Today we had a 4 hour meeting with our new business accountant putting things in place making sure everything we do is complying with regulation. We tried to do as much as possible ourselves over the last month, but there are just too many things you are not quite sure about and it is far quicker and safer just to hire a professional. I have used this accountant personally since 2010 so it made sense to combine personal and business in a package type deal. This was way more serious than personal taxes and was not expecting such a long meeting.
We have always been thinking about costs and the budgets yet hiring an accountant will most likely save money in areas you hadn't thought about. This month we were advised by the taxman with regard to the unemployment fund and if we had followed their advice it would have been all wrong and more shockingly incurred financial penalties.
We were unsure of where we stood when it came to the office at home and apparently how we understood the tax benefits were all wrong. So much has changed over the last 10 years mainly down to money laundering and corruption which the tax man has jumped over tightening what was seen as the grey areas.
I delved into the idea of receiving a dividend instead of monthly salaries only to find out it is not worth it. The tax can be as high as 48% and you are better off paying tax on a bonus instead. This is why having a professional looking over what you are doing and advising on the big things really pays off. The price for all of this is relatively inexpensive coming in at $350 monthly and more importantly removing the stress of knowing everything is above board. This is excluding the online company which will no doubt be added as soon as that business is operational. One 4 hour meeting was enough to know we are on track and can tackle business number 2 another time.
The current company accountant/book keeper team has had me concerned for some time and now the business has been separated having our own accountant was a good move. Their interests lie with the previous company who pays their salaries and our business would be playing second fiddle. When you have someone working on your behalf you can ask the stupid questions without feeling like an idiot. My view is the questions not asked are the stupid ones as we all need to have a clear understanding of what we are doing.
My aim was to find an accountant who had your interest at heart keeping you legal whilst paying the least amount of tax possible. The accountants monthly fee fails into comparison when looking at what they will be saving you in the long run. They are not that expensive either and are a company expense so do not cost you anything because eventually this will be tax deductible.
Luckily we have not started manufacturing yet because this becomes a while different ballgame and is taxed and reported differently from the rest of the business. This requires a different tax program which we have to run off and highlights how clueless we are.
Over the coming months this is going to be a huge learning curve on what can and cannot be written off against tax. When you have your own business you will be amazed what people are getting away with subsidizing their lifestyle through various tax loop holes.
When I went to America many years ago now that was funded through the business and you look at the cost of things far differently knowing you are only paying 40% or 60% of the actual cost. I cannot remember the exact percentage, but it was a massive discount on what you would normally pay for airfare, car hire and hotels. This is all legal and how the other half are living and you only find out when you have a business of your own.