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Outsourced Accounting Service | Seeking To Check Out Sole Proprietorships?

Outsourced accounting service | incorporating versus sole proprietorships

Entrepreneurs think that incorporating their businesses will be too much work, and wonít benefit their business that much says outsourced accounting service. Therefore they continue to operate as a sole proprietorship and miss out on all the benefits of incorporating. By discussing the differences between incorporating versus sole proprietorships, many misconceptions about sole proprietorships can be changed, to help business owners make informed decisions about their business and what will be in their best interests.

The first understand the difference between incorporating and the sole proprietorships in Alberta, business owners need to know what the top personal tax rate and the small business tax rate is in Alberta. The top personal tax rate in Alberta, says top accounting service is 48%. That means for every hundred dollars that a sole proprietor earns, they are paying $48 to the government. The small business tax rate in Alberta is 11%. That is a huge difference and taxes, especially for small businesses. Rather than paying almost half of what they earn to the government, businesses who incorporate can pay a fraction of that. That should be one of the biggest reasons why businesses should want to incorporate. For that reason alone, incorporating would be worth it. Any business who would rather continue paying 48% tax over 11% tax, is simply not making a good business decision.

What implications do these differences in tax rates have on business owners who are trying to accumulate wealth asks outsourced accounting service. Simply put, it is much easier to accumulate wealth when it is possible to put far more money into investments. Business owners who are incorporated will be able to save and invest far more money than businesses who havenít incorporated, because they will have more money at their disposal. Business owners who are saving for retirement and looking to invest money, should definitely incorporate so they donít miss out on the tax benefits.

These different tax rates also have huge implications when it comes to buying equipment for their business says outsourced accounting service. Businesses who are not incorporated have less money at their disposal to use for buying assets. Incorporated businesses are able to accumulate money quicker in order to reinvest that money on purchasing assets to help further their business. Any business owners who ever need to buy more equipment, replace old equipment, or purchase equipment to improve production, should definitely incorporate to have they tax benefits to allow them to have more money to invest back into their business.

For these three reasons alone, outsourced accounting services it is definitely in a businesses best interest to incorporate. Whether they want to pay less taxes, invest more wealth for retirement, or if they need to reinvest in their business through purchasing assets, incorporation is definitely the best way to achieve these goals. Business owners should not miss out on all of the benefits of incorporation, especially if they think itís not worth their time or effort.

Outsourced accounting service | incorporating versus sole proprietorships

Many business owners start their businesses as sole proprietorships, and donít know or donít understand the difference between sole proprietorships and incorporating. They often make assumptions that their business canít be incorporated, they donít need to be incorporated, or when the best time to incorporate their business would be. Therefore they donít incorporate their business. Intuit, the makers of QuickBooks say that only 11% of business owners seek professional help when they need it. Entrepreneurs donít know that they need this help, and so they continue operating a sole proprietorships without getting properly educated. By knowing the difference between incorporating and sole proprietorships, business owners can make better business decisions that can help them further their business.

Business owners need to know, says outsourced accounting service that if they donít incorporate, business owners can increase their risk of being sued personally. Many business owners donít understand that they will significantly lower their risk of being personally sued without being incorporated. Through incorporation, the corporation takes on most of their liability, taking the risk off of the business owner themselves. And itís not just the business owner that is at risk if they do incorporated, their personal effects are also on the line, meaning their house and car for example are as well. Any the business owner who is trying to protect their family, should think about incorporating just for the lord liability that incorporating gives them.

Another benefit of incorporating versus operating as a sole proprietorship is that businesses who are not incorporated may discover that some companies will not hire small businesses that are not incorporated. There are couple of reasons for this says outsourced accounting service. The first is that it is a legitimacy concern. Businesses may believe that if a company is not incorporated, they are a fly-by-night organization, or that they lack credibility. This is rarely true, but businesses need to know that they run the risk of being considered unprofessional if they are not incorporated. The second more important reason that businesses may not hire companies that are not incorporated, is because it increases their liability. By not hiring companies that are incorporated, those hiring businesses run the risk of sole proprietors being considered their staff. This is a risk to those companies, and therefore may decide to only hire incorporated companies in order to limit that risk to themselves.

In addition to lowering the risk of being sued, and increase the chances of being hired, companies that donít incorporate may not have the same legal rights to their tradename is companies who have incorporated. Entrepreneurs take their tradename to the Registryís office to register it, and then believe they have full rights to their tradename. Unfortunately says outsourced accounting service, this isnít true. Businesses who come after that and incorporate under that name have a greater legal right to that tradename regardless of who registered it first. Businesses that want to be sure that they get to keep and protect their tradename, should incorporate their business.