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

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Vancouver CPA | Consider This Before Incorporating

 

If business owners do not understand the benefits of incorporating says Vancouver CPA. They may decide not to do this in their business, and save money. As well as not be and while many business owners need to save as much money possible. This is not one place where they should try to save.

Many business owners understand that once they incorporate, they will have a lot more accounting requirements. Such as needing to hire a Vancouver CPA. To do their corporate year-end, tax planning and preparing their financial statements. As well as sending information off to Canada revenue agency.

They see the additional accounting fee as money that they do not need to spend if they remained unincorporated. However, they may not realize that by trying to save this money, they are causing them selves to pay more taxes in their business.

As a sole proprietor, business owners simply file their business taxes alongside their personal taxes. By filling out another form. With much more simplistic accounting requirements. Because there is no additional accounting fees, they might consider this the less expensive option.

However, business owners need to consider that since they are filing their business taxes alongside their personal taxes. Their business will be getting taxed at whatever personal tax rate they are currently at. And it is quite possible that their business is bumping them up to another tax bracket.

And since the highest personal tax rate in BC is currently fifty-three and a half percent. They could be getting their business income taxed at over 50%. Even though the corporate tax rate in Canada is only 11%. Which means as soon as business owners incorporate, they can be enjoying a much lower tax rate.

And while many business owners think that even though they can save taxes. They are still going to end up paying more money to their accountant. Which is why they still decides to remain a sole proprietor. Even though they understand that they are paying personal taxes on their business income.

However, Vancouver CPA did some calculations. And discovered that business owners do not need to be making very much money in income in their business. In order to pay less as a corporation. Even considering all of the additional accounting fees that they have to pay.

As long as a business owner is invoicing around fifty thousand dollars in their business per year. They will benefit financially from incorporating. By saving us so much in taxes, that even with paying an accountant for their additional reporting requirements. They still will be saving more money in the long run.

This is why it is very important that any business owner gets all of the facts from their Vancouver CPA. Before making the decision to not incorporate their business. And once they make the decision using the facts, they know that their business will benefit from that decision.

They can use the money that they are saving to put it back into their business in the form of hiring another staff member. Or they might decide to purchase and assets, or spend more money on their marketing and advertising. To help them grow their business even larger.

We have a great value on our Vancouver CPA

 

Many business owners consider the decision of whether to incorporate their business or not as a financial decision says Vancouver CPA. But these people are not aware of all of the nonfinancial benefits of incorporation.

In fact, there are so many nonfinancial benefits of incorporation. That many sole proprietors decide to incorporate. Just so that they can get these benefits that are not available as a sole proprietor. And can help them grow their business larger and more successfully.

One of the first things that incorporating will do, is give them access to more job sites then ever before. The reason why, is because some companies simply refuse to hire sole proprietors as independent contractors in their business.

The reason why companies have this policy. Is because they run the risk of having Canada revenue agency deeming those sole proprietors as employees instead of their own separate businesses. If Canada revenue agency determines a contractor should be considered an employee.

Then the company that hired the sole proprietor will then the government all payroll remittances that would have been owed from the start of that contractors employment. It includes income tax, CPP and EI. Which can result in thousands of additional dollars the company has to pay the government.

This can be a huge amount of money to pay, so many companies decide to eliminate this risk altogether. By only hiring independent contractors that have incorporated as well. Therefore, once a business incorporates. They will be able to get hired on to more job sites than ever before.

And having access to more job sites can help business owners grow their business faster and larger than they ever could before. This is why even small businesses should consider incorporating as early on as possible says Vancouver CPA.

Another reason why businesses should incorporate. Is because they may not be able to get a WCB number without a corporation. This is because WCB often thinks that businesses can get their WCB coverage from the prime contractor. However many prime contractors will not extend their coverage.

The reason why they will not extend this coverage to subcontractors. Is because if those subcontractors have a claim. Their own premiums will increase. So they do not want to risk that. And as a result, unincorporated contractors may not be able to work on that job site.

Therefore, by incorporating, business owners can get access to more job sites than ever before. Which will help them grow their business fast, and not have to refuse jobs. These are just two of the examples of how incorporating can help small businesses. In addition to saving significant taxes.

However, if business owners do want more information about the benefits of incorporation. And especially if they have specific questions about their individual circumstances. They should contact their Vancouver CPA for a free consultation. And get all the answers they need, to make the right decision.