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Accounting and Tax Considerations for Entrepreneurs

Long-term success begins with proper financial planning and a solid foundation. Here are a few things to consider when you get your business off the ground. What works for one entrepreneur may not suit your specific situation, which is why we start with a discovery call. If we’re a good fit, we’ll meet for a complimentary strategy session at our office or on Zoom and explore the options available to you.

Why talk to an accountant before you register?

A good accountant for entrepreneurs does more than file returns. We support you as you think about the future, find the right structure for your company and build a solid financial plan from the first year. Talking to an accountant before you register can save you the cost of fixing a structure later. Don’t worry if you don’t have every answer yet. Most entrepreneurs come to us with a high level of energy and only part of the picture, and that’s a fine place to start.

1. Registering the Business

Before you register, choose your business structure. Each model has its own advantages and disadvantages for tax, liability and paperwork.

The sole proprietorship: easiest to set up, a simpler tax return and lower cost, but more personal liability and harder to exit. Business income goes on your personal income tax return.
The partnership: shared risk and a fairly simple tax return, but shared decision-making (no controlling interest) and a risk of conflict between partners.
The corporation: limited liability, easier to raise capital, and more tax planning and tax deferral options. On the other hand, a corporation means corporate tax returns, more paperwork and higher costs to register and maintain.
The cooperative: limited liability, owned and democratically controlled by the people who use it. The downside is slower decision-making.

If you plan to bring in investors later, a corporation usually makes that easier, since investors can buy shares. We look at your goals, from growth to personal wealth, before you choose, and we can register the company for you.

2. Bookkeeping

Build a simple, regular way to track business income and expenses. Too often we see entrepreneurs mix personal accounts with business ones, especially sole proprietors. Open separate business accounts, so it’s easy to tell personal expenses from business expenses.

For our clients, we set up cloud-based accounting software to manage bookkeeping online. It tags expenses and GST/HST as they come in and gives you a monthly snapshot of cash flow. Tracking business finances is the least exciting part of running a business, but good financial management depends on it. Working this way also gives you the numbers you need to think about the future.

3. Learning Your Tax Duties as a Business Owner

Do you plan on hiring employees? Then you’ll need to think about payroll, CPP and source deductions. How will you pay yourself, salary or dividends, and how will that choice affect your future? What deferral methods are available to you, and how can you legally lower what your company owes? How do you file income tax and sales tax? The answers vary with the business structure you choose and the CRA rules that apply to it.

GST/HST and instalments

Sales tax and instalments are common first questions. We tell you when GST/HST registration applies to your business, whether you need to pay income tax by instalments, and which dates to put on your calendar from day one.

Where do you start?

Most owners we meet are working long hours with limited resources, and they want accounting advice they can act on. Using outside accounting resources early lets you spend your own time on sales and growth. If your business is in its early years, all this can seem like a lot, especially when your focus has been to hit the ground running and find a quick path to profitability.

Very few great organizations were built by one person alone. Most had a team working together. Our team of accountants can be an extension of your own team, doing all the “boring” number work and leaving you to run the business. You get your evenings back, and we help you plan each year-end while you keep working on the business.

Growing with your company

As the company grows, our support grows with it: monthly financial statements, cash flow management and strategic advice on when to hire, invest or pay yourself more. Reviewing the numbers every month helps small businesses spot problems while they are still small, and that habit supports long-term success. We offer the same advice to individuals with one company and to owners managing several businesses.

Over the years, the same planning helps you build personal wealth from the company you created, with the right balance between salary and dividends. That balance shifts as your income changes. If you bring in partners or shareholders, we prepare the accounting and financial management reports they will ask for.

Our accounting services for entrepreneurs and business owners

Our accountants help entrepreneurs and small business owners with their accounting, taxes and financial planning for the future. Here is what that covers…