Vancouver Accountant | Will Incorporating Help Entrepreneurs Succeed
Even though many business owners consider whether to incorporate or not a minor business decision says Vancouver accountant. And actually can gently impacted business. Which is why the decision of whether to incorporate or not should be made very seriously in a business.
One of the most significant things that incorporating will do, is will help entrepreneurs save money. The reason why, is because corporations get taxed at 11%. While sole proprietors will get taxed at whatever the personal tax rate is for the business owner.
And while the personal tax rate is arrange, it is definitely over 11%. And maximizes out in British Columbia at fifty-three point 5%. Which means so proprietors could potentially paying more than 42% higher taxes.
This money that they save by incorporating can be very beneficial to businesses. According to Vancouver accountant, there are three main reasons why businesses in Canada are failing. They are either unable to find customers, they run out of money, or they cannot find staff.
Therefore, when business owners can save a significant amount of money in taxes. They can use that money, to overcome all of these obstacles easily.
For example, business owners save money in taxes, they can put that money towards increasing their advertising and marketing budget. So that they can be more likely to find more customers. To help them increase the revenue.
And while this is 1 Great Way to use the money that they save through corporation. They also can use that money, to hire more staff, and overcome the third most common reason why business owners fail. Which is that they cannot find or keep staff.
And finally, by saving a significant amount of money. Can help entrepreneurs overcome the second most common obstacle causing business owners to fail. It is simply running out of money, so by saving a significant amount of taxes.
Can help business owners have that money, so that they can use it anyway that they need. Whether it is buying assets, paying bills, or simply having savings in their business. For unforeseen circumstances that come up.
However, saving money on taxes is not the only way that business owners can save money. They can also save money, because they will no longer have the requirement of paying the employee and employer contribution of CPP. That sole proprietors are required to do.
And while this does not seem like a lot of money initially. Ultimately, it results in an additional tax of fifty-two hundred dollars at the end of the year. That business owners do not necessarily have to pay, when they incorporate their business.
So business owners can save significant money through corporation. And even when they pay for additional accounting services. To help them do their corporate year-end, and reporting requirements. They still and up on other hand financially. And if they were sole proprietor.
However, if business owners still have questions about their specific circumstances. They can always make an appointment with their Vancouver accountant. In order to have all the questions answered. And find out corporation is still their best recommendation.
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One of the reasons why business owners avoid incorporating their business when they start out says Vancouver accountant. Is because they think it is going to cost them more money, and increased accounting fees. And it will cause them to spend more money than they will save.
And while it is true, business owners are going to have to hire an accountant, or a Vancouver accountant to do their corporate year-end. As well as things like prepare their T4 and T5 slips. As well as prepare their monthly financial statements such as their balance sheets and income statements.
The amount of money that they will end up saving will be more than the cost of their accounting bills. Which is why they should not let the additional reporting requirements. Keep them from incorporating their business. Especially with how beneficial incorporation can be to small businesses.
One of the main things that they will benefit once they incorporate. Is by getting limited liability. So that if a business owner gets sued while conducting their business. It is the company that shoulders that liability, and not the business owner personally.
If a business owner has personal assets, such as home that their family lives in that they own. Or vehicles, recreational properties. All of these things are at risk if a business owner gets sued as a sole proprietor.
Therefore, business owners can protect themselves significantly. As well as protect the other directors of the corporation. If they decide to incorporate their business. This is just one of the reasons why business owners should incorporate, even when their business is small.
Another way that business owners can benefit from incorporation, is by legally protecting their tradename. While many business owners make the assumption that registering their tradename at corporate registries office is enough. All that does is create a placeholder for the name.
That will not keep someone else from using that same name. And it will not stop anyone from incorporating their own business using that name. And in fact, Vancouver accountant says whoever incorporates that name will have the legal rights to it.
Which means that even if a business owner has been using that name for many years. A new business can start out, incorporate that name, and have the legal rights to it. So if a business owner wants to protect the name of their business.
And the brand that they have been building for months or years. They should incorporate their business sooner, so that they can protect their name, their brand and their business.
As well, incorporating can help business owners secure loans from banks are financial institutions. Because most banks will not issue business loans to sole proprietors. Therefore, if a business owner thinks that they are ever going to need a business loan in the future of their business.
They should incorporate their business sooner, so that this does not become a barrier to getting the funds they need. To grow their business, purchase assets, or buy a building that is necessary to help them grow.