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E-Myth – “Why most small businesses don’t work & what to do about it”

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Edmonton Tax Accountant | Incorporating To Buy Assets


29% of business owners who failed in business within five years said that running out of cash was one of their contributing factors to their businesses failure says Edmonton tax accountant. Business owners can significantly minimize the taxes that they pay in their business simply by incorporating. The highest personal tax rate in Alberta currently is 48%, and the small business tax rate is at 11%. Business owners can significantly increase how much money they have in their business by incorporating their business and utilizing the corporate structure in order to minimize as much tax as possible. By being able to save up to 37% in taxes, is owners can significantly affect their business by paying significantly less tax.

One of the ways that business owners can use this much lower tax rate impact their business says Edmontons tax accountant, is by being able to save money in order to buy assets. Through paying significantly less taxes, business owners can put much more money into savings in order to buy assets. This is extremely important, his business owners tend to become less able to secure financing the longer their business is in operation, making it important for business owners to be able to find their own asset purchases if necessary. By increasing the amount of money they put into savings, business owners can have that money for asset purchases sooner. Edmonton tax accountant says business owners can utilize this strategy to not only save money for asset purchases in their business, but also to eliminate debt quicker and accumulate wealth as well.

Incorporated businesses can also help business owners minimize taxes by being able to strategize with their accountant how to take money out of their business in a strategic way that will minimize taxes. Business owners who are not incorporated, have no choice but to pay all the taxes when the prophets. If they have a significantly profitable year, theyíre going to pay significantly lower taxes, whereas a business owner who is incorporated, can utilize the corporate structure to minimize paying taxes.

In addition to these tax benefits, business owners who incorporates can significantly impact their business through a number of secondary benefits of incorporating says Edmontons tax accountant. These benefits include decreasing their personal liability. What is a business owner incorporates, their corporation shoulders a lot of the liability in the business, minimizing the ability for business owners to get suit. Edmonton tax accountant says this doesnít completely eliminate the risk of the business owner getting sued personally, but it does minimize it. There secondary benefits of incorporating include protecting a business owners tradename. Although many business owners have registered their tradename, that doesnít actually give them the overwhelming legal rights to it. Once they incorporate their business, they protect their tradename. Third benefits of incorporating business, is gives that business a certain amount of intimacy, and can help that business qualify for jobs. This is especially when companies will not hire independent contractors unless they are incorporated, by incorporating they will be able to land a lot more jobs.

There are many benefits to incorporating a business says Edmonton tax accountant, and one of the benefits is able to pay lower taxes. The small business tax rate in Alberta is 11%, business owners must be incorporated to get that rate. On the other hand, the personal tax rate in Alberta is 48% at the highest. Many business owners can save up to 37% in taxes alone by incorporating their business. Not only does incorporating their business gives them the opportunity to pay less in taxes, but it also enables them to utilize the corporate structure in order to strategically plan their taxes in their business to further minimize paying taxes in their business.

Once business owners are paying the much lower tax rate that comes with the corporation, business owners can start saving more money. By paying 37% less in taxes, business owners can put more money away into saving money, in order to be able to afford assets in their company. Itís important that business owners continue to upgrade their business by buying assets, and they may not qualify for financing says Edmonton tax accountant, because as a business ages, they are likely to run into a cash crunch that makes them less favourable to loan money to. By helping business owners save in taxes, so that they can save them money more efficiently, can help business owners get ready to take those asset purchases much sooner than they be able to they are paying higher taxes.

Not only can business owners save taxes by utilizing the small business tax rate, but it can also help them utilize the corporate structure to minimize tax in their business. For example, businesses who had an extremely profitable year, can strategize with their accountant how to take money out of their business in a way that will have them tax as possible. This strategy is extremely effective, especially if they are going to have expenses in their business coming up, or if they are going to take a leave, such as maternity or medical leave. Edmontons tax accountant says since self-employed people donít get EI, this can be extremely beneficial.

Another way that business owners can save by incorporating is by no longer having to pay CPP amount in addition to to taxes. Business owners have to pay not only the employee portion of CPP, but the employer portion, which works is self up to with the 10% in business. Entrepreneurs can immediately save this money in their business instead of paying tax.

There secondary benefits of incorporation says Edmontons tax accountant include protecting their tradename, qualifying for financing, getting the business amount of legitimacy, and allowing the business owner to get hired by companies only will hire and when it contractors who have been incorporated. Edmonton tax accountant says that businesses that incorporates also reduce the amount of the personal liability that the business owner has in their corporation.