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20 tips for reducing taxes

Female AccountantBy Gordon M. Haslam
Spring is that wonderful time of year when the weather warms up, the birds return from their southern migration, the flowers start to bloom, the leaves reappear on the trees—and it is tax season, the busiest and most critically important time of the year for many franchisees across Canada.

For franchise systems that deal with accounting and taxes, spring can be very lucrative, but with the tremendous increase in workload comes a very high level of stress, if the business is not adequately prepared for satisfying the demands of customers, meeting the deadlines imposed by the Canada Revenue Agency (CRA) and assisting poorly organized clients. Add software and other computer-related issues, staffing requirements and other clients who seem to expect miracles and you have all of the ingredients for a disaster.

So, the key to running a successful accounting and tax practice at this time of year is being ready. The top priority in this respect is to organize clients for their personal income, small business and/or corporate taxes. The better organized they are, the more smoothly your franchise will run and the greater the profits you can earn.

Of course, you will also need to ensure your own internal operations are well-organized, with policies and procedures in place to maximize efficiencies and help you keep up with the workload.

Organizing clients
It is not always easy to organize clients. Some of them do not understand the value of keeping detailed records of their financial transactions and retaining receipts for their business-related expenses. For some, keeping receipts for the likes of medical expenses, education, children’s fitness programs, day care and other items seems to be too much trouble.

These expenses, however, and others that are relatively small can make a significant difference in an individual client’s personal income taxes. And similarly, when it comes to small business taxes, the retention of receipts and the maintenance of proper records become even more important. Just a few misplaced receipts can mean unnecessary taxes, adding up to hundreds, if not thousands, of dollars.

Getting your clients organized will take some effort on your part, but will be well worth your time. You should start by developing checklists (if these are not already available as part of your franchise system). You will then need to meet with each of your clients and explain how to use the checklists, the types of information they should retain and the importance of maintaining all pertinent records.

This process will be very time-consuming at first, but as you develop your systems, it will become easier with each new client. You may well be inclined to teach a staff member to handle this area of the business, if possible, to free up your own time to deal specifically with the most difficult clients.

Everyone’s goal is—or should be—to minimize the taxes they pay. Under Canada’s Income Tax Act, you have the legal right to structure your affairs in such a manner as to achieve this outcome.

Nevertheless, your clients may need to understand there are no loopholes in tax preparation and no ‘magic’ ways to save money. Only organized, detailed and accurate records will help them reduce the taxes they pay.

There is a tremendous amount of information to consider when it comes to assisting in tax planning for business owners and their families. This is especially difficult when dealing with small businesses that are growing and becoming more profitable.

You cannot start tax planning for a client in April—at that point, it is already too late. Instead, tax planning needs to be an ongoing process, adapting to changing economic conditions, family structures and incomes.

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