You can't teach new tricks to an old beancounter. Or can you?

Since the early days of lockdown, I’ve been feeling really worn down by the literal conveyor belt of whiplash decisions made by the Canada Revenue Agency, because they seriously have not stopped for four. straight. years. Worse still, they tend to come out at the height of personal tax filing season, when Canada’s tax practitioners are already stretched beyond thin serving their clients, and frequently change the goalpost — whether that’s eligibility for certain benefits, requirements to file certain information, application of penalties and interest, or even straight up changing deadlines at the eleventh hour.

As you can imagine, trying to keep up on this hamster wheel has left me with very little mental room (and energy) for the joy I take in helping self-employed Canadians pay only as much tax as they need to and the passion I have for shedding light on our (needlessly) complex taxation system. I’ve been stuck in one hell of a rut.

However, in trying to get my mojo back, I've discovered that doing the exact opposite of what pre-COVID Katy would do has been incredibly rejuvenating for my creativity and innovation. (This is not the first time I’ve tried this strategy — it worked so well the last time I hit a similar point in my career that it felt like a no-brainer to try it again. I mean… what else have I got to lose?)

If you're in a similar place and have been feeling completely burnt out, you’re going to love this post. I’m sharing three new things I’ve been doing to breathe new life into the ways I do my work. 

Hint: There's also one tax-adjacent thing I'm giving up despite the fact that most accountants still do it. 

Can you guess what it might be? Read on to find out.

Why is Trying New Things in Tax Planning So Important?

You may think that you have your methodology all figured out, and you don’t need to be fixing something that ain’t broke. 

However, after working with dozens of Millennial and Gen Z self-employed makers and creators, I’ve discovered that these particular generations of business owners want a far more active role in their tax planning and are craving the support of other professionals to work collaboratively with them.

For example:

When Ana (name changed to protect the innocent) first came to me, she had a well-paying contract with an agency and a handful of private clients. All she wanted to do was make sure she was on the right side of her tax obligations.

Through working together, we were both surprised to discover that her existing business model was making her miserable because it was not attracting the type of clientele she truly wanted to work with. By trying some of the strategies outlined in this post, she was able to leave the contract that was ultimately holding her back, more than replace that income with ideal clients, and even start saving for a downpayment.

I can’t take all the credit for her successes, but she tells me that being able to reach out to me with questions and work collaboratively on the tax implications of the various scenarios she was considering helped give her some peace of mind and confidence about stepping into this next era of her business.

Want a similar type of experience working with an accountant? You’re in luck! My Waiting List is currently open.

Thankfully, I’m not the only one who benefits from my “What’s the opposite of what pre-lockdown Katy would do?” approach. 

Let's get into the three things I’ve been doing to expand my tax-planning skills… perhaps you’ll find some inspiration of your own!

#1. Compensation Camps

Accountants are often prone to black-and-white thinking. It’s not entirely our fault — many of us are attracted to the profession for how linear it is — but it’s not the best trait for an accountant who is also a tax practitioner. 😅

I know for me that means I have a default starting point for determining the best way to report a client’s personal income on their tax return. But unlike some accountants who fall squarely into either the Salary or the Dividend compensation camp, I typically start out by allocating enough to salary without triggering CPP premiums and the rest to dividends, because of how they’re taxed. From there, I take into consideration each client’s personal situation and short- and long-term goals, because not everything can be shoved into a Box 14. (Sorry, tax joke, couldn’t help myself!)

So do you see what might happen if I don’t explore one or two more options for each client? 

That's right, they could very easily wind up paying more tax than they need to — not only this year but in the future, as well. 

Instead, I have to occasionally give my clients homework by asking them to think about what they want in the future. Until recently, I was hyper-fixated on their retirement plans, but as Millennials such as myself and younger folks are completely redefining what retirement planning means, it’s no longer that cut-and-dried. What we do now is look at their current stage of life and business, and consider what some possible next steps might be — having a baby, buying a home, going (back) to school — to get their feet wet with that kind of long-term planning and the tax implications that come with different kinds of financial, business, and lifestyle goals.

This is particularly important with the changes to the CPP. Even the old guard accountants need to re-think their positions on salaries versus dividends and come to grips with the fact they can’t force their clients to stay in the same compensation structures of yesteryear. 

#2. Just Register For GST/HST Already

I know, just like you, I have been rolling my eyes whenever the topic of the GST/HST comes up. So many makers are resistant to registering for it early. I used to give them the pros and cons… and then leave it to them to decide if early registration was right for them. 

Thankfully, I’ve long since figured out that GST/HST plays an important role not just in tax planning, but in a business’s profitability, too.  

