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Top Benefits Of Using A Local Accounting Firm

When living in the capital of the United Kingdom which is London – for many reasons you may find yourself having to make use of an accountant. There are many reasons why you may need an accountant in London, it could for example to:-

Advise you on getting started with your business

Help you with additional income in your side business whilst working for an employer

Advise you on marketing with your business

Help with your tax returns for your work from home business and many other instances.

The main thing to do is to check out all of the other local accountants near me reviews and experiences that other users of the best accountants in London have had. For More Read On Here

Part of the reason in making sure you use the best accounting firms Calgary is that as you can imagine hiring an accountant in London can turn out to be quite expensive. Having said that, when filing your tax expense return forms, the amount of money that your chartered accountants Calgary could save you could well be worth the fee that you end up paying her in the first place.

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Best Legal Structure for Small Business

When you start a small business in Calgary, one of the items on the long list of things to attend to is choosing a legal structure. What is the best legal structure for your small business? This choice depends on several factors. Will you be going into business on your own or with someone else? How much liability are you willing to accept? What choice or choices will result in the best tax implications? Do you want to have Alberta (or any other province) as your jurisdiction or is it better to have a federal jurisdiction? You can find out the answers to these questions by sitting down with us at Versatile Accounting.

We have been providing chartered accountants Calgary, tax, and assurance services to clients in Calgary and throughout Alberta for years. What follows is a brief rundown of the various business structures, their advantages, and disadvantages. Always remember that while you can change the legal structure of your business along the way, it may be more efficient and cost-effective to make the right choice when you first start your business. This is another matter in which we have the experience to help you make the right choice.

Sole Proprietorship in Calgary

This is going into business on your own. A sole proprietorship is the least expensive legal business structure and the most simple. You own the business, manage the business, hire employees, and pay them. The law will consider you and your business to be the same entity.

This business model and legal structure appeals too many who want to run their own business, not work for someone else, and have control over all operations. With a sole proprietorship in Calgary, the owner takes all of the profits and accepts the risk of any and all losses. The sole proprietor pays all of the taxes on their personal tax return. When you sit down with personal tax accountant Calgary, we can explain how any of your business creditors will not only have a claim against your business assets but your personal assets as well. Likewise, anyone who is hurt either while on the job in your workplace or there as a customer or visitor will be able to sue you personally for damages. This sort of “unlimited liability” is commonly seen as the most important “downside” to a sole proprietorship for a company that works with a large market, has lots of employees, and provides lots of services to the general public.

There are tax implications of a sole proprietorship of which we will advise you. Because, under Canadian and Alberta law, you are one and the same with your business for tax purposes. Your net business income will be included in your personal tax return. A useful aspect of this fact is that if your new small business suffers a loss, you can deduct the loss from your other personal income. Of course, a successful small business will make a profit and that is added to your personal income for tax purposes. To the extent that this “extra income” bumps you up into a higher tax bracket that can be a pain.

A sole proprietor will need to obtain licenses as required for their type of business such as the Goods and Services Tax-Harmonized Sales Tax Account (GST/HST), municipal permits, and the like. At Versatile Accounting we can help you with the bookkeeping services Calgary and tax services Calgary related to these requirements.

Sole Proprietorship Pros and Cons in Calgary

Sole Proprietorship Advantages:

You own everything and take all of the profits

Sole Proprietorship Disadvantages:

There is no limit to your personal liability

Why Choose a Sole Proprietorship for Your Small Business in Calgary?

If you do not expect any liability issues, want to deduct early financial losses from your personal income for tax purposes, and want to keep initial costs down, pick a sole proprietorship. As always, talk to us at Versatile Accounting in Calgary if you have any questions.

Partnerships in Calgary

Business partnerships consist of one or more owners who put their resources and efforts together to make a new business work. Management can be “by committee” or one partner can be the manager. This does not affect the partnership legal structure. For the purposes of taxation, all partners are usually considered business owners and each one is liable for business debts and expenses. This may be different for some partners in a limited partnership which is one of many reasons to discuss this legal structure option with us at Versatile Accounting.

