Edmonton Accountant | Incorporation Is Important
Incorporation fact doesn’t have to be hard, says edmonton accountant. Take for example Confucius is quote, “life is really simple, but we insist on making a complicated.” This can be true of many misconceptions in life and business. One of the many misconceptions is that it takes a very long time to incorporate your business. This is in fact false in that it is not a drawnout pat process at all and can be done in potentially one business day. Does however take a little bit longer for doctors and lawyers to get incorporated, potentially a couple of weeks, as your charter professional accountant will need a sample approval from that industries governing body.
It is important understand that into it, the maker of QuickBooks has done a study which says that only 11% of small businesses will actually seek professional help. As well, bear in mind to the 50% of businesses fail within the first five years of opening up their business.
Let’s take a look at some points which can help you in your incorporated business save money and time in the long run. For example, in Alberta, province in Canada. The top personal tax rate is 40%. However, the top small business tax rate in the same province in Canada is only 11%. Essentially what that means is that if you are an incorporated business you will save 37% in taxes and you will be able to retain that money for yourself and your business as opposed to giving it to the government. It’s just simply that much easier for you to accumulate wealth if you are under the 11% tax umbrella versus the 40% tax bill… Simple math. You will be able to pay off bills far quicker, save your retirement sooner, and potentially pay off your business quicker as well.
Speaking of equipment, cautions Edmonton accountant, they are not in fact a business expense, as it is considered an asset purchase. Therefore, in order to purchase an asset you need to be able to make money and to have revenue in your business. 30% of extra revenue in your business from the saving and tax will give you that much better chance in paying things off much quicker.
The risk of being sued personally does in fact increase exponentially if you are not incorporated. This ideally means that your personal liability increases although it is not absolute. You could have everything that you’ve worked so hard for, i.e. your car, your house, or your life savings on the line if you do in fact get sued. Your personal life savings was will be online with every unincorporated job that you do.
As well there are some companies that will not hire you because you are unincorporated and for them, it is an issue of legitimacy. For all intensive purposes, you could be a fly-by-night company, or there is rightfully so risk of you being considered one of the parent company’s employees.
As well, you do not have the legal right to your tradename.
It is tough to get WC on board with you in terms of coverage if you are not an incorporated company, says edmonton accountant. WCB likes to ensure the prime contractor. When the reasons why you will have a tough time getting coverage from WCB is quite frankly because you do not have a WCB number.
It is so simple for your company to get incorporated and takes hardly any time at all. If you are in fact a solo printer, no, your business will not need any updates on software or more software at all to deal with the more accounts that you will have when you’re corporate. Your accounts won’t get any more complex just because you have more of them. As well, most people will already have account software and then you will not need an upgrade.
Tax payments can in fact be easily simplified with planning. A lot of families are often going from one to four or five tax accounts after incorporation. This is often why many businesses shy away from corporation. However, it is so much easier to work with your CPA, says Edmonton accountant, as your accountant will be able to reasonably project what that income is going to be. They will be able to agree on what amounts of money the small business is going to take out of the business every year and the accountant will just be able to give the business owners schedule with which they can pay into each of those accounts every month. The business owner will then simply write a whole bunch of postdated checks, and once a year they are handed over to the government, through the accountant It’s as simple as giving the government postdated checks. Once year. The government will literally hand in 12 statements on the account once year.
As well, says Edmonton accountant, it does not take any time at all with which to go through the incorporation process, contrary to popular belief in fact, doctors and lawyers aside, it should only take approximately one business day to have the process completely finished. In the case of doctors and lawyers, it may in fact take a maximum of two weeks because the charter professional accountant will need a stamp of approval from those industries governing bodies.
You may be in serious risk of losing a lot of your assets personally as well, if you happen to be sued and you are unincorporated. Your risk of taking on personal liability increases exponentially. Although this is not absolute, you will not have incorporation to fall back on if in fact you get sued.
As well, says Edmonton accountant, you will not potentially have the same legal right to your business name, i.e. your tradename. If you want to protect a tradename you should in fact be incorporated. If another company incorporates with the same name first they have the legal right to that name.