Edmonton CPA | What Do Entrepreneurs Need To Know To Start Business
Starting a business is a huge leap for many entrepreneurs, but there are several things that they should know before they take even the first in small steps according to Edmonton CPA. The reason they should be finding out the answers to these questions before they even take the first step is that even the smallest things they can do might be the wrong thing after getting all the right information from a chartered professional accountant.
The first words of advice that entrepreneurs need when they are starting a business, is the first thing they should do is talk to a chartered professional accountant. The reason for this says Edmonton CPA is because it is going to be a good first step in determining the answers to questions like what will the corporate structure of the company be, do they have a business plan and do they need help in creating one. Many entrepreneurs think that they can take their first steps before speaking to professionals such as opening up with a bank account or starting they incorporation documentation. And while many entrepreneurs are extremely excited to get started, even the smallest steps can cause problems if not done properly.
One of the things that entrepreneurs need to understand if they incorporate on their own, they may be causing their business to have inefficient tax structure. Edmonton CPA says that there are specific aspects that must be included in the articles of incorporation that advise what the tax structure is going to be of the business. If it is not entered properly in the articles of incorporation, a business owner is either going to have to close that corporation down and start a new one, or have not inefficient tax structure in their business. Having to shut a corporation down and open anyone back up just wastes time and wastes money. Business owners can miss that step before talking to their accountant.
Else that entrepreneurs might want to do when they first start their business is talking to a lawyer before they do anything else. However, Edmonton CPA says any decent owners are going to ask an entrepreneur to go talk to a chartered professional accountant first. The reason for that is because in order to set up the articles of incorporation correctly, a lawyer will need to know what the tax structure needs to be. The right order of the fence should be for a business owner to talk to the chartered professional accountant, who will ask all of the necessary questions to find out what the tax instructions should be, and then the lawyer can set up the corporation with the right tax structure.
In order to help entrepreneurs set their business up for success right from the very beginning, Edmonton CPA says even knowing who to talk to from the very beginning can help entrepreneurs start their business off on the right foot. Since 50% of all Canadian entrepreneurs fail in the first five years, doing everything in their power to set their business up for success can mean all the difference to entrepreneurs.
Setting up business for success is extremely important says Edmonton CPA because so many businesses in Canada fail within the first five years. If entrepreneurs can start their business off on the right foot, avoiding many of the common reasons why businesses fail they can increase their odds of succeeding. In order for that to happen, business owners need to know the answers to some vital questions so that they take the first steps correctly.
While many entrepreneurs believe that they need to incorporate their business, they also should know that there is a business structure that they can operate without incorporating. Edmonton CPA says there is no mandatory laws saying that entrepreneurs need to incorporate in order to own a business. And then business owners do not incorporate their business is called a proprietorship. All of their business activity is reported on their personal tax return. While this is possible, entrepreneurs should be talking to a chartered professional accountant in order to get advice on whether this is something they should do or not. There is many reasons why an entrepreneur might choose to incorporate or not, and before they make the decision on which to do, they should get all of the answers.
One of the first reasons why an entrepreneur would choose to incorporate is to limit their personal liability. Almost all businesses have a risk of getting sued. If an entrepreneur is operating a proprietorship and puts their personal assets including their house at risk of being sued. In order to limit that liability, businesses can incorporate so that the corporation can shelter much of that liability.
Another reason why an entrepreneur might choose to incorporate is in order to take advantage of better tax rates. Edmonton CPA says that the highest personal tax rate in Alberta is currently 48%, while the small business corporation tax is at 11%. There may be reasons why entrepreneurs would choose to incorporate simply for saving taxes alone. Business owners should understand that owning a proprietorship stops making sense once they are making fifty thousand dollars per year if there looking at the tax benefits only.
If an entrepreneur talks to a chartered professional accountant and they have been advised about the tax Sarah scenarios, personal liability and if it still makes sense for an entrepreneur to operate a proprietorship, it still good advice to talk to the chartered professional accountant because they can still help entrepreneurs tax plan efficiently, and navigate business questions such as how can they efficiently track expenses and do they need to register for GST and how can they do that? Regardless of what the corporate structure of their business is, talking to a chartered professional accountant can help entrepreneurs at their business up for success says Edmonton CPA.