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Why Should I See my Accountant in January?

Accountant in January

It’s only January. There’s lots of time before you need to think about tax deductions and filing business taxes. Or, is there? Contacting your certified professional accountant in January is wise. It gives you time to consider and discuss all possible deductions. It gives your accountant time to maximize your deductions and minimize your taxes. Tax laws change constantly. Your accountant will stay abreast of changes and, if given adequate time, may find new tax credits you’re eligible to claim. The health of your business could depend upon it! Contacting your accountant in January has many advantages:

  • Reduce stress: Last-minute tax preparations reduce potential tax planning and create unnecessary stress. Tax minimization requires careful preparation, planning and time. Do your business and yourself a favour and contact your accountant in January. Save yourself from stress and headaches by tackling the problem in advance.
  • Keep your accountant informed: Your accountant can help mitigate losses and solidify successes. To provide these services, they need all the facts. Contact your CPA in January and let them know about any changes in your business (new product line, second location, switching of banks, equipment purchases, etc.) so that they can help plan for the future of your business. 
  • Manage cash flow: Cash flow problems can spiral out of control. Manage your cash flow problems by talking to your accountants. They can help you maintain a healthy cash flow all year. 
  • Keep a handle on growth: An professional accountant has experience handling both revenue growth and capacity growth. They can tell you if you need more customers or if you are unprepared to handle more clients. They can assist your business with financial advice and planning.
  • Stay ahead of changes: Changes to regulations and tax codes are constantly occurring. To stay competitive and receive all possible benefits, you need the help of your accountant. They will ensure compliance with all tax changes.
  • Handle transitions: Changes in your life (inheritance, marriage, divorce, new partners/investors) have accounting and tax implications. Your CPA can help you handle these transitions effectively.
  • Ease budgeting for tax payments: Filing your tax return early gives you information on what you owe the government and an opportunity to plan a payment strategy for your tax bill.
  • Ensure all items are included: Contacting your CPA in January gives you plenty of time to find important or misplaced records and receipts. No last-minute unpleasant surprises!
  • Lower accountancy fees: Take advantage of the lower rates afforded by many professionals during off-peak months to save your bank balance and your stress levels.

Gather all of your business’s essential reports and documents in early January, every year. Include your previous year’s return to help pinpoint your past data and compare it to your present information. Contact your CPA and let them help properly prepare your tax return in a timely manner. By making an appointment to see your accountant in January, you can conquer one of your biggest challenges, filing your business tax return accurately and on time. 

For all your tax needs contact Cook and Company Accountants. Whether you operate a sole proprietorship or a sizable corporation with multiple subsidiaries, we can use our experience and expertise to make tax time a breeze. Contact us to request a meeting.

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Options for Financing a Business

Options for Financing Business

Businesses come in all shapes and sizes, from large corporations with hundreds of employees to mom-and-pop enterprises. But there is one thing that all businesses need, financing. Being aware of the financing possibilities available for businesses can help a company succeed. The following is a list of various financing alternatives.