There are still exceptions to this, but these days I often recommend that clients register for GST/HST from day one. Here's what I discovered when more of my clients started registering for it early: 

• You’re going to have to register for it when you eventually reach the income threshold, so not only does it help build the habit of breaking it out of your expenses, you won’t have to worry about tracking a partial year without GST/HST and a partial year with it. Trust me, that is super annoying — for your accountant and, more importantly, for you.
• In the years where you pay out more GST/HST on your expenses than you collect from your customers, the CRA will refund you the difference. This can be particularly attractive if a significant portion of your sales come from outside Canada!
• Wholesalers often require that you have a GST/HST number to register for an account with them. Having access to this kind of pricing on your materials is really valuable.
• It’s a well known fact that most businesses aren’t required to register until they hit $30,000 in sales. When customers attend craft fairs or visit websites of makers who don’t charge sales tax, it sends a message that the maker might not be all that serious about their business. Intentional or not, it can impact a customer’s perception of you and your creations.

#3. Misery Loves Company

Silly to think that an accountant can fall behind on their own bookkeeping, but not so long ago I was completely drowning in bills and receipts and paralyzed by the prospect of adding them all up.

It dawned on me that I was experiencing the exact same anxiety as many of my clients.

One of the things I’ve been doing for years now with some of my colleagues is “virtual coworking.” One of us opens up a Zoom room and we all pile in. The structure varies depending on who’s running the room, but the principle is always the same: it’s a dedicated container to get some work done with the kind of accountability that comes with company and positive peer pressure. I sat down in one of our groups and declared I was going to get at least one quarter’s worth of bank accounts reconciled in 90 minutes.  Thank goodness, I finally followed some of the same advice I give to my own clients: How do you eat an elephant? One bite at a time. 

And that’s how Books Club was born. 8 months ago, I opened up to my IG followers that I was behind on my business’s bookkeeping, and I wanted to get it done before the rush of personal tax-filing season. I proposed a 6-week co-working group focused on getting together to do our bookkeeping, with opportunities to ask me questions and get access to any resources I have that are typically only available to my tax clients.

I don’t know why I was surprised, but I had a very positive response and I’ve decided to continue to offer Books Club year-round.

Fast forward to today, and I’m happy to say that I am finally caught up on my corporate bookkeeping, as are many of the Books Club members! 

For example: 

One member, who was a few years behind on her taxes when she first joined, admitted that it was her experience with her dismissive accountant one year that had made her decide to look for someone new to work with, and then life happened and the taxes didn’t get filed. As the years went on, the anxiety of having to get through multiple years of tax returns became more and more crippling.

After a coming to a couple of Books Club sessions, she posted this in the group chat:

Two wins already - checked (what I thought was) a big item off the bookkeeping to do list in 15 mins, and when I opened the next item I already had it about 1/3 done and I forgot I had even started it! Books Club was what I needed.

Want to get caught up on your bookkeeping with a supportive group of makers and creators?

Join Books Club

Bonus! I've Given up on Letting my Clients be Called “Small”

Here’s what I’m not doing anymore.

Through my work with professional makers and creators, I’ve discovered that many of them are not taken seriously as business owners. What’s worse is that my fellow accountants are some of the worst offenders!

Now maybe I’m a tad biased here, not only for the fact that I’m an avid knitter (when I’m not counting beans for my clients, I’m counting stitches on my needles), but because I also saw it happen to my own mother.

She was quite an entrepreneurial lady and at one point she owned a very successful shop selling square dance attire. Now, unless you’re also a square dancer, it’s very easy to be dismissive of such a specific niche… and trust me, her accountant was — at first. But square dancing is serious business and so is looking stylish while doing it.

It’s no different in the knitting, crocheting, sewing, stitching, and all the other maker and creator business communities. They come to us accountants looking for advice on their business structure, bookkeeping, and tax obligations… only to get scoffed out the door. I find it deplorable.

This means that I’ve given up on letting any maker or creator I meet feel small or less than. 

There is enough (sadly) dismissiveness, bullying, and snark from literal customers of maker businesses going around in these communities without my industry adding anything to the mix.

Since letting this go, I’ve been told countless times by makers that it’s a breath of fresh air to meet an accountant who “gets” their niche. Having someone who is in their corner, believing in the viability of their business, and supporting them with what is arguably one of the most stressful aspects of being self-employed allows them to ditch some of that mental load and focus on what they do best.

What I do Instead

Whenever I’m in conversation with a maker and we start talking about what they do, the moment they call it their “little business” I correct them. I have no filter. 😂 Even if I could help myself, I wouldn’t. Acknowledging the chutzpah it takes to open any business is a matter of respect — and I have a lot of respect for the self-employed.