Vancouver Accounting Firm | Top Reasons for Small Businesses to Incorporate
When entrepreneurs first start their business, they often ask Vancouver accounting firm. When the best time to incorporate their business is. It is often, the assumption is they cannot or should not incorporate their business while they are small.
However, there are many arguments to be made. About the importance of smaller businesses incorporating their business early. Because of all of the benefits that they can enjoy.
The first benefit other than tax savings. That business owners should be aware of is that it limits their liability in their business. So that if they get sued while operating their business. Their personal assets are not at risk.
This is extremely important, especially when entrepreneurs have many assets personally. Such as owning their own home, owning vehicles. Other property, or even having money in savings.
If they get sued while operating their business. They can end up with their personal assets at risk. And while this is very important for businesses that do have a high risk of being sued. Such as plumbers or electricians.
It is also very important for other businesses as well. Even low risk businesses like graphic designers, or web designers. Because even though there is a lower risk. There is not a 0% risk and operating the business.
Once they incorporate however. With that does according to the Vancouver accounting firm. Is it allows the corporation to shoulder the liability. So it is the corporation as an entity that gets sued. Instead of the business owner personally.
And while that does not mean their personal assets are completely unreachable. What it means, is that it is significantly more difficult. And less likely that they will lose their personal assets if their business gets sued.
Another reason why entrepreneurs should consider incorporating sooner rather than later. Is because incorporation legally protect their tradename. While many business owners make the assumption that simply registering it will legally protected. All this does is if the name a placeholder.
And will not legally protect other businesses from taking the same tradename, and incorporating themselves using it. Therefore, they cover accounting firm says if entrepreneurs want to protect the name that they are building.
They should incorporate their business sooner. Knowing that as soon as they do, they legally protect the name from being stolen by other business owners. If you want to capitalize on the good name that they created.
The reason why business owners should consider incorporation. Is because if they do not, getting WCB coverage could be problematic. Which is extremely important for independent contractors. Who depend on the hired on by companies to work on their job sites.
If they cannot get their own WCB coverage. They may think that they can get covered by the prime contractor. But this is not typically the case. Because the prime contractor will not want to extend their own coverage to others. In case there is a claim, it will make their premiums increase.
There are so many benefits of incorporation. In addition to being able to pay fewer taxes. But if entrepreneurs still have questions, or if they want to start the process. They should make an appointment with their Vancouver accounting firm to ask questions, and to get started.
Recommendation from they Vancouver accounting firm is that businesses should incorporate quickly. Even when they are small, because there are many benefits that they can enjoy. And the main benefit is a lower tax rate.
Many people may not realize, but as a sole proprietor. They are going to end up paying the personal tax rate on their business revenue. Depending on what tax bracket the business owner is in. And even if they are not at the top tax bracket, when they add to their business revenue to that amount.
They need to realize that will be paying whatever the personal tax rate that their personal revenue and their business revenue is combined. And the personal tax rate in BC, currently Max’s out at fifty-three point 5%.
Which means once an entrepreneur is a sole proprietor, and combined with their personal income reaches the top personal tax rate. Over half of their business revenue will go to the Canada revenue agency in the form of taxes.
However, once an entrepreneur incorporates their business. They will immediately enjoy a much lower tax rate. Because the corporate tax rate across Canada is only 11%.
This means that as soon as an entrepreneur incorporates. They will be able to keep much more of the revenue from their business, in their business. So that they can use the money to help them grow their business.
Whether they want to spend the money that they save on their sales and marketing. So that they can find more customers and grow. Or perhaps, they will put the money towards a new staff member.
That will help them serve more customers, and make more money. Or, a business owner may simply decide to save that money. To accumulate wealth, order to save up for an asset that they will need in their business later.
And while many entrepreneurs understand that incorporating will allow them to save taxes. They also expressed their worry to their Vancouver accounting firm. That they are worried that it is going to cost a lot, or be complicated.
And fortunately, this is not the case. Because not only is incorporation very inexpensive, compared to the money that they are going to save in taxes. But most businesses are going to be able to be incorporated within one business day.
Therefore, if business owners want to keep more of their business revenue in their business. Whether they are going to use that money, or save it. They should incorporate sooner rather than later.
In order to start this process, entrepreneurs simply need to make an appointment with they Vancouver accounting firm. And they will be able to get things started very quickly for entrepreneurs.