Vancouver Accounting Firm | What to Know About Incorporating
New business owners often are wondering about what they should do says Vancouver accounting firm. Whether they should stay as an unincorporated business, or sole proprietor. Or if they should take the plunge and become an unincorporated business. And while many business owners think that it is going to be more expensive as a business owner. They might end up not only saving money. But they might also enjoy benefits of incorporating that they did not realize.
The first thing that business owners need to realize. That if they are not incorporated. And they are operating their business as a sole proprietorship. They are going to be getting their profit taxed at the personal tax rate that they would normally be taxed. Which in British Columbia is fifty-three point 5% as the maximum rate.
Business owners also need to take into consideration. That the income they generate as their business. Could push them into higher tax bracket. Or even the top personal tax rate. However, if they incorporate. They will immediately get to enjoy a much lower corporate tax rate. Which is only 11% across Canada.
Therefore, the moment businesses incorporate. They stand to enjoy a maximum of 43% tax savings. Which is an extremely good reason to incorporate says Vancouver accounting firm. However, many business owners still think that they are not making enough money in order to benefit from this much lower tax rate.
However, the accountants at Spurrell and Associates have crunched the numbers. And even small businesses, that are only making fifty thousand dollars per year. Will get to pay less overall once they incorporate. Even taking into consideration the additional accounting fees that they will have to pay.
And while financial reasons are a very convincing argument. As why businesses should incorporate. There are other secondary benefits of incorporation that entrepreneurs need to know about. So that they can make the best decision for their business.
One of the first things that business owners are going to be able to benefit from. Once they incorporate. Is having a limited liability in their business. Even extremely low risk businesses such as web designers do have a risk of being sued. As they operate their business.
And if they get sued, their personal assets will be added to risk, such as the family home that they own. And so to protect their assets, as well as the home in which their family lives. Business owners often decide to incorporate.
Once entrepreneurs incorporate, their business holds the liability. So that if they get sued while operating their business. It is the corporation that get sued. Limiting the ability for people to touch and entrepreneurs assets.
Therefore, if any business owners are operating as a sole proprietor, they should make an appointment with the Vancouver accounting firm Spurrell and Associates. Not only is the first consultation free. But they will get all their questions answered. And find out if incorporation is the right decision for their business. That will help them not only save money, but limit their risk.
Often, people who operate sole proprietorships, are not aware of the benefits of incorporation says Vancouver accounting firm. However, other than the lower tax rate that they will enjoy. There are several reasons why entrepreneurs should incorporate.
Often, people are seen when they are operating sole proprietors as a less legitimate business. So by incorporating, they can seem to others who are trying to hire them. That they are more business oriented. And they are a more legitimate business simply because of the incorporation.
However, some companies will refuse to hire contractors if they are not incorporated. Because it carries several risks for the company that is hiring them.
Canada revenue agency may deem contractors who are not incorporated as an employee of the business. And even if they are not, if CRA has made that determination. The company who has done the hiring. Will now be expected to pay all the source deductions that they should have paid. Dating back to the first day that the contractor set foot on their jobsite.
Vancouver accounting firm says this can equal several thousand dollars. And it will date back to the first day that the contractor set foot on the jobsite. Even if the first time they worked for the company. It was three, five or even ten years ago. Therefore, to eliminate the risk to their own company. And to ensure that they will never have a contractor deemed an employee by Canada revenue agency. They will simply refuse to hire independent contractors who are not incorporated.
Therefore, when entrepreneurs are deciding on whether they want to incorporate are not. They need to realize that once they incorporate, they will be able to accept a wider variety of jobs, on a wider variety of job sites.
And while business owners are thinking of a wider variety of job sites. They also need to realize that as a sole proprietor. They may not be able to get WCB coverage. Because Worker’s Compensation board will not give sole proprietors their own WCB number.
The reason why, is because they believe that if they are not incorporated, they will be able to work under the primary contractor on the jobsite. However, the primary contractors typically will not extend their WCB coverage to secondary contractors.
And the reason is, if that secondary contractor has an accident, and makes a claim. Their own premiums will go up. And so to protect themselves, other contractors will not let others use their WCB number.
Therefore, when business owners are deciding on whether they should incorporate or not. They need to realize that if they need to have their own WCB coverage. They should almost certainly incorporate their business.
However, if entrepreneurs are still not convinced. They should make an appointment with their they Vancouver accounting firm, Spurrell and Associates. Because they will be able to get all of the questions answered. And find out if incorporation is the right decision for them. And then they will be able to get this service than the same date.