CFO Services | Businesses Should Get A Financial Plan
It is extremely important for entrepreneurs to have plans to help them succeed in their business according to CFO services. And while many business owners think that having a business plan is good enough. This does not necessarily have all the information business owners need to succeed.
And even when business owners understand how important a business plan is. They still do not have this important document. Therefore, not only should business owners create a business plan.
They should also hire the correct CFO services in order to get a financial plan and a tax strategy. This will help them minimize taxes that they have to pay the government. Which will help them keep their hard-earned money in their company.
In fact, not only do half of the entrepreneurs that start small businesses in Canada fail. But the second most common reason why these business owners are failing. Is because they are running out of money.
Therefore if they learn how to save taxes. They can keep more of their money inside the company. Which can help them address the obstacle of running out of money. To help them stay in business longer.
However, many entrepreneurs think that their business is not large enough to need to worry about getting a financial plan or tax strategy. But this is not correct, because even small businesses can benefit from a financial plan and tax strategy.
In fact, strictly speaking from a financial standpoint. It is going to be more cost-effective for entrepreneurs are making fifty thousand dollars a year. To get a financial plan and tax strategy done. Then it would be to pay the taxes on that income.
Because of that, business owners who are making fifty thousand dollars a year or more. Should talk to CFO services in order to get a financial plan. So that they can start saving as much tax money as possible.
Although many business owners think that their accountant already has a great financial strategy for them. So it is very important that they would be able to look at their own finances. To see if that is the case.
Rough tests that business owners can use. In order to see if there accountant has implemented at financial plan or tax strategy. Would be to look at how they are taking money out of their company.
If the business owner is taking hundred percent salary out of the company. Orth they are taking 100% dividends out of their company. This typically indicates they do not have a tax strategy in their business yet.
The reason why, is because an efficient tax strategy typically requires a combination. Of both salary and dividends. But what that combination is, depends on the entrepreneurs circumstances.
So if an entrepreneur verifies that they likely do not have an effective tax strategy in their business. They can contact a different accountant and inquire about getting financial plans and tax strategies set up for their business.
So that they can minimize the tax payments that they are making. And they can keep that money in their business where they can use it to help them grow.
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Planning is so important to the success of businesses and when entrepreneurs hire the right CFO services. They will be able to use that information to help them succeed.
The reason why this is so important is because so many entrepreneurs in Canada fail. With 15% of all small business owners failing within the first year of opening the doors to their business. And 30% of business owners failing within their second year.
By the time businesses have been around five years. Only half of them that started their entrepreneurial journey are still around.
And the most common reason why businesses fail is because they cannot find customers for their products and services. Which leads to business owners not having enough money for their business.
Therefore, saving as much money as possible is extremely vital to the success of the business. And many savvy entrepreneurs can use the money that they save with an effective tax strategy.
To put that saved money towards marketing their business effectively. And avoiding the topic to reasons why entrepreneurs in Canada fail.
One of the first things that entrepreneurs need to keep in mind, is that whichever CFO services they hire. Needs to take into consideration the entrepreneurs personal financial circumstances.
The reason why, is because it is not possible for an accountant to create an effective financial plan and tax strategy for an entrepreneur. Until they know about the entrepreneurs financial circumstances.
Therefore, if a business owner is trying to get an effective tax strategy in their business. If the CFO services that they have contacted are not asking them personal financing questions. They may want to for a different accountant.
The questions that their accountant should be asking them include if there are any other streams of income. Whether that is from investment properties, investments, or even other people bringing in a paycheck.
As well as what their current consumer debt load is, and how much in bills they have to pay each month. This includes mortgage and car payments. And finally, the accountant should ask about number of dependents in their family.
The reason why all of these things need to be taken into consideration. Is because in order to have an effective tax strategy. Not only does their business need to have a strategy. But the personal finances also needs to have minimize taxes. So that they can reduce their overall tax payments.
And the next thing that business owners need to take into consideration. Is they need to look for an accountant who is going to do this exercise with them every single year. So that they always have the most effective tax strategy.
Since entrepreneurs personal and business circumstances are going to change on a yearly basis. They need to ensure that their current tax plan is as efficient as possible.
If they assume that last year’s tax plan is going to work this year. They might get to the end of the year. Only to realize that they do not have an effective tax plan. And have already paid too much in taxes.