Part-time CFO | Can An Efficient Tax Strategy Increase Wealth
One of the main reasons why entrepreneurs are driven to go into business for themselves says part-time CFO, is so that they can impact their wealth creation for their future. Employees often have limited means of increasing their wealth because they have limited amount of money they can make. Entrepreneurs can harness the ability to generate as much income as they can, which can significantly impact how much money they can save for their future. One way that business owners can help themselves do that, is by creating efficient tax strategies, that can help them save thousands of dollars every year in saved tax. This saved tax can be used to put towards investing in the business ownerís future, which can significantly impact how fast and how much wealth they can create for themselves.
The way that business owners can create their tax strategy, is by hiring a part-time CFO who can help them decide how to take money out of their business, through a combination of salary and dividends. Since salary is deductible from the income of the corporation, and dividends are not, since zero direct withdrawal of the prophets of the corporation, dividends donít show up on the income statements of the business. Essentially, the decision on how entrepreneurs take money out of their business either through salary or dividends ends up being a tax question. The hiring the right business professional to help them with this decision, can significantly impact the amount of taxes that an entrepreneur is able to save.
The reason they need to hire a part-time CFO to help this, is because itís an exceptionally complicated question, one of the most common questions chartered professional accountants will hear whatever. In order to answer this question, they have to completely understand not only the business, but business owners situation entirely. There are so many variables, that if any professional says that they can answer the question simply, or quickly just doesnít grasp the information well enough. One way entrepreneurs can ensure they are getting the right amount of help, is to not hire the least expensive accountant. Business owners that tried to save money on accounting services usually end up with service that lacks, and they have an efficient tax strategies. They often end up paying far more in taxes than they would have paid a good accountant.
The right accountant can help significantly, because they have all of the right knowledge. Theyíve gone to school for four years to get a degree, then articled for another three years before finding work, and getting a bunch more experience. Business owners should understand that that level of experience costs money, but is worth it.
business owners can significantly impact to their business as well as their life by coming up with strategies early on in their business to help them avoid paying significant amount of taxes. The money that they save can be put towards increasing cash flow in their business, or put towards wealth accumulation for the business ownerís future.
The most asked questions of the business owner to a part-time CFO is how should business owners pay themselves, in salary or in dividends? Even though this is the most asked question, the answer is a lot more difficult to state. Many variables must be considered when figuring out the best way for business owners to take money out of their corporation. Essentially boils down to tax strategy, because the biggest difference between salary and dividends, is the amount of taxes that are paid on each one. By having a great tax strategy, entrepreneurs can avoid paying significant amounts of taxes, which can help impact their wealth for the future.
There are so many variables that need to be considered when it comes time to create this strategy says part time CFO. In addition to any other income that the business owner may be making, they need to divulge if they have a spouse, if the spouse owns and income, if they want to do income splitting, child care expenses, divorce and separation agreements. All of these variables about the business owners life, goes into helping decide what the most efficient tax strategy is for entrepreneurs. Not only are significant questions asked about business owners life, the part-time CFO will also need to understand completely the business and business circumstances as well. Is the business going to move the next year, because it lost money last year or in the current year? Is the business facing a personal business service risk? All of these questions are extremely important in figuring out the answer to this question.
Often when entrepreneurs first start their business, they needs to save money, and choose to save money on accounting services. The problem with that says part time CFO is that when entrepreneurs save money on accounting, they often get lesser services, which can end up having business owners pay far more in taxes than they should. One way that business owners can review their files to see if this is happening, is by reviewing their financial statement, or their tax return. If they discover on their tax return our financial statement that they are receiving either hundred percent in dividends or hundred percent in salary, that may be a clue that not enough thought has gone into the entrepreneurs tax strategy. The reason for this is because most efficient tax strategy usually has a combination of salary plus dividends.
The hiring the right part-time CFO for their business, and ensuring that they are utilizing the most efficient tax strategy possible, business owners can take money out of their business, and know that they are saving thousands of dollars a year in taxes. The taxes that they save can go a long way in increasing cash flow in their business, as well as putting money away for their future. Since many entrepreneurs get into business for themselves in order to impact how much wealth they can accumulate for their future, this is 1 Great Way and how they can do it.