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It should not be a long discussion, says Edmonton accounting firm, when you meet with your charter professional accountant for the very first time upon introducing the idea that you want to start your own business. Specific such as variables will be discussed expenses, revenue, assets, etc. They, and mistake by many new small business owners is the fact that these pay far too much in tax. This will be addressed as well by your charter professional accountant, says Edmonton accounting firm. The other needs that need to be addressed during the preliminary meeting are the fact that the small business owner should think about and incorporate their business. Edmonton accounting firm and their particular charter professional accountant will explain all of the benefits to incorporation with their business.
As previously mentioned, it is a common habit for new businesses to be paying out right too much tax for example in the province of Alberta in the country of Canada the personal tax rate, and the tax rate that many new small business owners pay under if they are not aware and do not get advised. Is 48%. There charter professional accountant will be able to advise them that with incorporating their small business they will be able to drop that tax rate into a small business tax rate of 11%. To put that into perspective, that is $370 saved on every thousand dollars the business brings in on revenue. You have $370 more to save on better, more efficient equipment, marketing to get the word of your business out there and bring in more customers, or maybe use it personally towards your retirement, your children’s postsecondary education, or a holiday for the family.
If you decided that you do not want to incorporate your business, you are potentially taking on a lot of personal liability. This is not an absolute, but your risk of losing a lot of your personal and professional assets will significantly decrease. For example, if you get sued, and you are not incorporated, you risk losing assets such as your car, your house, your life savings, and, obviously your business. With incorporation these assets are covered.
Keep in mind that you could potentially lose business if you are not incorporated in that people just won’t trust you to hire. It is in optics thing in that you do not look like a legitimate business. People may be afraid that as you do not look like a legitimate business, you may run away with a job half done, or subpar work.
As well, with incorporation, you have instilled security of your tradename. This is essentially your identity in your industry. In most people will think that something registering the tradename with court registries is enough to provide protection from someone taking your tradename. That however is absently not the case in that if you are registered and only registered, somebody may use your name. If in fact that happens you do not have any legal ramifications against them.
It is a very prudent and wise decision, says Edmonton accounting firm to decide to incorporate your small business. That should be one of the first things that you decide to do when opening up a small business. This can provide you with a lot of savings, particularly in tax, as well as can save you a lot in time as well.
As the tax goes in a province such as Alberta in Canada the personal tax rate is 40%. Without proper advice from a charter professional accountant a new small business owner would have no idea not to change to a different tax bracket. They do have access to a small business tax rate in Alberta of 11%. That is a wonderful savings of 37%, or $37 on every hundred dollars. Imagine want 30 7X dollars a month month over month or per year year-over-year would do for the growth of your business. It can provide you with better, newer, more state-of-the-art equipment, you would be allowed to hire more employees to institute better efficiency within your small business, you could institute marketing strategies in order to retain the customers that you have or bring in more customers, etc. Personally, this could allow you a quicker retirement. This could allow you access to time and financial freedom quicker. You would be able to provide more time at home with your family because you have more people working on your business. As well, you may be able to afford a vacation for your family. This would be a wonderful surprise for yourself and your family as potentially in growing a small business you have not often seen them and they definitely miss you and would want to spend time with you.
Hopefully, says Edmonton accounting firm it doesn’t come down to this, but if you do work in a high risk industry, and you are incorporated, Worker’s Compensation board coverage will be much easier to retain for yourself or your injured employee. You will be provided with a WCB number and it will be much easier to wade through the process.
Contrary to popular belief, you do not need to buy, or install any new equipment or software in order to account for and manage the four or five extra tax accounts that you will have with incorporation. In fact, you can use exactly the same software program that you have used before you were incorporated.
Even tax payments and the process by which you make them can be simplified as well. Edmonton accounting firm suggests that you simply write postdated checks according to what your self and your charter professional accountant agree on the amount of money that is going to be taken out of the business every year. You will be able to project that based on numbers from the previous year. Right postdated checks, and pass them to your charter professional accountant to submit to the CRA so that you may not incur any penalties.
