Protect Your Business By Avoiding These 3 Unnecessary Mistakes!
You and your partner have come up with a great business idea guaranteed to give your families’ financial security for the future. You’ve come up with a compelling name, gotten your permits and licenses in order and now you’re ready to open the doors…right?
Maybe not. Many new business owners in Edmonton make the same mistakes that can influence the financial viability of a new business. By working with an Edmonton business lawyer, you can avoid these common mistakes and avoid the pitfalls they can cause.
Mistake #1: Not Incorporating And Taking On Liabilities In Personal Name
By incorporating your business you are allowing the business to act as a separate legal entity, rather than an extension of your person and your partner (an unincorporated business or sole proprietorship). This gives your business some advantages such as keeping all the profits rather than spreading them among shareholders. Incorporation is not required for an Edmonton business as such many new business owners choose not to incorporate initially due to legal costs.
As a sole proprietorship, you and your partner receive all the profits made by the business, but you both also assume all risks associated with the business in your personal name. This includes any type of liability including lawsuits, debts and tax liability. Choosing not to incorporate means that you assume the liability and your assets such as your home, vehicles and personal bank accounts can be seized to settle the liability. Ask your Edmonton business lawyer how you can incorporate your business to protect against these risks.
Mistake #2: Not Obtaining Tax Advice From An Accountant
For most people paying corporate taxes are much more complicated than personal taxes. The liability as well as the tax structure is completely different and can be quite convoluted if you’re new to the intricacies of The Income Tax Act of Canada and you’ll require the services of a reliable accountant.
An accountant can help you understand what business related costs are tax deductible, how often taxes are paid (quarterly or yearly), securing financing to expand your business and helping to determine if a reorganization of your business is required to make it more profitable. In fact you should find an accountant at the same time you secure an Edmonton business lawyer as they can work together to come up with the best plan for you – legally and financially.
Mistake #3: Avoiding Tax Advice About Business Structure & Shareholders
As a new business owner of course you are concerned with limiting costs until the business becomes profitable. Unfortunately there are some necessities that you will have to pay for up front and one of the most important is an accountant. You may think you only need an accountant when tax time comes, but the truth is that the decisions you make before your business has been incorporated can impact later financial obligations.
The structure of your company as well as the decision to have shareholders, the number of shareholders as well as the value of a company share will all be much easier to discern with the help of a corporate accountant. An accountant can help you decide if a sole proprietorship, a cooperative or a corporation is best for your business. This tax advice, as any Edmonton business lawyer will tell you, can limit your personal liability and prevent the seizure of personal assets.
With the help of a business lawyer and an accountant you can avoid these common business mistakes, so you can focus on how to make your business work instead of red tape and paperwork.[divider]
To get started or if you have any more questions you need to get answered, contact us at your earliest convenience.