Do I really need an accountant?
In New Zealand we have a number 8 fencing wire mentality. Why pay someone to do something that you can do yourself…? Often this thinking goes together with truisms such as “She’ll be right, mate”. When it comes to doing tax returns, it can be easy to take the same approach. After all, how hard can it be to add a few numbers together and file a tax return with IRD?
Here are four reasons why you should consider using an accountant.
1. What is your time worth?
Some people will spend hours, or even days, working out how much profit their business has made in order to complete their tax return. Few people, if any, enjoy doing this. Try multiplying the number of hours spent doing your own tax returns by your charge out rate. It is probably more efficient and cheaper hiring an accountant to do this for you.
2. Money – What is a dollar worth?
Accountants specialize in preparing financial accounts and tax returns every day. They have a good idea about what exactly can be claimed. Since the current Income Tax Act came into force in 2008 Parliament has changed it more than 130 times. That’s about ten changes to the Income Tax Act every year. Accountants specialize in this area; keeping current with the ever-changing tax law as it happens. Put simply, accountants know what can be claimed and what cannot. Some of those things might surprise you.
3. Compliance – We don’t know, what we don’t know.
When it comes to the law, ignorance is not a defense. If you make a mistake with your tax return the
penalties can sometimes be harsh. We regularly see clients claiming expenses for things that cannot be claimed, claiming GST when no GST can be claimed and not correctly accounting for “perks” (such as personal use of a “business” car). Some business expenses can be fully claimed, some partially claimed some must be spread out over several years, and some, while still valid, cannot be claimed at all. It is dangerous to think that just because you spent money on a “business” expense, you can claim it all back in your tax return. Accountants specialize in this area. They know what can be claimed and how much.
4. Peace of Mind
As human beings we often find we have a slight nagging feeling in the back of our minds, when doing
things outside our comfort zone. This can be especially true when it comes to dealing with government departments such as IRD. If you use an accountant you will save time, you’ll probably save money, your tax return will certainly comply with the law, but more importantly, you will have peace of mind knowing that someone who specializes in this area is dealing with the IRD on your behalf.
If you have any questions about your business or tax obligations, please contact us for help.
