Outsourced Accounting Services | Deciding To Make The Smart Choice?
Outsourced accounting services | deciding to incorporate
Many business owners do not understand the process of incorporating their business, thinking it will be too much work, time-consuming, expensive says outsourced accounting services. Business owners also think that their business is not large enough to incorporate, that they need to have a certain number of employees, or have reached a set amount of profit within their business in order to incorporate. However all businesses that are in operation have the ability to incorporate. It is not a long or complicated process and the benefits that business owners can see immediately through incorporation is reason enough for most businesses to incorporate immediately.
When deciding to incorporate, business owners should ask themselves some questions in order to fully understand the process. The first question is what is the top personal tax rate and the small business tax rate in Alberta? Outsourced accounting services that is currently the top personal tax rate in Alberta is 48%. That is a huge number, meaning almost half of all persons income goes to taxes. The small business tax rate in Alberta is currently at 11%. That is a huge tax savings, and all business owners will be able to save that immediately just by incorporating their business. The process takes one day, and a trip to their accountant. If business owners were told they could save almost 40% in taxes by a day trip to their accountant, most business owners would jump at the opportunity. The only reason that entrepreneurs are not incorporating their business, is because they donít understand the process.
The next question business owners should ask himself is what this means if they are trying to accumulate wealth says outsourced accounting services. Many people become entrepreneurs because they wanted to take control of their future and change their destiny. By becoming business owners not only to avoid that 48% tax rate, business owners want to be able to make as much money as they possibly could in order to accumulate their wealth, retire the way they want, leave money to their children etc. By not incorporating their business to save up to 37% in taxes, business owners are less able to affect these changes. If business owners incorporate, they will be able to turn that tax savings into wealth accumulation immediately. Business owners who are able to put more money aside for the future, will accumulate that wealth faster.
The third question that business owners need to ask themselves when they are deciding if they should incorporate, is what does this tax savings mean if they are trying to buy equipment for their business? Outsourced accounting services says this greatly affects their ability to buy assets for their business because by saving money within their business, they can use the saved money to help them accumulate that money in order to put it towards buying assets for the business, assets include machines to help the business operate, vehicles for the business, and purchasing a building. This last one is very important to business owners because if they can buy a building and reduce the rent, that translates into even more savings.
Outsourced accounting services | deciding to incorporate
Entrepreneurs are unaware of all of the benefits of incorporating as well as believing incorporating their business is too much work says outsourced accounting services. Therefore, they continue to operate their business as sole proprietorships and then end up missing out on all of the great benefits of incorporation. By helping business owners ask the right questions when it comes to learning about incorporation, business owners can continue to make the right decisions about their business, instead of making assumptions. There is a number of questions that a business owner can ask that will help them make the right decision about incorporation.
The first question that business owners should ask himself when speaking about incorporation says outsourced accounting services is if they donít incorporate to, does this increase their risk of being sued personally. Many business owners may be shocked to learn that yes, if they donít incorporate their business that actually does increase their risk of being sued personally. The reason for this is a corporation assumes the liability of the business. Therefore without a corporation, the liability falls onto the business owner. Therefore every time the business owner is at work, or on the job site, they run the risk of being personally sued. Being personally at risk doesnít just affect the person being sued, it affects their personal affects as well including their vehicle and their home. Business owners who want to protect the house that they live in, as well as the family thatís living in that house with them, should incorporate in order to minimize that liability.
The second question that business owners should ask when deciding if they should incorporate or not is if they donít incorporate will that cause some businesses to not hire their company? Again says outsourced accounting services, business owners may be shocked to learn that this is actually true. The first part of this question is businesses who donít incorporate are often seen as less serious, or fly-by-night than businesses who do incorporate. They may give the impression that they are hobby businesses, therefore less likely to be taken seriously. This is an unfair assumption, because even businesses who donít incorporate are serious. But to avoid this misconception, businesses may choose to incorporate. But the second and more serious part of this answer is companies that hire independent contractors who are not incorporated may be forced to consider that contractor as they are employee which increases their own liability and risk. To minimize that risk to their own business, businesses may have a policy of only hiring independent contractors who are incorporated. In order to be able to get every single job, businesses should incorporate so that they donít lose out on a job.
These are two very important questions that business owners should have the answer to before making the decision whether they should incorporate or not, knowing that incorporating their business will minimize their liability as well as increase the ability for them to land jobs.