In an ideal world, we’d love to see new business owners start off on the right foot with their tax filings by hiring a partner who can properly advise them.
But when companies are starting out, they typically look for the most inexpensive tax accounting service. And that’s understandable, especially when every yen, dollar, euro, etc. matter.
And at first, everything with your tax accountant can seem great:
“My tax accountant can prepare my tax returns in a day!”
“I can send them a doggy bag of loose receipts and they just take care of it!”
“They never ask me any questions, it’s so smooth!”
You feel so well taken care of that you don’t even realize what’s about to happen to you.
Because things will go wrong. Really, really wrong.
For starters, there’s likely a gap between the expectation you have for what a tax accountant will do for you as a baseline and the services that you’ve actually hired them to complete.
Here’s what everyone assumes their tax accountant will help with (no matter how inexpensive the service)…
- Proactively advise on what is needed for full compliance
- File all necessary documents, correctly, on time
- Review and catch mistakes
To put it simply, you probably assume that since you don’t know anything about tax filings in Japan, the professional you hire will take care of everything for you.
…but here’s what you’re actually getting
If you’re paying your tax accountant for their bare minimum service, what they’ll do is take the data you give them and drop them in only the filings you have specifically engaged them for. That’s it.
They won’t review and check all of your bookkeeping records. They won’t proactively advise you on everything you need to do to be compliant as a business.
So, if you make a mistake with the information you provide and it gets filed in the return? Not their problem.
If your business situation changes which will trigger additional filings you didn’t realize you have to file? Not their problem.
If you miss the filing deadline because you weren’t aware that you needed to provide information to them by a certain date? Not their problem.
If you get audited and are penalized for an accounting error you missed?
You guessed it! Not. Their. Problem.
When any of these things happen (which they will under these circumstances), you’ll throw your up your hands and think, “They know I don’t know anything about tax compliance in Japan! How could they expect me to take any responsibility for this?! It’s their fault!”
Bottom line? Many tax accountants only do what you’ve specifically engaged them to do. Even though you assumed they would provide a holistic, proactive service to ensure you never have a problem.
Find out for yourself
After reading this, if you’re now unsure whether your tax accountant has been following through with each of the points listed above, then send them this message and see what they say:
“As you know, I don’t know anything about Japan tax, so I’m relying completely on you to make sure I don’t have a tax issue. Can you please confirm that the following is part of your service:
- Proactively advising on what is needed for compliance
- Reviewing and catching mistakes
- Filing all necessary documents, correctly, and on time.”
You need to ask them in exactly this way in order to receive a clear answer.
You might be surprised by their response!
By the way, we’re not harpin’ on tax accountants’ services here; we just mean to explain to you there is often a gap between expectations in service delivery that can get people into trouble.
So when will you upgrade your tax accountant?
After hearing all of this, you must be super motivated to confirm that you have a good tax accountant, right?
Probably not. In our experience, even if you know the risks, you’re not going to want to think about tax until you actually have a “pain event”.
A “pain event” is an event that pulls your attention to tax matters, and annoys the hell out of you because it distracts you from building your business.
In most cases, businesses have a “pain event” when they’re audited, which happens randomly once every 3-5 years. So, unlike payroll where an angry employee will bang on your door as soon as a mistake is made with their salary payment, with tax, everything seems fine until all of a sudden it isn’t and you have a mess on your hands that could go back years.
So when this “pain event” happens, you have two choices:
You can either put a band-aid on the problem and kick the can down the road, which will ensure that you’ll have a larger pain event later.
Or, you can bite the bullet and change to a proper, long-term tax partner who will actually be proactive, hold your hand through all tax-related matters, get your accounting and taxes cleaned up, and make sure issues never happen again.
Here’s what it’s like to have long-term tax partner:
At weConnect, “pain events” are not okay. We’re all about being proactive and aligning with our clients to ensure we meet their expectations. If you’ve experienced your own “pain event” (or two or three) and want to make sure it doesn’t happen again, contact us here and we’re happy to help!