There are several things that entrepreneurs should keep in mind before they take the plunge into business ownership says Edmonton CPA. Since 50% of all Canadian businesses fail within the first five years, being smart about how they are going to set up their business, can help entrepreneurs avoid this fate, and avoid the most common reasons why those entrepreneurs in Canada fail. In order to ensure that there setting their business up properly from the beginning, entrepreneurs should be talking to a chartered professional accountant. They will be able to advise entrepreneurs on the right steps to take, in order to help them have an efficient business plan, avoid paying more taxes than they should, and how to structure their corporation properly.
Entrepreneurs should understand what happens if they incorporate it before they talk to a chartered professional accountant. The biggest detriment that entrepreneurs have by incorporating on their own, or talking to a lawyer before an accountant is that they may be setting up their corporation without the proper aspects in them that dictate how their taxes must be handled. Without knowing how to properly structure the taxes, the articles of incorporation might not have the right aspects and force an entrepreneur to deal with their taxes inefficiently. By understanding that knowing what the tax structure needs to be of the corporation before incorporating, entrepreneurs can avoid having and inefficient tax structure from the very beginning.
Many entrepreneurs believe that talking to a lawyer before a chartered professional accountant is the right order says Edmonton CPA. And while a lawyer may take care of the incorporation, any decent lawyer will ask an entrepreneur to speak to the accountant in order to get the right tax structure before they incorporate it. Edmonton CPA says not all lawyers are way to make that recommendation, so businesses should be talking to their accountant first.
In order to find the right chartered professional accountants, business owners should keep several things in mind so that they hire the right one. Edmonton and CPA recommends entrepreneurs find one with the public practice experience. The reason is that they will have experience advising entrepreneurs. Edmonton and CPA who do not have the public practice experience typically have experience with one large company acting as one of the accountants in that business. They may lack the breadth of knowledge needed to give advice properly to an entrepreneur.
Business owners should even avoid trying to set up their business bank accounts and insurance before there consultation with Edmonton CPA. If they accountant recommends that they incorporate, they may have to go and change all of the name on those accounts which may not be possible which will force them to have to close down those accounts and set up new ones. Although minor hassle, it is forcing entrepreneurs to do more work than they should from the very beginning.
If entrepreneurs know the right to order to set up their business in, they can avoid doing extra work, ensure that their business is being set up properly from the beginning.
It is very exciting for entrepreneurs to set up a business for the very first time, they usually have so many plans for the future says Edmonton CPA. Before they take their first steps, they should be talking to a chartered professional accountant in order to know all of the various business options that they have, and what their best first steps should be. Every single new business out there is unique, and they should talk to someone who can treat them like the unique businesses that they are and help them make the right steps for them.
One of the first things that business owners need to to decide alongside Edmonton CPA, is how to structure their business. The two choices are ultimate should they incorporate should they operate a proprietorship. While many entrepreneurs believe that incorporating is the best option for them, each new business needs to get the facts for themselves, so they can make that decision. The first reason why an entrepreneur might choose to incorporate is to limit the liability they have in business. Essentially, all businesses have the ability to be sued in the operation of their business. Entrepreneurs that have a proprietorship face a higher personal liability. Entrepreneurs that have a lot of personal assets including and especially their family house, might choose to limit that risk by incorporating.
Another reason why entrepreneurs might choose to incorporate, is because they can end up paying a much lower rate in taxes simply by incorporating. Proprietorships must report to all of their business activity on their personal tax return. Since the personal tax rate in Alberta tops out at 48%, the average Canadian spends 43% of their income on taxes, businesses that incorporate can enjoy the much lower 11% small business tax rate. If businesses make over fifty thousand dollars a year, owning a proprietorship no longer makes sense.
Even if an entrepreneur talks to their Edmonton CPA and discover that operating a proprietorship still is their best scenario, they still benefits by talking to their accountant, because they can advise the business owner on tax planning, business planning, and answer questions such as how can they track expenses to keep business and personal separate, do they need to register for GST, and if so how did they do that? By being able to offer advice like that, an entrepreneur will be able to benefit from the experience of what chartered professional accountant.
By talking to a chartered professional accountant first, is owners can ensure that their business structure is adequate, and if they decide that yes incorporating is the best bet for them, a chartered professional accountant is going to be able to create the best tax scenario that they are going to need to take to their lawyer to include that information in the articles of incorporation. by doing this, entrepreneurs can minimize the amount of taxes that they pay because the tax structure is built in properly to the corporation. This will help business owners minimize the amount of taxes that they are going to pay from the very beginning.