One of the realities of being a small or medium business owner is that you need to make decisions every day. Sometimes they’re small choices, like whether or not to drink that second or third cup of coffee before lunchtime. Sometimes, you need to make crucial decisions, such as adding more vehicles to your commercial fleet, acquiring another business, or upgrading your equipment.
You can independently make a decision about coffee, but the more significant decisions may require extra thought, analysis, and input from experts. Your Chartered Professional Accountant (CPA) should be your go-to advisor for critical decisions in your business. They have wisdom about Canadian tax law, understand how to keep records organized for when you file your taxes, and have insight into your finances and whether your business can afford the purchase or not. Here are seven examples of investments you might want to sit down and discuss with your CPA before you decide to buy.
Real estate purchases are major investments that will have a long-term impact on your business. Discussing your options with a CPA before you decide to purchase can help you set up your business for success and avoid costly mistakes. Your CPA can advise you on the pros and cons of purchasing versus leasing property. They can also give you advice on how to finance the property if you do decide to go ahead and make the purchase. Whether you’re investing in a commercial warehouse, additional office space, or would like to open a brick-and-mortar business, or if you rent commercial or residential real estate, CPAs can help guide you to the best solution for you.
A vehicle purchase for your business is an important decision to discuss with your CPA, not just because of the price tag on a vehicle, but for the best value to ensure your business benefits from the purchase and that you claim it correctly on your taxes. Your CPA will likely review your options for purchasing or leasing the vehicle, help you create a plan to track mileage for your business, and tell you how to arrange for the best insurance option.
Functioning equipment is essential for any business to run smoothly. Depending on your industry, you may require upgrades or replacement equipment more often than other companies do. Before you place any orders, we recommend discussing your options with your CPA. While they might not be able to tell you which model to purchase, they will be able to tell you how the purchase will affect your accounts and tax claims. Most equipment is classified as “business assets” and requires you to complete different paperwork than a regular corporate purchase. Assets are also subject to annual depreciation, and your CPA can help determine those numbers, which might influence which product you choose to buy.
Another time to consult with your CPA is if you plan to renovate your workspace. Whether you plan to extensively makeover your office or sales floor, or you’re upgrading your electrical system in your factory, the improvements made to your physical locations are improvements to your assets. They may require adjustments to your asset calculations. Your CPA will know how to source accurate estimates needed for tax purposes and give advice on how to track your related expenses. This ensures your business can look and function better without causing problems in your budget or tax planning.
Technology or System Upgrades
Regular updates to your systems and software are essential to running a business. Technology rapidly changes, and programs that operated well a year ago might be changing drastically in the following year. Companies also need to continuously invest in cyber security measures to protect their data, proprietary information, and clients’ private information. Upgrading your software or purchasing new technology for your business will likely help your business grow and improve. Once you’ve consulted with your IT experts, you’ll also want to consult with your CPA to discuss your technology budget and how you’ll classify your investment for your taxes.
If you have plans to travel for your business, you might be able to claim your travel expenses as business expenses, which is another reason to consult with your CPA. Depending on the nature and cost of your travel, you might be able to claim the whole or a portion of the cost of your transportation, lodging, food, and entertainment. Your CPA will help you figure out what you can claim and how to keep precise records for your tax file. Some companies travel on a regular basis and have their expenses preplanned with their CPA, while others only travel to specific events or at certain times of the year. Whatever your travel story is, your CPA can help ensure you track it accurately.
Is your business expanding? Are you planning to acquire assets from another company or to take over another business? Acquisitions can be an exciting process filled with potential and hope for the future. They can also be tricky in terms of accounting, just like purchasing real estate. Before taking steps towards any acquisition or holding any negotiating meetings, we highly recommend discussing your ideas with your CPA to ensure you’ll have all the necessary paperwork prepared and ready to go in the event that you do make plans.
CPAs Offer More Than Tax Services
CPAs can support businesses in a lot more areas than tax filings and tax returns. Business CPAs are dedicated to helping your businesses grow and succeed, especially if you’re thinking of making major investments or purchases. Navigating corporate tax rules can be confusing, which is where your CPA can step in and help explain the rules and requirements, so you don’t face frightening penalties down the road. However, they can also help with cash flow, budgeting, bookkeeping automation, tracking, and much more!
Chartered Professional Accountants in Edmonton
The Chartered Professional Accountants at Schwan & Associates offer personalized services to Edmonton businesses to help keep their tax files organized and prepared. We’re here to consult and advise on significant purchases and milestones. We invite you to send us a message or get in touch today to have your questions answered before you buy.