CFO Services | Should Entrepreneurs Get A Financial Plan
Even though many business owners get into business ownership in order to save taxes says CFO services. If they do not have an effective tax or financial plan. They will end up paying far more in taxes than they intend.
In order for an entrepreneur to save money in taxes after they own a corporation. They need to have the right tax and financial plan created for them. It simply does not happen just by purchasing or creating a corporation.
And while the tax rate that proprietors have to pay, the same as all other people paying personal taxes. Tops out at 48% in Alberta.
When people incorporate their business. The corporate tax rate they get to enjoy is 11% by comparison. Therefore, it is very important for business owners to know.
That they should be hiring an accountant to help them get the best financial and tax plans possible. The sooner they do this in their business says CFO services.
The sooner they are going to be able to start paying far less in taxes. However, many business owners think that they are still too small to worry about a financial or tax plan just yet in their business.
But this would be the wrong assumption to make says CFO services. Because a business owner only needs to be making fifty thousand dollars per year in their business.
In order to benefit from a tax strategy. Many entrepreneurs make the assumption that they need to be making tens of thousands of dollars or even millions of dollars in order to benefit but this would be inaccurate to assume.
With the threshold being so low. Even solo-preneur’s would be able to benefit from attacks and financial planning strategy. And they would also save taxes as well.
However, some business owners make the assumption. That their current accountant is already taking care of their tax and financial plan on their behalf.
Unfortunately this is less likely to be true. If they have not sat down with their accountant in order to flesh out their business and personal circumstances.
The reason why it is important for an entrepreneur to explain their personal circumstances to their accountant. Is so that the financial plan that the entrepreneur ends up with will be based out of reality.
The information that they should be discussing with their accountant. Includes things such as how much other income is coming into their household from other sources.
This could be income from properties that they own, or investments that they have. Or even from other people in the household such as a spouse for example.
They also should take into consideration the current debt that the entrepreneur has. And how many bills they have, including mortgage and car. The accountant should also take into consideration the number of dependents living in their house.
So that the accountant can end up with a financial plan. That will have the entrepreneur taking out the amount of money that they need to in their business to survive.
By ending up with the right financial and tax plan. Can help entrepreneurs grow their business significantly.
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Business owners need to understand all the reasons why getting a financial and tax plan is important according to CFO services. So that they get both in their business each year.
Not only is a financial and tax plan going to be a way to help an entrepreneur minimize the taxes that they pay.
And when they pay less in taxes. They can accumulate that wealth so that they can save for their retirement. Or more importantly, they can use that money to help fund their business.
Because the second most common reason why entrepreneurs fail in their business. Is because they run out of money in their business.
When half of all business owners fail, the second most common reason being running out of money. As a lot of businesses that need help financially.
Therefore, when their accountant helps them pay less in taxes. That means many business owners that can now have a lot more money in their business. Or keep the money that they have in their business.
They should also ensure that when they are getting their business and financial and tax plans done by their accountant. That they do this exercise every single year.
The reason why this needs to be done every single year. Is because circumstances change from year to year. Such as an entrepreneur might have their personal circumstances change. Such as a spouse no longer bringing that income home.
Or the amount of money that an entrepreneur has made in a single year has significantly increased or decreased says CFO services. Regardless of what the circumstances are that change.
The fact that the circumstances change. Means that there tax strategy might not work in the next year. If they are not redoing the exercise year-to-year.
They might not find out that last year’s tax strategy no longer works on the business. At the end of the year. And after they have already paid significantly more in taxes than they may have needed to.
The best case scenario will be for an entrepreneur to find an accountant that does not charge for their financial plans. So that this is not a yearly expense that a business owner must budget for.
And the reason why an accountant might not charge for their tax and financial plan. Is if they use a template. That can help them do high-quality work. But do it a lot faster than other accountants who are creating this plan from scratch every single time.
The sooner that an entrepreneur can end up with a financial and tax plan in their business. The greater the likelihood is that they are going to succeed in business. As well as be able to use the money that they save in taxes. Towards running their business more and more successfully.
Not only are tax and financial plans necessary to the success of a business says CFO services. A business owner should ensure that they are doing them every single year.