Edmonton CPA | First Steps Into Business Ownership
If entrepreneurs are unsure of the first steps that they need to take when they decided to start their own business, they should consider talking to Edmonton CPA as their first step. The reason this is so important is that they will be able to help them establish a starting point with things like what the corporate structure of their business should be, ensuring the financial readiness of their business plan and ensure they have thoughts everything through. If entrepreneurs take other steps first, they may end up having to redo work after talking to their chartered professional accountants.
For example, many business owners believe that they can save money and save time by incorporating their business on their own before they have a meeting with Edmonton CPA. If they do this, they could be creating an efficient tax structure in their business. The reason why is because articles of incorporation need to have specific aspects in them in order to handle the finances in an efficient tax matter. If entrepreneurs have created their incorporation before having an accountant figure out what tax structure they need, they could end up either having to pay additional taxes, or closing the corporation down and paying additional money and taking more time to create a new one. They can save themselves significant amounts of time and money by speaking to chartered professional accountants before incorporating.
Another mistake that entrepreneurs often make when they are starting their first business is they talk to a lawyer first. While this is not necessarily a mistake, because great lawyers will usually point their clients back to a CPA to get their corporate structure in order, but if not, then businesses may end up wasting time and money talking to lawyers instead of having a free consultation with Edmonton CPA first.
when entrepreneurs are talking to their chartered professional accountant first, they are going to figure out who is involved in the business, what their personal circumstances are and their payroll plans in order to figure out the best tax structure for their business. After that, they are going to help an entrepreneur create a business plan that is going to help them figure out what the next steps are in their business, to help them determine what they need to do first in order to open their business, and put some plans in place for their next steps after that.
When entrepreneurs have decided that they definitely want to start their own business, they can significantly help their chances of success by talking to Edmonton CPA, so that they can have a business plan, the right tax structure, and have the proper corporate documents before proceeding. By doing this, they will maximize their chances of succeeding, since 50% of all Canadian entrepreneurs fail in business, by starting their entrepreneurship right, business owners can significantly change their chances of succeeding in business. This is important in order for entrepreneurs to find success in business
If entrepreneurs think that is the first step in business is incorporating, they may be surprised to hear that there is a business structure they can operate without incorporating first says Edmonton CPA. Before deciding that they need to incorporate, entrepreneurs should talk to chartered professional accountants and find out all of the reasons why it is good to incorporate, and the options why they might not. Once they have made the decision with their accountant, then they can take the next steps. If they have decided to incorporate, their accountant will be able to help them with that, so that they set it up with the best tax structure possible.
The business structure that an entrepreneur can operate without incorporating is called a proprietorship. This business structure, all of the profits of the business gets reported on the personal tax return. One reason why an entrepreneur might choose to operate to business this way, is if they are in a current bankruptcy, they are not allowed to be a director of the business. However, there are also some reasons why business owners would want to incorporate. The most obvious reason is tax benefits. Personal taxes are at the highest personal tax rate in Alberta is currently 48%, the average Canadian is paying 43% in taxes. On the other hand, the tax rate in Alberta for small businesses is only at 11%. Entrepreneurs often incorporate their business purely to save money on taxes. Once an entrepreneur starts making fifty thousand dollars a year in their business, it makes financial sense to incorporate. There are costs to incorporating, not only to create the corporation in the beginning, but they have requirements to claim taxes on a monthly basis, and the year end financial statements. Many entrepreneurs do not want to incur this cost unless they are going to be saving more money than they spend incorporating.
Other reasons that entrepreneurs might incorporate says Edmonton CPA, is that it can limit the personal liability of a business owner. If an entrepreneur does not incorporate, they have a greater risk of being sued personally in their business. This means that the business owner as well as all of their personal assets could be put at risk. This includes their home. Especially if they have their family living in a home, entrepreneurs may want to incorporate just to limit this liability. It does not mean they cannot get sued, but it does mean that they have a much lower risk. The reason for that is because the corporation shoulders much of the liability, sheltering the business owner.
Regardless of if the entrepreneur decides the right way to move forward is to incorporate or not, Edmonton CPA will be able to help them out. If they incorporate, they will help them create the tax structure, help them with incorporating and create a business plan for them. If they choose not to incorporate, there still going to help the entrepreneur set up a tax plan as well as a business plan to help them through some of the other questions such as do they need to register for GST.