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Edmonton CPA | What To Keep In Mind When Starting A Business
Should keep in mind that as optimistic as they are when starting their very first business says Edmonton CPA, that there is actually a high failure rate of entrepreneurs in Canada. 50% of all Canadian entrepreneurs end up feeling before their fifth year in business according to Industry Canada. The reason why those businesses fail is that they ran out of money, there are unable to find customers, and they are not able to hire the right team in their business. However, business owners should know that keeping these things in mind, they can increase their chances of success by starting their business the right way.
There are several things that entrepreneurs need to know and starting their first business. The first question that they should know the answer to his when starting a business who is the first person you should talk to? Edmonton and CPA recommends that the first place that entrepreneurs start is by talking to an accountant. They say that while it might seem like a selfish answer, entrepreneurs need to understand that what accountants can do for entrepreneurs is important, and often need to be done first. They help figure out the tax structure, the business structure that is most beneficial and can create a business plan in order to ensure that an entrepreneur is financially ready and that their business makes economic sense. The business plan can also help entrepreneurs secure financing, and have a roadmap on how they are going to move their business forward, and avoid typical reasons for business failure.
The second thing that entrepreneurs need to have the answer to when they are starting their business for the first time is what happens if they try and incorporate on their own? Many entrepreneurs believe that this is an efficient way that they can save money and save time, however, Edmonton CPA says that the directions on how accountants handle taxes are actually written directly into the articles of incorporation. If any entrepreneur incorporates their business without first talking to an accountant and figuring out the best tax plan, it will end up with a corporation that has and inefficient tax plan attached to it.
Entrepreneurs need to know the answer to this third question as even though lawyers generally incorporate, why do entrepreneurs want to talk to an accountant before a lawyer? The biggest reason why this is important, is answered in the second question. Because before and a corporation happens, there needs to be a tax plan. While lawyers do business incorporation, lawyers do not do tax planning says Edmonton and CPA. Therefore, if entrepreneurs talk to their lawyer before accountants, they may end up with a corporation with an inefficient tax plan. Edmonton CPA says that good lawyers will ask entrepreneurs to talk to their accountant and then come back.
There is many steps that entrepreneurs need to know when they start a business, talking to Edmonton and CPA can help them figure out the best order in which to do those things.
When entrepreneurs are starting their very first business, they often do not know what order they need to do things in says Edmonton CPA. Often because this is the first experience they have as entrepreneurs, therefore they are just guessing at what they need to do and in what order. However, by knowing the answer to several questions, business owners can significantly help their chances of succeeding in business.
The first question that entrepreneurs know the answer to their a type of business structure you can operate without incorporating? Edmonton and CPA says that while many entrepreneurs believe in order to operate a business it must be incorporated, that is actually not the case. There is two business structures one is a corporation and the other is a proprietorship. Understanding the difference between the two can help entrepreneurs pick which one is the most advantageous one for them. A proprietorship is a business that must be run through the personal taxes of the business owner. Since the personal tax rate in Alberta is currently at 48%, and the small business tax rate is 11%, but only for businesses that are incorporated. Therefore, it often makes more fiscal sense to incorporate. However, there is additional costs involved not only with the fee to incorporate the business, but in the monthly reporting and year-end financials that need to get done. For this reason, if entrepreneurs are not making a large amount of money in their proprietorship, they may choose to not incorporate. Edmonton CPA says that for tax purposes alone, if an entrepreneur is making over fifty thousand dollars a year, incorporation makes the most sense.
Edmonton and CPA says the next question entrepreneurs should know the answer to is why should they talk to a CPA even if they decide to operate a proprietorship? The reason for this is because accountants can help entrepreneurs avoid back tax scenarios, advise them about the personal liability they have as a proprietor, and help them decide if the proprietorship is the best decision for them. If it still does, and accountant will be able to help an entrepreneur with their tax planning. They also need to help entrepreneurs figure out how to track their business and personal expenses as well as understanding if they need to register for GST and if they do how they can do that. Regardless of what the structure is of the business, Edmonton and CPA can help entrepreneurs set their business up for success.
My understanding all of the different options that are available to them, entrepreneurs are able to get all of the facts, and to discuss with Edmonton CPA what the best plan of action is for their business and for them. Once they have all of the appropriate information, they will be able to go forward with that accountant in order to maximize their chances of succeeding in business.