’re looking to steer clear of these myths, reach out to Darren Bruce, CPA, Professional Corporation. As a Chartered Professional Accounting firm in St. Catharines, Ontario, we are fully committed to providing you with the best financial services possible. Whether you’re looking for an accountant on a business or personal level, we want to serve you with professionalism. We offer services like financial analysis, accounting services, corporate income tax preparation, individual income tax preparation, business advisory services, financial and tax planning, and small business consulting.
We offer our services to small and medium-sized businesses across St. Catharines, Niagara Falls, Toronto, Markham, Vaughan, Hamilton, Mississauga, Brampton, Kitchener, Burlington, Oakville, London, Barrie, Oshawa, Huntsville, and the surrounding areas.