  • Bank loans: A commonly used source of funding, bank loans require a solid business plan and often a personal guarantee from the entrepreneurs. More than 50% of small businesses use some type of institution-based credit to start, operate or expand their business.
  • Government grants: Government agencies provide financing such as grants and subsidies that are available to many businesses. Check the Government of Canada website for business grants and financing options. 
  • Business incubators: A business incubator is a program that gives early-stage companies access to mentorship, investors and other support to help them get established. There are a number of business incubators in Alberta such as Innovate Calgary at the University of Calgary, The Northern Alberta Business Incubator in St. Albert, Tecconnect in Lethbridge and the Agrivalue Processing Business Incubator for food-based businesses in Leduc.
  • Venture capital: A venture capitalist is a person or firm that invests in small companies, generally using money pooled from investment companies, large corporations, and pension funds. Though less than 1% of small businesses in Canada receive equity-based funding from venture capitalists, there are ways to find this type of funding by networking and meeting people at local start-up groups, or by researching, contacting or joining groups like the Venture Capital Association of Alberta. Venture capitalists are generally looking for technology-driven businesses and companies with high-growth potential in sectors such as information technology, communications and biotechnology.
  • Angel investors: Angels are wealthy individuals or retired company executives who invest directly in firms owned by others. They often contribute their experience, technical knowledge, management skills and contacts. Angels tend to finance the early stages of a company. They often reserve the right to supervise the company’s management practices and may be looking for some sort of share in a company. Check out this bdc site for information on finding angel investors and the National Angel Capital Organization.
  • Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. It makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites and brings investors and entrepreneurs together. Crowdfunding has the potential to increase entrepreneurship by expanding the pool of investors beyond the traditional circle of owners, relatives, and venture capitalists. The National Crowdfunding Association of Canada is a good place to find information on crowdfunding for small businesses. If you’re considering the crowdfunding route, ensure that your intellectual property is protected. Read the fine print on crowdfunding websites.
  • Peer-to-peer lending: P2P lending is the practice of lending money to individuals or businesses through online services that match lenders with borrowers. It allows investors to lend money directly to other individuals via a P2P platform. Check out Peerform and Funding Circle.
  • Microloans are simply small business loans that are issued by individuals rather than banks or credit unions. These loans can be issued by a single individual or aggregated across a number of individuals who each contribute a portion of the total amount. They are a great option if you need a bit of capital to fund specific operational costs, expansions, or projects. They typically have specific limitations in regards to how much you can borrow. Check out Accion, LiftFund and Kiva.
  • Pitch competitions are contests where entrepreneurs present their business concept to a panel in the hope of winning a cash prize or investment capital. Even if you don’t win, the pitch competition can be a way to introduce yourself to the elite world of venture capital and angel investment. Check out Hatch Pitch, Disrupt and PITCH.
  • A business line of credit: This is an option for those who need cash quickly and have good credit. Check with your local bank.
  • Personal funds: Many businesses use some type of personal funds to finance themselves (savings, mutual funds, collateral).
  • Love money: This refers to money loaned by a spouse, parent, family member and/or friend. 

If you’re interested in starting or expanding a business and you require financing, there are many and varied options available. No matter the size of your business or the amount required, there is a method to finance your company that suits your needs. Contact us for a complimentary consultation.

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Why Should a Business Undertake Financial Planning?

Business Financial Planning

A financial plan affects day-to-day fiscal decision-making, defining the future of a business and shaping a company’s journey. A detailed financial plan brings a company’s objectives into focus and helps in developing viable strategies.

What is financial planning for a business?

Financial planning is the task of determining how your business will finance its strategic goals and objectives. The plan is a document that describes the activities, resources, equipment and materials needed to achieve these objectives. It sets time frames for your goals and strategies for achieving them. It helps you be in control of your company’s income, expenses and investments and is essential to building a successful business. A good plan includes an assessment of the business environment, company goals, resources needed to reach these goals, team and resource budgets and risks that might be faced. It ensures a company is equipped in advance to deal with changing circumstances at both personal and business levels. 

Why create a financial plan for your business? 

  • To manage your risk and respond quickly to financial issues: A business must plan for a lot of risks (death or disability of central figures, illness, property ownership loss, lawsuits, interruption of business, lower than expected revenue, high overheads, etc.). By regularly reviewing risks and planning a response, a company is prepared to tackle issues quickly, before they become hard to manage. 
  • To provide a road map for growth: It’s easy to focus on daily issues and neglect long-term planning. A financial plan helps a company focus on the future by providing clear goals for company growth and performance.  It helps you analyze your current situation and project where you want the business to be in the future.
  • To help you develop a good tax strategy: Financial planning is helpful when it comes time to submit your tax return or if you sell the company.
  • To identify sales trends: A financial plan that includes quantifiable targets and sales records helps determine which individual products and which initiatives are most lucrative, making it possible to adjust your marketing strategy appropriately.
  • To prioritize expenditures: A financial plan sets clear expectations for cash flow and helps a business owner to consider spending priorities. 
  • To identify necessary cost reductions: A financial plan helps you refer to past spending and identify unnecessary or over-inflated costs so you can adjust accordingly. 
  • To create transparency with staff and investors by sharing key figures (revenue, costs, profitability, etc.).
  • To show progress: A financial plan is helpful in showing increased revenues, cash flow growth and overall profit in quantifiable data, encouraging business owners.

Every financial decision your business makes has a significant impact on the overall strength of your company. Financial planning helps you be better equipped to make decisions. Corporate financial planning demands a strong understanding of commerce and how companies operate fiscally. It also calls for attention and care for the immediate financial needs and specificities of your enterprise. 

