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

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Vancouver Accounting Firm | Incorporation Can Help Businesses

Although many small business owners start their business out of their homes is Vancouver accounting firm. Incorporation can still help them while they are small. And in fact, can help businesses grow, so they do not have to wait until they are large before they incorporate.

Even though not all businesses carry big risks while they operate. The way that plumbers, or electricians do. Who can get sued if something goes wrong. Graphic designers, and web designers for example do not have zero risk either.

And if they are running a sole proprietorship, because they are not incorporated yet. If there company gets sued, so proprietors run the risk of having their personal assets affected by a lawsuit. Therefore, if business owners own the home that they are living in.

Or if they have vehicles, equipment, or even savings. All of those things could be affected if they were sued. This is one of the reasons why Vancouver accounting firm encourages many small businesses to incorporate.

Because once a business incorporates, the corporation shoulders the liability. And if a business gets sued. It is the corporation as an entity that gets sued, and not the business owner themselves. While this does not mean a business owner, or any of the directors of the Corporation have zero risk.

It simply means that there is a much larger chance that they will not be affected. As the corporation itself gets sued, which will protect the assets that a business owner has.

And while protecting their assets is a great reason to incorporate. There are many other benefits to a business. Which is why they should know about all of them, to decide if they should incorporate or not.

For example, many business owners think that all they have to do to protect their tradename. Is to go to the corporate registries office, and register their name. However, while this acts as a placeholder. It does not actually legally protect their name.

And anyone else can take that same name, and incorporate with it. And then they hold the legal right to the name. Therefore, if entrepreneurs want to protect the name that they are building. They should incorporate quickly, and know that nobody else will be able to use that name without ramifications.

And while many business owners may understand a lot of the benefits associated with incorporation. They also think that incorporating their business is going to be very expensive. And that incorporation is going to be very complicated. However, when they meet with their Vancouver accounting firm.

They will find out that it is very simple, with incorporation taking about a day. And is less expensive than the additional taxes that they will pay, as a sole proprietor.

If entrepreneurs want to discuss their specific business. And why incorporation might be an optimal decision. They should set up a meeting with their accountant right away. And discuss all of the benefits, and then they can make a decision that is best for their business.

Often, business owners operate as a sole proprietors says Vancouver accounting firm. Simply because they do not understand what incorporation can do for them.

And while many business owners have a goal of ultimately incorporating their business. They are under the misconception that they can only incorporate their business once they have grown to a certain size. Or are making a million dollars in business but this is not the case.

A business of any size can incorporate. And in fact, smaller businesses can benefit significantly. By minimizing their taxes. And helping them save money in their business, so that they can use that money to purchase assets, hire more staff. Or simply accumulate wealth for the entrepreneur.

In fact in British Columbia, the highest personal tax rate is fifty-three point 5%. Which is the tax rate that sole proprietors will have to pay on their business revenue. And so if an entrepreneur in this province is at the highest personal tax rate.

That means that over half of their business revenue will go to Canada revenue agency in the form of taxes. Which is why many people decide to incorporate their business. Because the corporate tax rate across Canada is only 11%.

That means business owners will be able to keep more money in their business. To help them grow their business, and become successful. And since the second most common reason why entrepreneurs fail in Canada. Is because they run out of money. Once they incorporate, they can significantly minimize these odds.

And while many business owners do understand that they are going to pay significantly less taxes once they incorporate. They also think that they are going to have to make a significant amount of money. In order to make that tax savings worthwhile.

But the truth is, business owners will only have to make around fifty thousand dollars per year. In order to come out farther ahead financially. To incorporate their business. Instead of running a sole proprietorship. This means even the smallest businesses, who are solo-preneur’s. Will be able to benefit financially.

And while financial reasons are some of the most compelling reasons to incorporate according to Vancouver accounting firm. There are many other benefits that business owners should be aware of, so that when they incorporate, they can enjoy these benefits in their business.

One great example, is so that entrepreneurs can get a WCB number. Because WCB often will not give coverage to entrepreneurs who are not incorporated. Which means they will be very limited to what jobsites they can walk onto, because if they do not have their own WCB coverage.

They often are not eligible to work on job sites as a contractor. Therefore, once an entrepreneur does incorporate their business. They will be able to get that important WCB number. And be able to work on a wider variety of job sites. To help them grow their business faster.

If entrepreneurs want more information about the benefits of incorporation. They should set up an appointment with Vancouver accounting firm, because not only is the first consultation free. But they will be able to find out all of the answers to their questions. To make the most informed decision about their business.