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

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Edmonton Accountant | Incorporation is Necessary To Win

Edmonton accountant asks what would you do with an extra $890 in tax, either per month or per year? This could in fact be a wonderful reality for small businesses if in fact they decide that they want to incorporate their business.

Let’s look at the facts. For a small business to run in the province of Alberta in Canada if you are on Inc. you will be paying upwards of 40% and personal tax. That versus 11% tax for a top small business tax rate, i.e. Inc. companies. That is a difference in 37% in tax. To put that into numbers, if you have $1000 for on Inc. companies you will lose $480 on that thousand dollars as a government will take it. If your company is in fact Inc. with the 11% tax, you will be able to retain $890 on that thousand dollars. That is an extra $300. That extra three her dollars can go towards hiring new staff your business, or in fact buy new equipment to make a small business run more efficiently. You may even decide to put that extra money towards your retirement or getting closer to time and financial freedom.

Intuit, the maker of QuickBooks states that only 11% of small businesses will actually seek professional help. That is potentially a major contributor factor to 50% of small businesses fail within the first five years of opening. Likewise, upwards of 70% of people, i.e. small business owners, do not understand simple financial terms or methods and ideals.

One of the main reasons why small businesses do not choose to incorporate their business is, says Edmonton accountant, mistakenly, they think that it is a long drawnout process. On the contrary, most of the time incorporation of your business can be a process started and completed within one business day. A warning however for lawyers and doctors, where in your charter professional accountant will need a sample of approval from your governing body before they may be able to issue you incorporation number. However the weight is minor in that it may only take a maximum of two weeks.

Yes it is true, says Edmonton accountant, that businesses and people may go from one unincorporated tax account Comment to may be four or five tax counts, which can include payroll, GST, etc. This, however should not be a deterrent to not incorporate. This can be a simple fact and process or your charter professional accountant to deal with and have all of the accounts organized and paid to the government by the end of the year. It may be a simple process of you issuing 12 postdated checks, and handing them off to your charter professional accountant for them to submit to the government so as not to be fined or missing any deadlines. This is only a once a year process between yourself and your charter professional accountant. That will leave you with much more time to focus on other parts your business, your clientele, and your employees.

There are many factors, says Edmonton accountant, that can potentially lead small business owners down a path of time and financial savings. One of these factors can be the ability to incorporate your business. This can save you upwards of 37% in government tax, can save you a lot of money in bookkeeping and dealing with the Canada revenue agency, or paying yearly bills.

It is much easier to accumulate wealth, advises Edmonton accountant, if you are under an 11% tax umbrella versus a 48% tax umbrella. You will be able to accrue more money that much quicker. This is true and those are in fact the tax numbers out of the province of Alberta for Inc. companies versus non-Inc., companies.

Further to that if you have a small business, be it a new business or a well-established business, keep in mind that your name is potentially your reputation and the way in which people and clients are able to find you. If you simply register your tradename with court registries, ideally, that is simply a placeholder. If another business owner comes around and decides to choose your company name and is already Inc. they in fact have the right to their name and you must relinquish it. Ergo, that potentially means that people won’t know where to find you and your familiarity is gone.

Taking on personal liability can take a huge increase as well and risk if you are not Inc. The risk, although not absolute, is significantly lower if in fact you are an incorporated company. If you get sued because of a job or other matters, you may be in danger of losing your car, your house, or your life savings. What you have worked so hard to build will in fact be in jeopardy. Make sure to be incorporated so you do not run the risk of losing anything.

There are many easy ways with which to continue on with your business as soon as you follow down the path of incorporation. For example, suggests Edmonton accountant, a solo printer does not need new software in order to keep up with being an incorporated business. Know your taxes will in fact not get more complex, and you will not need any new and improved, or knew it all software. The chances are that because you are a small business owner and that you are retaining employees and paying them that you will already have the software that you need.

Your bookkeeping upon incorporating does not have to get harder either. It can be as simple as getting the year-end filings done by hand in 12 bank statements to your charter professional accountant, and then passing it off to the Canada revenue agency. It is a one-time process annually. This routine can be continued again simply once a year and your charter professional accountant will be able to do it for you. All it takes is a signature on a check from you.