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

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Outsourced Accounting Services | incorporating businesses

Business owners often donít understand the benefits of incorporating says outsourced accounting services, therefore they make the decision to not incorporate their business. Since only 11% of business owners seek professional help says into it the makers of QuickBooks, they rarely learn the benefits of incorporating until much later in their business, not reaping the benefits from incorporating until much later. Incorporating is not difficult, and brings significant benefits. If more business owners understand the benefits of incorporating their business, it would be able to get the benefits earlier on, which might make a difference to many business owners increasing cash flow in their business earlier in their business.

One of the most significant benefits of incorporating the business is the tax rate. Outsourced accounting services says that the top personal tax rate in Alberta is 48%, which is a very terrible rate. That means for every one dollar that is made, almost $0.50 is given to the government. One of the reasons that business owners decides to go into business for themselves is to take advantage of their tax rates, so why arenít more business owners take advantage of that? Meanwhile the small business tax rate in Alberta is 11% which is absolutely amazing. Why would anyone pay 40% in taxes when they could be paying 11%? The implications of paying a much lower tax rate and business is huge.

One of the most common benefits of paying a much lower tax rate, is that the business owner will be able to accumulate their wealth much quicker. Instead of investing only half of the money they get, they can invest almost 90% of it. Thatís almost double, and for business owners who are trying to accumulate wealth for retirement, vacations, it is the difference between almost doubling their savings in the same amount of time. Business owners should definitely take advantage of this lower tax rate and incorporate immediately.

Another way that this lower tax rate impact business owners is when they go to buy assets in their business says outsourced accounting services. Not incorporated businesses have less money to use for buying assets because they are busy paying 50% in taxes. Businesses who do incorporate can more easily and quickly accumulate the money needed to buy those assets. Whether they are buying machines for their business, like welding machines, x-ray machines or printing machines, vehicles or even buildings, business owners will have more money at their disposal to be able to do that. In fact they will be able to purchase equipment for their business twice as fast as unincorporated businesses. This is one of the best reasons businesses should incorporate immediately.

If business owners incorporate for no other reason than the tax savings, this is a significant enough reason for business owners to go to their accountant immediately and incorporate. Incorporating this not take long time, and can often be done in the very same business day. Entrepreneurs need to take advantage of this now.

Outsourced accounting services | incorporating businesses

Business owners are unaware of all of the benefits of incorporating their business says outsourced accounting services. They donít get the information they need, like 11% of the business owners who donít seek professional help when they need it says Intuit, the makers of QuickBooks. Not only did they misunderstand the benefits of incorporating, they also think that will be too much work or will make their life more complicated and therefore miss out on the benefits of incorporating the business.

Taking advantage of the massive tax break is one of the biggest reasons that businesses decide to incorporate, but there are many more benefits than just taxes. Business owners may be surprised to find out that they can limit their personal liability in their business if they incorporate. Outsourced accounting services that itís true that personal liability decreases once business incorporates because corporation then shoulders the liability instead of the business owner personally. Every time and unincorporated business does work or goes on to a job site, they run the risk of being sued personally. Being personally sued means not only are business owners on the line, but so are there assets including their house and car. Being incorporated doesnít mean that you canít ever be sued, but it means that your risk is greatly diminished.

Another reason why business owners may choose to incorporate is to protect their tradename. Many business owners believe that just by registering their tradename gives them the legal rights to their name. Outsourced accounting services says this is actually not true, business owners donít own their tradename at that point registering it is only putting it as a placeholder. If they want to truly protect their tradename, they need to incorporate using that tradename. If another business owner decides to incorporate using the tradename of a business owner has not incorporated, they will have a greater legal rights to that name then the unincorporated company. Business owners will want to make sure that they are protecting their brand, as well as the reputation that comes with their name by incorporating.

Another one of the reasons why business owners will want to incorporate their business is in order to ensure that they can get a WCB number. WCB doesnít usually issue numbers to unincorporated businesses Says outsourced accounting services. In order for businesses to ensure that they do get one, they should incorporate. This can be devastating to a business if they are unable to get a WCB number they may not get awarded jobs, or they may get kicked off jobsites for not having one. Many business owners are under the misconception that the main contractor, or business that has hired them to come onto the job site will be able to extend their WCB number two them, and this is not usually the case.

These are some very compelling reasons that business owners will want to talk to their accountant today about incorporating their business, they can see some serious tax cuts as well as protect their name, obtain a WCB number, and minimize the risk of being personally sued.