Partnerships need licenses, permits, and the like. These requirements will vary according to the business.

As with a sole proprietorship, you can run a partnership using the exact names of the partners. Then there is no need to register your business name. If you use any other name, you will need to register the business name in Alberta and will be wise to make sure that the name is unique to avoid taking an already-registered name and to avoid legal difficulties.

A major issue with partnerships is defining responsibilities and rights of each partner from the very beginning. Too many partnerships break up because this was not done properly at the beginning. Ask us at Versatile Accounting in Calgary and we will be pleased to refer you to a competent attorney to draw up the papers you need.

General and Limited Partnerships

There are two kinds of partnerships in Alberta to consider. These are general partnerships and limited partnerships. Both are partnerships in which two or more individuals contribute their time and resources and share in profits and losses. Here are the differences.

A general partnership is what is created when two people start a business together and not specifically create a limited partnership. All partners have equal liability, say in the business, and right to profits.

A limited partnership has both general and limited partners. The general partners manage the business, get a larger share of the profits, and are liable for business losses and debts just like partners in a general partnership. The limited partners are essentially investors whose sole contribution is investment capital. They do not have a say in how the business is run. They will make less of a profit but will not be liable for business debts and losses. Their sole risk is the loss of their investment capital. And, limited partnership shares can be transferred without having to sell the business. In order to form a limited partnership a “Partnership Declaration” must be filed.

Advantages and Disadvantage of Partnerships in Calgary

Partnership Advantages:

Partners are in charge of and own all business assets

The work of management is done by more than one person

Regulation of a partnership is limited

Although the business needs separate accounting and tax prep, each partner only has to file their own personal tax return

This is a less expensive business setup than for a corporation

Several partners share in the initial investment

Profits are shared by partners and losses can be deducted from personal income

Partnership Disadvantages in Calgary:

Liability of general partners is unlimited and can result in personal bankruptcy

Actions of one partner can be binding on and result in major problems for other partners, even when not consulted

Management-by-Committee can be tedious and inefficient

Finding partners you can work with can be difficult

The business ownership cannot be transferred unless the business is sold although minor partners in a limited partnership may sell their shares

This is a slightly more expensive business set up than a sole proprietorship if a partnership agreement is required.

Raising investment capital can be difficult

This is a good business structure for people who can work together, can benefit from shared skills, and when liability issues are unlikely.

Talk to us at Versatile Accounting in Calgary regarding how to “write off” early business tax losses in your partnership against your personal income.

Corporations for Calgary Businesses

When you are just starting a small business, you will want to keep costs down and this often means starting with a sole proprietorship or general partnership. However, there can be distinct advantages to incorporating your small business as we note in our blog article of that title. With a corporation you will have limited personal liability, the business does not have to be sold when an owner leaves or dies, and getting investment capital can be easier.

From the taxation viewpoint, there are ways to share or split income within your family from corporate income and there are tax advantages such as the Small Business Tax Deduction (SBD) for Canadian controlled corporations. This can run as high as $500,000!

While we generally think of Calgary corporations like Suncor Energy Inc., Imperial Oil Ltd., or Enbridge Inc., a corporation can have only one person who owns all of the corporate shares and runs the business. And, a large business size is not necessary to incorporate. Versatile Accounting provides professional corporate tax services in Calgary to corporations large and small. We also provide bookkeeping services for corporations and well as other small business structures.

In general, there are three reasons to consider a corporate business structure:

Limited liability

Corporate tax advantages

Ability to raise capital by selling shares

Disadvantages of a corporate structure include these:

Double taxation of corporate profits by the corporation and dividends by shareholders

Dilution of ownership if you sell too many shares

More expensive than setting up a sole proprietorship or general partnership

A big part of why you may choose a corporation over another business structure may come from careful tax planning. It is a fact of life that too many times the results of good ideas and hard work can be diminished by sloppy tax planning. Contact us at Versatile Accounting for help in determining how your business structure will affect your taxes for your particular business.

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