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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 Really Timeliness

A lot of businesses, says Edmonton accountant, can learn from a quote from the Chinese philosopher and teacher Confucius, “life is really simple, but we insist on making a complicated.”

This is in fact true in business when we talk about the incorporation of a business. The myth is that incorporation is very hard, drawn out procedure that has little effect on businesses of any kind. This is truly a false myth. In fact, I’m sure the most businesses will not say no to saving 37% tax year-over-year. This can be done as in Alberta Canada, the top personal tax rate is 48%. In stark contrast, the top small business tax rate is only 11%. So, for the incorporated business you will save $0.37 on the dollar versus being not incorporated. As a small business owner in a struggling economy I’m sure that savings of any kind would be very welcome to any business, be it a business was welcoming revenue on a daily basis, or one that is on the verge of bankruptcy.

Edmonton accountant states many reasons why incorporation is a wonderful idea for a small business. The accumulation of wealth happens that much quicker. Because your simply paying that much less in tax. Also to, if you need to buy equipment for your new business, equipment is not considered a business expense it is in fact an asset purchase. Therefore, small business owners will hope to have assets in their account otherwise they will have to go out go without purchasing new equipment that could potentially make their business much more efficient and cost-effective.

If you don’t incorporate your business, there are many more risks include including your personal liability risks increase manyfold. The risk is significantly lower if you are in fact incorporated, although not obsolete. If you get sued and you are incorporated, the chances of you losing your personal assets are much less then if you are not protected with incorporation.

You may also lose the legal right to your business name and your businesses identity, states Edmonton accountant. If you have simply gone through the motions of registering your tradename with court registries, is in fact legal although you are not well protected. If another business comes along, chooses your tradename, and then proceeds to incorporate for you you have essentially relinquished your right to that tradename therefore they take it over. You will have to go through the whole process of rebranding your business and potentially losing customers because they can’t find you.

WCB is also a struggle in dealing with when you are unincorporated. As WCB during a claim likes to ensure and deal with the prime contractor as they will have the WCB number. If you are not incorporated, you therefore will not have a WCB number, you therefore will not be the prime contractor, and will not be insured.

Don’t make the mistake of of thinking a solo printer needs account software that is new or state-of-the-art. No, your accounts will not be more complex with incorporation.

Edmonton accountant says that incorporation can be as easy as handing over 12 postdated checks to your accountant at the end of every year end, year-over-year and not having to deal with the Canada revenue agency all year. In addition to it being paramount to retain and work with a charter professional accountant, as they will be able to help you to get those checks directly to Canada revenue agency and they can deal with all the other paperwork for you throughout the year as well. Those are a few less things to worry about as you are attempting to start a profitable business and you are being pulled in every which way. Simply, according to Edmonton accountant right 12 posted checks, and pass them to your CPA for them to deal with with the Canada revenue agency if you’re not sure about how much to make the checks out for that too is a very subprocess. You and your charter professional accountant can reasonably project what that income for the year is going to be and you will be able to agree on what amounts of money you’re going to take out of the business every year. Your CPA will just give you a schedule with which the payments need to be accounted for from within each account and again, the business owner simply writes a whole bunch of postdated checks. That is much less work for you so you can focus on other things.

If anybody told you that you would be able to make and save 37% more money year-over-year, that would definitely be a positive step towards financial security and time freedom. This can easily be done if you are incorporated in that incorporated companies will pay the small business tax rate of 11% in Alberta versus the personal tax rate of 48%. If you do the math, with $1000 you will be paying just $110 of tax versus $480 year-over-year month over month.

Furthermore, Edmonton accountant asks you to consider that equipment for your company and small business does not categorize itself under a business expense. It is on the other hand considered an asset purchase. As with all people, in order to make a purchase of any kind you need money in the bank, i.e. revenue and assets.

Your personal liability risk increases exponentially as well if you are not an incorporated company. Everything personally will be on the line if in fact you get sued because of a job that you did or so they went wrong. This is also true of your subordinates. If you are not incorporated this could mean the end to your car, your house, or your life savings.

Likewise, WCB is troublesome in retaining coverage for yourself and your employees. WCB often looks to ensure the prime contractor because they will have a WCB number. You on the other hand because you are not incorporated do not have access to WCB number.