As we outlined in our article “10 Things to Consider After Forming an Ontario Corporation”, there are a lot of things to take care of after you incorporate your company.
Near the top of the list are: (1) choosing a fiscal year-end, (2) opening tax accounts (sales tax (i.e. HST, GST, PST), import/export tax, payroll tax), and (3) opening workers health and safety insurance accounts.
You can take care of those items on a DIY basis; however, in this article, we’ll explain why it might be worthwhile to get help.
Why get help?
The reason why you should get help with choosing your fiscal year-end, opening tax accounts, and opening health and safety insurance accounts is this: Once you take those steps, you will trigger ongoing tax filing and remittance obligations.
Keeping up with those obligations is not rocket science, but it can quickly feel overwhelming; it’s easy to make mistakes and miss deadlines. It also distracts from the more important work of building your business.
If you engage a bookkeeper or accountant to assist you from the beginning, they can set up a proper system for record-keeping, filing, and remittances so that you easily meet all obligations on time. It’s definitely a situation where a dollar spent proactively saves many dollars in unnecessary expenses and headaches down the road.
Who can help?
The best people to assist with choosing a fiscal year-end date, opening tax accounts, and opening health and safety insurance accounts are accountants and bookkeepers.
But, you might ask, what’s the difference between a bookkeeper and an accountant? And do I need both?
What’s the difference between a bookkeeper and an accountant?
The best way to answer this question might be with an analogy to a different profession: medicine.
Imagine being in a hospital. In that hospital, there are doctors and nurses. You will notice that nurses attend to patients on a regular basis and take care of their basic ongoing needs. You will also notice that there is a doctor who only visits each patient from time to time, reviews the patient’s file, and provides directions to the nurses.
The role of accountants is similar to that of doctors, and the role of bookkeepers is similar to that of nurses.
Accountants tend to provide high-level services to their customers, such as: strategic advice, preparation of financial statements, tax planning, and tax return filings. Meanwhile, bookkeepers tend to provide more routine day-to-day services to their customers, such as: setting up books for accounting, reconciling accounts on a monthly basis, keeping track of how much income tax or sales tax needs to be remitted every month, etc.
Do I need help from both a bookkeeper and an accountant?
In most cases, you will need both a bookkeeper and an accountant to assist you. (Some accounting firms will provide bookkeeping services (and vice versa), so sometimes you will get both services bundled into one.)
Typically, you need a bookkeeper to be engaged on a daily, weekly, or monthly basis so that they can keep your company’s books and interim tax filings up to date. The work of bookkeepers is invaluable for giving you regular insight into the fiscal status of your company. This insight helps you to make better and faster decisions. Bookkeepers typically charge a lower fee per unit; however, their work is more regular during the year.
On the other hand, accountants only usually need to be engaged on an annual basis (to review the books, prepare annual financial statements, and prepare annual tax returns) or when strategic decisions are being made. Accountant fees are usually significantly higher than bookkeeper fees; however, accountants are usually engaged less regularly than bookkeepers.
Having said this, there are nuances to consider that can save you some money (at least early on). Specifically, early-stage companies can usually start out just with a bookkeeper: Companies that are just starting out can probably rely exclusively on a good bookkeeper to choose a fiscal year, set up tax accounts, set up health and safety insurance, and set up and maintain the company’s accounts. We say this because bookkeepers are usually best suited to those administrative activities, and, for an early-stage company, there is limited strategic advice that an accountant could provide.
There are exceptions, however. The advice of an accountant is recommended from the outset in the following situations: start-ups that anticipate high growth, start-ups that are funded by people who are not the founders, and new companies that are part of a larger group of companies. In each of those situations, more complex strategy considerations can be addressed by an accountant (rather than a bookkeeper).
The long story short
In summary, we highly recommend hiring a bookkeeper or an accountant to help you out right from the beginning. The most cost-effective way to begin is by engaging just a bookkeeper (if your situation allows), with assistance from an accountant at a later stage.
With Tobuso, you can easily incorporate your company and get started with your business right away. We can assist you with setting up your accounts with a bookkeeper and even opening your corporate bank account. Visit us to learn more.
