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E-Myth – “Why most small businesses don’t work & what to do about it”

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CFO Services | Getting A Financial Plan Done

Business owners may find that they are running out of money in their business says CFO services. However, they are ending up paying unnecessary amounts of tax from an inefficient tax strategy.

In fact, the second most common reason why business owners fail in Canada. Is because they are attract enough customers, making running out of money the second most common reason for businesses to fail in Canada.

If they were able to save on taxes as soon as possible in their business. CFO services says that they would be able to use that money to help fund their business. So that they would be less inclined to run out of money.

However, many business owners avoid getting a financial plan and tax plan created for two main reasons. The first reason, is because they are afraid of how much money this will cost them.

Business owners are acutely aware of how little money they actually have when they start their business. And do everything in their power to minimize the expenses that they have in their business.

Therefore, they look at the cost of getting a financial plan done. Because these are often extremely expensive. Because their accountant charges an hourly rate. And they figure it is not worth the money to get one created.

And the second reason why entrepreneurs avoid getting a financial and tax plan created says CFO services. Is because they make the assumption that it is not going to help them in their business. Until they have close to or over a million dollars in revenue every single year.

Unfortunately, this is not the case. And while there is a threshold that business owners need to be making. In order to make creating a financial plan effective.

That threshold is much lower than they might immediately assume. And if entrepreneurs are making a minimum of fifty thousand dollars in gross revenue each year. They will greatly benefit from a financial plan.

Since this is much lower than many people assume. Even the smallest businesses. And solo-preneur’s will benefit from getting a financial plan created. And they should create one.

And while many business owners still think that it is more money than they can afford. CFO services says that business owners should take into consideration. That at fifty thousand dollars a year.

It is cheaper for them to pay for a financial and tax plan. Then it is to pay the taxes on fifty thousand dollars a year in efficiently.

They should find an accountant that is willing to include the cost of the financial and tax plan along with all the rest of their services. Because ultimately, the best accountants no. That their clients are going to be the most successful. When they have these plans created for them.

Therefore, when they hit that threshold of income. Should be making an appointment with their accountant. To find out how they can start using financial plans in their business. To minimize taxes. And help them succeed as well.

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It is very important for entrepreneurs to understand how important financial plans to their business says CFO services. Because paying the minimal amount of taxes. Means that business owners can take that saved money.

And spend it on a wide variety of thing Such as reinvesting that money back into their business so that they can avoid running out of money in their business. But also, business owners can also use the money to invest, and start accumulating wealth.

The problem is, many business owners think that their accountant has already created financial and tax plan for them. Even though they have not sat down and discuss this with their accountant.

They can look at the way that they take money out of their business. As a litmus test on whether they are taking money out in the most tax efficient strategy or not.

If their accountant is getting them to take a hundred percent salary or hundred percent dividends. This is typically because they do not have an effective tax strategy.

The most efficient tax strategy according to CFO services. Typically requires a combination of taking some salary and some dividends. But what that mix is. Will depend on the personal circumstances of the business owner. As well as the current financial circumstances of the business.

Therefore, the accountant will be able to figure out what the best tax strategy is. After sitting down and talking to the business owner about their personal circumstances. And taking the circumstances of the business into consideration.

The reason why it is important to consider the personal circumstances of the business owner and their family. Is so that the financial plan that business owner receives from their accountant. Can be based out of reality.

Therefore, their accountant will likely ask the business owner what other streams of income are they receiving. Whether this is from a spouse, or investment or property. As well as what kind of debt they have.

They will also likely want to know about the entrepreneurs bills such as mortgage and car payments. In addition to the typical utility bills, phone and Internet.

This way, when the business owner ends up with a financial and tax plan from the accountant. They know that they will be able to live off of the financial plan that they receive. Because it takes their circumstances into consideration.

And they need to do this every single year in addition to that says CFO services. Because their personal circumstances can change every year. As can the businesses that circumstances. As well as the tax rules can change.

By working with an accountant that understands that the best strategy must be created brand-new every single year. Can help ensure that they are continuing to pay minimal amounts of taxes.

If an entrepreneur ends up with an ineffective tax strategy. Because they are using last year’s strategy. They can end up paying much more in taxes than they should. Because last year’s tax strategy is not effective for them this year.

Therefore, they need to work with an accountant that understands this importance. And the best accountants will not charge extra for their financial plans. Because they understand how important they are to the success of the business.