CFO Services | Are Financial Plans Critical
Not only can financial plans and tax strategies help entrepreneurs succeed according to CFO services. They can also help entrepreneurs grow their business, and so every business owner should create one for their business.
The reason why having a financial plan and tax strategy is so beneficial. Is because it will help a business owner minimize the taxes that they have to pay the government. Which will allow them to keep more money in their business.
According to industry Canada, 15% of entrepreneurs fail in the first year of opening the doors to their business. And 30% of Canadian entrepreneurs fail within the second year of operations.
And ultimately, 50% of all businesses will fail within five years. And the second most common reason why entrepreneurs fail is because they run out of money in their business.
By having a financial plan and tax strategy in their business. Can help entrepreneurs minimize the taxes that they are paying. So that they can keep more money in their business.
Whether they use this money for paying bills, paying staff or even purchasing assets. Some business owners can use this money to attract more customers to their business.
And by doing this says CFO services. They end up overcome the first most common reason for business failure. Which is entrepreneurs cannot find enough customers to buy their products and services.
Therefore it is very likely for entrepreneurs to be able to address the two most common reasons why business owners in Canada fail. If they have an effective tax plan and financial plan in their business.
However, many business owners think that it is going to be too expensive to create a tax strategy and financial plan. And that they will not have a return on investment for those plans.
Until they make hundreds of thousands of dollars a year in their business. However, this is far from true. And business owners can significantly benefit from a financial plan and tax strategy well before that threshold.
Business owners who are making fifty thousand dollars a year in gross income. Are making enough money to make a financial plan and tax strategy financially worthwhile.
In fact, business owners only need to be making about fifty thousand dollars per year. In order to make it beneficial for their business. And end up paying less in taxes.
Therefore, business owners can create the financial plan and tax plan with CFO services. And then use those plans to pay less taxes, and benefit their business.
One of the first things that business owners should do when they open the doors to their business. Is if they do not already have a financial plan and tax strategy in their business.
Is contact their accountant in order to create one. So that they do not end up paying more taxes than they ultimately should be.
The sooner they have an effective tax strategy in their business. The sooner they know that they are avoiding paying more taxes then they should. Which will help them significantly succeed.
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Financial plans and tax plans will help entrepreneurs pay less taxes, which is why they should get them created with their CFO services. In fact, business owners should do this sooner rather than later in their business.
However, one problem that many business owners have. Is they think that by having a business plan. That they have a financial plan and tax strategy in their business.
While this might be the case, CFO services says that it is not necessarily true. Because all business plans are created differently.
And a business owner might not have a financial plan or tax strategy in their business. Even if they have a business plan.
A great test that they can apply to determine if they have a great tax plan in their business. Is to look at how they are trying money out of their corporation.
If a business owner is getting hundred percent salary or hundred percent dividends. They typically do not have a beneficial tax strategy being implemented in their business.
The reason why, is because the most efficient tax strategy typically requires a combination of both. And what that combination is depends on the entrepreneurs personal as well as business circumstances.
Therefore, if a business owner finds that they are drying hundred percent salary, or hundred percent dividends. They might want to contact their CFO services. In order to ask them what the tax strategy is.
If there is no tax strategy. They should inquire about getting one created. So that they can start paying as few taxes as possible.
Business owners should understand that not only will their accountant have to look at their business circumstances. They also will need to ask questions about their personal finances as well.
Questions such as what is their current debt including consumer debt, but also things like mortgage and car payments. As well as if they have any income coming from other sources.
Such as income coming from investments or investment properties. Or income by other family members such as a spouse. They accountant also will ask about how many dependence are living in the home.
Because all of this will help them determine what a great tax plan is for them personally as well. Because if an accountant can minimize the corporate tax down to zero for example.
That is not going to benefit an entrepreneur if it means that there personal taxes are at the highest personal rate. Especially because personal taxes are higher than corporate taxes.
They also need to ensure that they go through this planning process with their accountant every single year. Especially because as the business circumstances change.
As well as their own personal circumstances are likely to change. It is important that business owners and their accountants do not assume that the circumstances are the same.
So that they can ensure that they have the best tax plan for their circumstances each and every year. To always be paying the minimal amount of taxes possible.