Every Canadian citizen is required to pay income taxes each year. For many, doing taxes is a regular part of their year, especially when tax season comes around.
However, not everyone might be as confident or well-versed in the Canadian tax system, especially if they are new to the process. Some people may also not have the time or resources to do it themselves. In these cases, one would benefit from some outside help.
Hiring an accountant isn’t limited to large businesses and people with massive wealth. They could also help individual taxpayers better understand and comply with tax requirements.
However, not every situation calls for an accountant. Below is a short guide to help you decide whether you should hire an accountant for your tax needs or not.
When To Do Things Yourself
Many individuals do their own taxes. It’s often not an easy task, but accomplishing it usually comes with a sense of satisfaction.
Many resources and tools are available to help taxpayers work on their tax returns. Below are some cases when it would suit your situation to do your taxes.
When You Have a Relatively Simple Tax Situation
If you have a relatively simple and uncomplicated financial situation, it might make more sense to do your own taxes. You might have only one or two income sources and not many expenses or liabilities to keep track of.
You can find free or paid tax services and software to conduct your computations online. These programs often come with tutorials to help you get started.
When You’re Familiar With Tax Laws
Some people are meticulous about their finances and are sufficiently knowledgeable about local tax laws. If you are one of these people, you might be capable enough to do and file your tax returns each season.
If you don’t think you’re at this level yet, you can always visit online resources or have a friend teach you their ways.
When You Couldn’t Afford an Accountant
Accountants cost money. Not everyone can hire one, especially on a tight budget.
If you have the time but not enough resources to hire one, it would be better to do things yourself. You might need to dedicate a few days or weeks to prepare your tax returns. But this will depend on the complexity of your financial situation.
When To Work With a Professional
Accountants are experts in their field. Hiring or working with one could make your tax preparations easier, especially if you can afford their services.
Here are three situations where hiring an accountant to do your taxes would be preferable.
When You Cannot Handle the Task
Preparing income tax returns is difficult, especially if you’re new to the task. It also takes up a significant chunk of your schedule.
It could easily be overwhelming for some people, particularly if you already have a lot on your plate. You may have missed payments or made previous errors, thus needing to apply to the voluntary disclosure program in Canada.
In these cases, hiring an accountant would be in your best interest.
When You Have Your Own Business
Running a business requires you to monitor multiple cash flows. You must pay attention to revenue streams, profits, expenses, and losses.
Doing one’s taxes while managing a business is a tall order for anyone. If you are overwhelmed by your many responsibilities as a business owner, it might be time to hire someone to ease the load.
When You are Unfamiliar With Tax Laws
If you are new to the country or your province of residence, it might take some time to familiarize yourself with the local tax laws.
You can always do your research. But, if you are not yet confident enough to do your own taxes, an accountant would greatly help.
An accountant’s services significantly benefit anyone who needs to do their taxes. However, these services are costly and might not be accessible to everyone. Assess your financial situation and capabilities first before making your decision.