Need help with financial planning? Looking for business advice? Contact Cook and Company Chartered Professional Accountants. We are based out of Calgary, Alberta, serving clients across Canada and the United States. We provide high-quality tax, assurance, financial and succession planning services for a wide variety of privately-owned and managed companies. Contact us for a complimentary consultation.

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Bookkeeping Tips for Small and Medium-Sized Businesses

Bookkeeping Tips for Small Businesses

As your business grows, the once simple process of bookkeeping can become complicated and daunting. Yet, it’s vital that you have accurate books. If you don’t keep detailed financial records you can end up with problems; unpleasant financial surprises, an audit, forgotten paperwork, missed goals, large bills from your accountant, payroll and tax challenges. Accurate and efficient bookkeeping can help you make and keep long-term goals, smooth out the ups and downs of seasonal cash flow, improve profits and alleviate troubles with the CRA. The following are some tips to help you improve your bookkeeping skills.

  • Keep business and personal banking separate: Open a dedicated bank account for your business, preferably one with online access as this makes it easier to make payments and do bank reconciliations. If you need business money for personal expenses, do a regular transfer to your personal account. This will make bookkeeping much easier.  Don’t use your personal credit card for work purchases and vice versa.
  • Recognize business vs. personal expenses: You need to know what type of expenses can and can’t be claimed against your profit for the purpose of reducing tax. An expense that is directly related to the operation of the business and towards producing income is tax-deductible. An expense that is for your personal pleasure is not. Mixing personal and business does not mean a full claim for business can be made. If you’re in doubt about whether or not to claim an expense, contact your accountant.
  • Plan for Major Expenses: Consider what expenses will arise in the next one to five years (upgrade of facilities, new office equipment, peaks in staffing costs, emergencies). By planning for major expenses, you can avoid taking money out of the company during good months and finding yourself short in slow months.
  • Utilize bookkeeping software: There are free bookkeeping software packages if you are on a tight budget (Wave, ZipBooks, Akaunting, SlickPie, GnuCash, CloudBooks). If you can afford it, purchase a good quality program that comes with occasional updates (Cashbook, Quickbooks, Xero, Sage, Freshbooks, Zoho). Choose one that is easy to use, customizable, produces charts for quick reference and combines different aspects of reporting from one period to the next. 
  • Organize and store source documents: Quotes, orders, delivery dockets, sales and purchase invoices, credit and debit notes, payment/remittance advice, cheques, receipts, wage records and deposit slips need to be filed and archived for 5 to 7 years. Keeping source documents at your fingertips makes it easier to prevent fraud in your business, improve your accuracy and ease finding transactions when needed.
  • Read and understand monthly reports: Keep your bookkeeping system up to date and produce reports monthly. Learn to read and understand these reports, in particular the income statement and the balance sheet. 
  • Keep on top of sales invoices: Late and/or unpaid bills hurt cash flow.  As soon as a job is complete or a product is delivered, prepare and send out the customer invoices. Put a process in place to track your billing carefully (issuing a second invoice, a phone call reminder, penalties or extra fees). Be organized.
  • Know when to outsource: If you find bookkeeping too difficult or don’t have enough time for it, outsource the task. This can be cost-effective and professional help will ensure accuracy. Professional bookkeepers often give great business advice and assist with many tasks (recommend good software, attend meetings with your banker, explain accounts you find difficult, prepare annual budget and cash flow reports, etc).

These bookkeeping tips can help you improve your business, spend less time on finances, focus on growing your company and enhance your customer relationships. Give them a try!

Need help establishing a good bookkeeping system? Looking for business advice? Contact Cook and Company Chartered Professional Accountants. We are based out of Calgary, Alberta, serving clients across Canada and the United States. We provide high-quality tax, assurance and succession planning services for a wide variety of privately-owned and managed companies. Contact us for a complimentary consultation.

 

References:

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The Benefits of a Holding Company

Benefits of a Holding Company

The Canadian taxation system allows for the establishment of holding companies. The registration process is the same as any other company. You can register at a regional or federal level. If you wish your company to have an official name, ensure that the proposed name is available for use by doing a search through  NUANS. Your corporation can alternatively be recognized by a unique number assigned to it by Corporations Canada.

What is a holding company?

A holding company is an entity created for the purpose of gathering various assets under one umbrella (real estate, shares, stocks, GICs, term deposits, bonds, other companies). This type of company doesn’t conduct any operations, ventures, or other active tasks for itself. There are several types of holding companies (pure, mixed, immediate, intermediate).       

