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Even though there are many benefits of incorporation according to Vancouver CPA. Many new and small business owners are not aware of these benefits. And often see it as a burden. Because they know that they will have additional accounting and reporting requirements. That can cost them additional accounting fees.
However, even with this additional requirement and bill. Business owners can still benefit greatly from incorporating. Which is why Vancouver CPA recommends that even small businesses incorporate their business sooner rather than later.
One of the first things that will help business do, is save taxes. Because sole proprietors must complete their business tax filing at the same time as their personal taxes. And as a result, will have their business income taxed at the same personal tax rate as the rest of their personal taxes.
Therefore, depending on what the tax bracket a business owner currently has for their personal taxes. Any additional income brought in by their business. Will potential increase that tax bracket. And the highest personal tax bracket in British Columbia is currently fifty-three point 5%.
Means that is is owners can be paying up to fifty-three point 5% on their business income. Which can be extremely difficult for business owners to do. Especially when the corporate tax rate is only 11% across Canada.
It does not take a lot of income for business owners to benefit from near 42% tax savings. And a business owner can benefit greatly, when they do not have to pay Canada revenue agency a significant portion of their business income in taxes.
A business owner can take the money that they are no longer being the government. And use that to save money and accumulate wealth in their business. Or perhaps hire more staff to help them grow their business.
Business owners can even purchase assets, or spend the money on increased marketing. So that they can find more customers, and grow their revenue. Almost anything that they do that money will be more beneficial to their business.
And simply giving it to the government. Which is why Vancouver CPA recommends that even small businesses incorporate their business. The sooner they do this, the sooner they will start saving taxes.
However, this is not the only place where they will save taxes. They can also save payroll remittances because as a sole proprietor, they will have to pay the employee and employer contribution of CPP. Which can equal over five thousand dollars of additional taxes at the end of the year.
Again, this is even more money that business owners can save in their business, or spend on things that are far more advantageous. Then simply writing an additional check to the government.
However, many business owners may wonder about their own unique circumstances. And if they should incorporate. Or what time is the most advantageous for their business to incorporates.
And for these questions, businesses can contact their Vancouver CPA, and during their free consultation, can ask all of the questions that they need. In order to be comfortable with incorporation.
One mistake that many small businesses make when they first start out according to Vancouver CPA. Is that they are not incorporating their business. Because they either think it is a burden. Or they are not aware of all of the benefits that they can get from incorporation.
This is why it is very important for business owners to get as educated as they can about incorporation. So that they can understand the benefits, and make the right decision for their business, and unique set of circumstances.
One of the first ways that business owners can benefit from incorporating their business. Is by protecting their tradename. And while many business owners will have register their tradename at corporate registries office according to Vancouver CPA.
This does not legally protect the name. And anybody else can take that same name, and incorporate their business. And whoever incorporates using that name has the legal rights to that name.
Therefore, if business owners are working hard to create a brand and recognition around a name. They should incorporate that name. So that nobody has the opportunity to steal it out from underneath them.
Another benefit to incorporation is that is going to protect a business owner and their personal assets from getting sued. The reason why, is because a corporation offers a business owner limited liability. By shouldering the liability of the company.
And even if a business owner is in an extremely low risk business, such as a design company. There are inherent risks associated with conducting their business. And if they get sued, if they are not incorporated.
The lawsuit can put their assets at risk. Such as their vehicles, or their home. And particularly if they have a family living in their home. Such as their spouse and children. They should want to protect those assets, and protect their family.
While having a corporation does not reduce the risk to them personally down to zero. It does make it far more difficult for anyone to reach the directors of the corporation. Making a business owner far less likely to lose their house if they get sued.
This is particularly important for companies that are in higher risk businesses, such as plumbers and electricians. That can end up causing damage through the course of their work.
Another thing that business owners can benefit by incorporation. And that will be to help them get a WCB number. That they often need in order to set foot on many job sites.
Worker’s Compensation often will not give sole proprietors a Worker’s Compensation number, because they assume that they can get covered underneath the main contractor. But this is not always possible.
Therefore, when business owners incorporate, they will be able to have a WCB number. Which will keep them from being limited what jobs they can accept. And be able to take more jobs, to increase their revenue.
There so many benefits to incorporation, that if business owners still have questions. They should set up an appointment with their Vancouver CPA. And find out what else they need to know. In order to make the decision on whether they should incorporate their business or not.
