Edmonton CPA | Giving Entrepreneurs The Best Start
While there is no absolute right way or wrong way for entrepreneurs to jump into business ownership, there are best ways that they can do that says Edmonton’s CPA. By understanding what is going to give entrepreneurs the best start into business ownership, can help guide entrepreneurs onto the right path, which can help them not only avoid typical reasons for business failure, but also help them succeed and grow their business. The first thing that business owners need to know is that they should get advice from the right place as early as possible.
The best place for entrepreneurs to get their first business advice according to Edmonton CPA is an accountant. While this might seem like a very selfish answer, the reason why it is a good starting point is because accountants can help entrepreneurs figure out the best tax structure for their business, the best business structure, and because they help so many other businesses, they will be able to take a critical look at their ideas, to see if it makes sense economically and if it is feasible. They will be able to help an entrepreneur figure out if it makes sense, and what they need to do to maximize their chances of succeeding. Because accountants have seen hundreds of other businesses succeed and fail, they generally have a good idea of what works, what does not work, and how business owners can achieve success.
Many business owners think that a great place to start is talking to a lawyer. Edmonton’s CPA says there is nothing technically wrong was speaking to a lawyer, however, entrepreneurs should also know that the most efficient tax strategy needs to be built into the articles of incorporation. If they talk to their lawyer first, they may not end up with the most efficient tax strategy, simply because lawyers do not plan taxes. By talking to an Edmonton CPA first, though be able to get answers to questions such as who are the different owners that are involved, what are their personal and financial circumstances, and how is the business planning on making money and paying staff? All of these questions are going to help an accountant to figure out what the most efficient tax strategy will be for the business.
if an entrepreneur decides to incorporate on their own before talking to any professional, they will end up with a corporation that has an inefficient tax strategy says Edmonton CPA. They will be locked into having their accountant follow rules that will not allow them to handle the business finances in a tax-efficient manner. The only options past this, is to operate the corporation with inefficient tax structures in place, or paying money to wind to the corporation down, and paying for a new one with the correct corporate tax plan in place.
It is extremely important to entrepreneurs to start their business correctly, by speaking to the right professionals are going to be able to give them the advice that is going to make the difference in their business success.
One of the first things that entrepreneurs tend to assume when they are starting their very first business says Edmonton CPA is that they must incorporate to own a business. This is not true, and the decision on what business structure is most advantageous for them is a decision that is best left to the entrepreneur and the Edmonton’sCPA. There have many benefits and drawbacks to both business structures, and so to get all of the facts, entrepreneurs should talk to their chartered professional accountants.
Entrepreneurs need to understand what the two business structures are that they can operate to choose between the two. There is a corporation, where the various business owners own shares of the Corporation. And then there is a proprietorship. The proprietorship means that there are no corporate finances required. All of the business’s financial activity gets run through the business ownerís personal taxes. The reason why this is not necessarily advisable is for tax purposes says Edmonton’s CPA. Since the highest personal tax rate in Alberta is currently at 48%, and the average Canadian pays 43% in taxes, the more money an entrepreneur puts through their taxes, raises them into a higher tax bracket.
On the other hand, the tax rate for small businesses in Alberta is 11%. Edmonton CPA says that that is a savings of 37%. However, to get that tax savings, entrepreneurs need to incorporate it. If entrepreneurs are thinking of incorporating just to save that tax, they need to understand that the cost of incorporating, plus their mandatory monthly reporting plus their year-end financials means that it makes financial sense when they start making more than fifty thousand dollars a year in their business.
Another reason why businesses might choose a corporation over a proprietorship is that once an entrepreneur incorporates, their corporation shoulders most of the liability of the business If an entrepreneur is operating a proprietorship if they get sued, they will be at personal risk. That means all of their assets will also be at risk says Edmonton’s CPA. If an entrepreneur wants to protect the whole that their family lives in, they may choose to incorporate simply because they do not want to put their family at risk of being homeless if they get sued. And the risk of being sued in almost every single business is there. If they drive anywhere for any purpose or service any clients, there is a risk of getting sued. To minimize that risk, businesses can incorporate it.
Regardless of which business structure a business owner decides is the right one for them, Edmonton CPA says that accountant will still be able to help them plan efficient tax strategies, and for the proprietorship, help entrepreneurs track expenses, understand if they need to register for GST so that entrepreneurs can set their business up for success no matter what that structure looks like.