Common mistakes agencies make in tax planning

 The purpose of agencies of tax planning Calgary for your business is to examine your income and establish plans for the best methods to file taxes and reduce the overall amount of money you pay in taxes. But many agencies make some mistakes in tax planning strategies, such as-


  1. Failure to Select the Appropriate Accounting Method


By Failing to prepare, you are preparing to fail.” – Benjamin Franklin.


The quote goes well with the context of making mistakes in tax planning.


Therefore, If you don't have a consistent method for reporting revenue and expenses, you'll miss out on many tax breaks.


As a best practice, project-based agencies should utilise the accrual approach, whereas monthly retainer companies should use cash basis reporting.


If your company performs both types of operations, you can even build your reporting to be a combination of the two - accrual for projects and cash for monthly clients.



  1. No cash projections.

Not only do agencies need a plan for their money, but they also need robust statistics to back it up. It is a mistake for agencies to fail to generate cash projections for their operations.


The easiest method to start establishing a cash flow plan is with a cash flow estimate.


Understanding cash flow from forecast to plan will help you make educated judgments for tax and company planning, which means you can be bolder in your business decisions and better identify when taxes must be paid and how much each payment should be.


  1. Selecting the Incorrect Business Structure

Many organisations wait until it is too late to structure a business tax-efficient way before taking it into account.


Each of the four company forms has advantages and disadvantages, and conducting a study before establishing your firm is the best way to prevent making a mistake. However, there are ways to correct an error, which is why tax planning services are beneficial.


  1. Unsuitable Cash Balance at the Bank

Agencies of tax planning Calgary should be aware of their cash flow to pay their taxes, keep their business bank account open and manage their finances.



You should constantly be aware of the maximum amount you can withdraw for investments without jeopardising your ability to pay bills like payroll.


Your business may suffer if you withdraw too much.


On the other hand, businesses regularly miss out on investment opportunities that could have improved their profit margins because they don't withdraw enough money from the bank, which gets you to a significant cash flow planning mistake.
Location: Canada

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