Running a small business can be quite a bit of work. In addition to maintaining daily operations and keeping customers satisfied with your product or service, you’ve also got to dedicate precious resources like time and money towards hiring employees, dealing with suppliers, responding to enquiries, and doing your own bookkeeping and taxes every year.
The bad news is that spending too much time on these tasks takes away time you could be spent generating value for your customers. The good news is that there are qualified professionals that can help with things like accounting and taxes so that you don’t have to.
Is it worth trying to do your own taxes for your business or is it better to hire a professional tax accountant? The short answer is a big ‘it depends’. Below are some pros and cons of DIY tax accounting compared to hiring a professional tax accountant.
Doing Your Own Tax Accounting
PROs
- Learning how to lodge yearly taxes for your business can be an invaluable skill, potentially saving you money that would have been spent on a tax accountant. Note that this comes with a big caveat, however. More often than not, the money spent on a tax accountant will save your business in taxes owed!
- There are many tax software packages that can make lodging taxes marginally easier and some even automate processes, but these seldom help with optimising cash flows or with processes where human intervention is required.
CONs
- There are many risks to doing your own tax accounting. For starters, you may lack up-to-date bookkeeping or be mixing up personal and business accounts (common in sole proprietorships).
02. Lodging taxes is a time-consuming task, which essentially means time and potential revenue being lost in the meantime. It creates a lot more paperwork during tax season which could otherwise be used more productively within your business operations.
- If you don’t know any tax loopholes or other tips to reduce your taxable burden legally, you’re essentially throwing away money. Rather than lowering your taxable burden, you may end up paying significantly more when you don’t have to.
Hiring a Professional Tax Accountant
PROs
01.Professional tax accountants can help reduce your tax burden by applying their experience and knowledge of Australian tax laws and general accounting principles. The savings in taxes alone can easily justify the marginal cost required to hire them in the first place.
- A good tax accountant will do more than just reconcile your books and submit your tax returns to the Australian Tax Office. They’ll optimise your cash flows, help to maintain proper and up-to-date balance sheets that accurately reflect your business assets, liabilities, and owner’s equity.
03.Reliable tax accountants can also assist your business financially by streamlining processes and helping you to better prepare for the following fiscal year(s). For example, they may advise you to hold onto certain statements, invoices, receipts, etc. which can subsequently be used as tax deductions.
CONs
- Hiring a tax accountant does cost money, but it should be seen as a sound investment since a good, reputable tax accountant can end up saving your business potentially thousands or tens of thousands in payable taxes.
Is it Better to DIY Taxes or Hire a Professional Tax Accountant?
It is always better to hire a professional tax accountant to lodge yearly taxes for your business . The risks of DIY tax accounting are simply too big (read: potentially costly), so choose a reputable tax accountant such as Badawy Large & Powers to assist your business during tax season and beyond.
Badawy Large & Powers
Choose Badawy Large & Powers for reliable, cost-efficient tax accounting services and much more.
Read Also – DIY Tax Returns vs Hiring a Tax Agent