Vancouver CPA | Is Incorporating a Good Decision
Many small business owners do not truly understand why they should incorporate their business according to Vancouver CPA. And make the decision on whether they should incorporate or not. Based on how much money it will cost them to incorporate their business.
This is because especially when businesses are starting out, they will have very little time or money. So saving money wherever possible is very important. However, they should not make the decision to not incorporated based on saving money on the cost of incorporating. Or the cost of the increased reporting requirements.
Because it can often save more in taxes than they would on the cost of incorporating. And hiring a Vancouver CPA to do their increased accounting requirements. And while it is true, they will need to hire an accountant to do their corporate year-end, as well as their tax planning, and financial statements.
Business owners should understand how much they will save in taxes first. Because often, business owners can save more in taxes even with considering the additional accounting fees that their business will incur.
When businesses are sole providers, they will submit their business taxes alongside their personal taxes. And because of this, their business income taxed at their personal tax rate. Which in BC, currently tops out at 53. 5%.
However, business owners need to understand. That the moment they incorporate, they can enjoy the 11% tax rate that corporations get. Which means they have the potential of saving over 42% in taxes as soon as they incorporate.
And in order to save more money than they spend on accounting fees. Businesses only have to be invoicing around fifty thousand dollars per year. Which means even small businesses can benefit financially from incorporating their business.
Therefore, before business owners make the decision not to incorporate. They should sit down with their Vancouver CPA and find out how incorporating would affect their business specifically. And then make the decision that is most beneficial to their circumstances.
However, there are even more benefits to incorporating then financial. And business owners often are surprised to find out that incorporating can offer many benefits outside of saving taxes. Such as protecting their personal assets.
Once business owners incorporate, they have limited liability. So that if they ever get sued while conducting business. It is the company they get sued, and not the business owner personally. This can make it much more difficult for the directors of the corporation to be affected personally.
If business owners want to protect themselves and the assets that they have. Simply by incorporating their company, can give them that protection that can help them feel more secure.
Since there are so many benefits of incorporating. Businesses who have questions on if they should incorporate, and when the right time would be. They can simply set up a consultation with their Vancouver CPA, in order to ask all of their questions, and find out what is best for their business specifically.
When you want a Vancouver CPA, just call Spurrell!
Even though many business owners consider that are not to incorporate a financial decision according to Vancouver CPA. There are many benefits to incorporating outside of finances. That entrepreneurs should be aware of, before they decide not to incorporate their business.
One great benefit of incorporating. Is that business owners will have access to more job sites then they would if they were sole proprietors. Many companies refuse to hire sole proprietors on their job sites as contractors or subcontractors.
In the reason they refused to do this, is because they run the risk of having Canada revenue agency deeming those contractors to be employees of the company. If Canada revenue agency does consider the sole proprietors to be employees.
Then the company will have to pay all the payroll remittances they would have the government, if they had hired them as an employee ends that have a contractor. This can equal several thousand dollars, especially if the contractor has been working for the company for a long period of time.
Because of this, many companies simply refuse to hire sole fighters as contractors or subcontractors on their job site. Therefore, by incorporating. Many entrepreneurs will have access to job sites that they did not have before. Which can help them grow their business by not having to refuse jobs.
Another way that businesses can benefit by having access to more job sites through corporation. Is because it will help them get a WCB number. Often, WCB will not issue number two people who are sole proprietors of the business.
They do this because they believe that the subcontractor will be able to get coverage under the prime contractor. Unfortunately, many prime contractors will not extend their WCB coverage. Because it is their own premiums that will increase if the subcontractor has a claim.
Therefore, business owners may not be able to work on job sites that require them to have a WCB number if they are sole proprietors. Which is why they should consider incorporating. And then being able to work on many more jobsites than they would have access to before.
In addition to that, Vancouver CPA says many banks will not issue business loans to unincorporated businesses. Therefore, if business owners ever wish to have a business loan. Whether it is for leasehold improvements or purchasing assets they need to grow their business.
Business owners should think about incorporating before they ever need to apply for a business loan. So that they can be far more likely to get that loan when they need it.
As well, by incorporating, business owners are legally protecting their tradename. Even if they have registered that name. It does not legally protected. And business owners who spent months or years creating a great name for themselves. Should want to protect that name.
With all the benefits of incorporation over and above financial benefits. Businesses should find out all of the advantages of incorporation. Before making the decision to not incorporate their business yet.
If they have any questions about a corporation. Especially as it relates to their own circumstances, they should set up an appointment with their Vancouver CPA. And get all the answers they need to make the right decision.