CFO Services | Should Business Owners Get A Financial Plan
Not only should entrepreneurs get a financial and tax plan in their business says CFO services. They should ensure that they are getting one done every single year. Because as their business grows and changes. Last year’s tax strategy may not work.
However, it is a hard enough job convincing business owners that they need to have a financial and tax plan early on in their business. Let alone saying that they need to work on getting one every single year.
The reason why, is because many business owners tend think that financial and tax plans are only beneficial when they reach a certain size. And while this is actually true. The size they need to be is going to be smaller than most business owners assume.
In order for an entrepreneur to make paying for a financial and tax plan worthwhile. The business owner only needs to be making fifty thousand dollars a year in gross income.
Business owners often assume that they need to be making at least a million dollars or more. In order to benefit from a financial and tax plan. However CFO services says that a business owner will pay more in taxes than they would on a financial plan. Once they start making fifty thousand dollars a year.
So once an entrepreneur has been in business for a year. They will be able to tell if they should get a financial plan. To help them pay the least amount of taxes possible.
What is even more beneficial. Is if business owners are told that they can find and accountants that does not charge additional for their financial and tax plans.
The best accountants know how important financial and tax plans are to the success of the business. And include that in their services. Even if they are just getting a year and completed. Because of how important that is to a business.
Accountants can offer this service for no additional cost says CFO services. When they have created a template. That will allow them to know what questions they need task. And what variables change from business to business. In order to come up with an effective financial and tax plan quickly.
Not only will this template allow them to be able to offer fast financial and tax plans. But this will allow them to offer consistent quality new matter what business walks through their door.
But also will allow the accountant to automate as many processes as possible. So they can spend more time on the parts of the entrepreneurs financial or tax plan. That cannot be automated. So that they are ultimately getting a higher-quality plan.
By finding the right accountant. Business owners do not have to worry about budgeting for a financial plan year after year. But they will end up with the right plan that they need in order to be successful.
When business owners want to ensure that they can succeed in business. They need to look for accountants that will work with them to get the best financial and tax plans available.
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While many business owners may understand why financial plans and tax plans are so beneficial says CFO services. They may not realize how beneficial it is to their business.
Or, they might think that their current accountant is getting them the tax savings that they need without going through the tax planning document.
But the greatest tests that an entrepreneur can use to verify if they are tax planning properly or not. Is if their accountant is having them take out money from their corporation either as 100% salary. Or taking out money from their corporation as 100% dividends.
Typically, when this is the money that an entrepreneur is taking out of their business. They do not have an effective tax strategy. Because the efficient tax strategy is typically a mix of both.
However, what that mix is. Depends on the entrepreneurs own circumstances. As well as the circumstances of their business. And is best determined by their accountant. After they have gone over their personal and business circumstances.
In fact, according to CFO services. It is not possible for accountants to create a financial and tax plan. Without considering the entrepreneurs personal circumstances. And without considering the household variables as well.
The reason why, is because what happens in the entrepreneur’s home is important. To ensuring their financial plan is it based in some kind of reality. So that an entrepreneur is able to live off of the money they take out of their business.
This is why they should be discussing with their accountant. Things such as do they have income coming from other sources and what those sources are. As well as if they have a spouse or partner that springing home income to the family as well.
They need to disclose their current debt. And what their bill payments are. Including their mortgage and car payments says CFO services.
They also should be discussing how many dependence they have. So that the accountant will be able to figure out how much money the entrepreneur truly needs to pull from the corporation to survive.
In addition to that, it is best practices to find an accountant that does not charge additional for financial and tax planning. Simply because this is very necessary to do every single year.
Because as the business circumstances change. Such as earning more money or earning less money. And as the personal circumstances of the entrepreneurs change so will the tax strategy.
Even tax rules themselves change from year to year. Especially if there has been a change of government. And if entrepreneurs assume that last year’s tax strategy works this year.
Therefore, it is not just important for a business owner to find an accountant to create financial and tax plan once. But they need to go through this exercise every single year.
So that every year they can end up with an effective tax strategy to help minimize the taxes that they have to pay. They may end up with the wrong decision. That will have them paying far more in taxes for the current year then they should be paying.