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And even if business owners know how important business plans are. As well as financial plans and tax strategies. They still do not have these important documents in their business.
This is what so important for entrepreneurs to hire the correct CFO services for their business. Who will create these important documents for them.
Because they will significantly help entrepreneurs minimize tax payments. And keep that money in their business where it is going to help them succeed.
One thing that business owners should keep into consideration. Is while there is a 50% failure rate for entrepreneurs opening small businesses in Canada.
The second most common reason why these businesses fail. Is because they ran out of money. And because of that, getting a tax plan that will help them pay fewer taxes.
Is going to help them keep more money inside their business. So that they will be less likely to run out of money in their business.
And if entrepreneurs use that additional money to spend on their marketing budgets. They can also address the most common reason why entrepreneurs fail in business.
Which is businesses are not finding enough customers to buy their products and services. Resulting in 42% of all failed entrepreneurs to have to close the doors to their business.
However, many business owners do not contact their accountant to get a financial plan and tax strategy. Because they think that they are not large enough.
Many business owners think that they have to be making hundreds of thousands of dollars every year. Or even millions of dollars a year in order for a tax strategy to be cost effective for them.
Nothing could be further from the truth however. And business owners need to realize. That even very small businesses, and even solo entrepreneurs can benefit from a tax strategy.
All the business owner needs to make per year in their business in order to benefit financially from a tax strategy. Is fifty thousand dollars a year in gross income.
The reason why it is so beneficial for even small entrepreneurs. Is because the tax rates for incorporate businesses are so much lower than personal tax rates.
And by contacting CFO services in order to create an effective tax plan. They can create a plan that not only minimizes their corporate taxes. But minimizes their personal taxes as well.
And by saving money in both areas of their life. Business owners can not only pay fewer taxes. But use that money in their business. As well as use it personally, to start saving and accumulating their wealth.
And while many business owners think that this is something that they can pay for a few years later in their business. The recommendation for business owners is to do this sooner rather than later.
Especially because 15% of entrepreneurs fail in the first year of opening the doors to their business. And 30% of entrepreneurs fail in the second year. So business owners should do this sooner to benefit their business immediately.
It is so important that business owners have an efficient tax strategy in their business, which is why CFO services should be hired right away. Especially because business owners are so tight on cash flow early on in their business.
Having an effective tax strategy can help entrepreneurs pay fewer taxes. So that they can use the additional money that they do not have to pay the government in their business.
And if many entrepreneurs find that they are running out of money in their business. But they have not set down with accountant in order to create financial plan or a tax strategy. This is an indication that they should do so as soon as possible.
One of the first things that they are going to ask the entrepreneur. Is about their personal circumstances. The reason why, is to understand exactly what the personal financial needs are.
Because if they do not understand the personal circumstances, they will be able to create an effective tax strategy. Because the best tax strategy takes not only the entrepreneurs business to consideration.
But takes the personal circumstances of the entrepreneur into consideration. So that they can minimize the personal taxes that they are paying as well. Which will result in a lot of savings tax wise.
An entrepreneur should expect for their CFO services to ask them questions about how many streams of income they have currently. Such as investments, investment properties, or income being brought in by other family members.
They will also ask about their current that, and how much they are paying on things like credit cards. But also take into consideration the number of household bills they have to pay each month. Including mortgage and car payments.
They will also take into consideration how many people are living in the home, and how many are contributing financially. And how many are dependents, so that they have a clear picture of their personal finances.
In addition to that, this information will help the accountant understand how much money the entrepreneur needs to draw from their business. And help them create an effective strategy of minimizing personal and corporate taxes.
It is important that a business owner realizes that the best strategy will need to consider these personal circumstances. As well as the circumstances of the business each and every year.
Because business and personal circumstances will fluctuate from year to year. If CFO services makes the assumption that everything is the same. Or that the tax strategy for last year will work this year.
That can end up with the entrepreneur paying far more in taxes without even knowing it. Especially since taxes for the previous year are calculated until that year is over.
Which is why it is extremely important for entrepreneurs to see their accountant on a yearly basis. In order to create the financial plan and tax strategy that they will implement in their business.