  • A Pure holding company is formed for the sole purpose of owning stock in other companies.
  • A Mixed holding company (also known as a holding-operating company) not only controls another firm but also engages in its own operations. 
  • An Immediate holding company is one that retains voting stock or control of another company, in spite of the fact that the company itself is already controlled by another entity. 
  • An Intermediate holding company is a firm that is both a holding company of another entity and a subsidiary of a larger corporation.

What are the advantages of having a holding company in Canada?

  • Increased Asset Protection: A holding company helps keep assets safe from creditors in the event that something happens to the operating company. The operating company can take risks without exposing the holding company because the holding company performs no transactions and therefore does not move cash and other assets. The only risk is the extent of the holding company’s investment in the operating company. 
  • Tax Benefits:  Since dividends between Canadian-controlled private corporations (owned by the same person) are tax-free, you can move money from an operating company to a holding company with no negative tax consequences. 
  • Lock in the Capital Gains Exemption: There are specific criteria that need to be met to claim the Lifetime Capital Gains Exemption (LCGE).  A holding company can help business owners meet these criteria.
  • Estate planning: Shares in an operating company can be transferred to younger family members through a holding company by way of an estate freeze that is structured to cap a person’s tax liability upon his or her death and transfer any future growth to family members.
  • Limited Liability:  Companies frequently get sued by employees (wrongful termination), by suppliers and vendors (breach of contract) and by customers (product liability). Holding companies can protect an individual’s personal assets, shielding the individual from debt liabilities, lawsuits, and other risks. 

What are the disadvantages of having a holding company in Canada?  

  • Costs: Holding companies require set-up costs (incorporation fee, lawyers fee) and yearly compliance expenses (financial statements, corporate tax returns).
  • Complexity: A holding company adds a level of complexity that requires reliance on professionals. 

Holding companies are not right for all organizations. If your business is accumulating excess cash and you’re looking to invest, incorporating a holding company may be the right decision for you. Establishing a holding company is complex, so consult a Chartered Professional Accountant to discuss the pros and cons. Ideally, a holding company provides tax savings, helps you reach your estate planning goals, assists in growing your business, provides asset protection and limits your liability.

Interested in establishing a holding company? Looking for business advice? Contact Cook and Company Chartered Professional Accountants. We are based out of Calgary, Alberta, serving clients across Canada and the United States. We provide high-quality tax, assurance and succession planning services for a wide variety of privately-owned and managed companies. Contact us for a complimentary consultation.

 

References:

 

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Succession Planning for Small Businesses

Succession Planning for Small Businesses

Planning can be overwhelming! Because of this, sometimes we avoid planning or we do it quickly and poorly. Small business succession planning is particularly difficult as it’s complex, people are often resistant to change and there’s potential for conflict. But no one stays in the same position forever. Illness, retirement and/or turnover are inevitable. If a company fails to plan, knowledge may be lost, opportunities missed and clients delayed. Succession planning provides a business with a framework that ensures continuity when change occurs. 

What is succession planning?

Succession planning is a process of identifying and developing future leaders/owners of your company. This strategy prepares your business for all contingencies by training high-quality people for advancement. It ensures that your business continues to run smoothly after key people retire, resign, move on to other opportunities or pass away. This process involves the coaching and development of designated successors.

Why develop a succession plan?

There are multiple benefits and reasons for succession planning for your business. 

  • Lower hiring costs
  • Stronger internal hires
  • Shorter vacancies for key positions
  • Better career development
  • Increased employee engagement
  • Higher performance
  • Increased retention
  • Higher job satisfaction
  • Disaster-proofs the business
  • Identifies the most-qualified future leaders
  • Creates a structure for training and development
  • Maintains brand identity
  • Helps a company plan for the long-term

Phases of succession planning:

  • Phase One/Identification: Establish who you are as a company and what you want. Then, consider all key roles in your organization determining the day-to-day import of each position and the impact that would occur if that position was suddenly vacant. Identify multiple candidates for each position (a short list) and teach them the values, guidelines and vision of the business.
  • Phase two/selection: This is where a specific candidate is chosen for each role. The successor may be the person next in line in the organizational chart but may also be a promising employee from another position. Look for those who display the skills necessary to survive and thrive in the new post. Objectively consider your shortlist for performance, skills and emotional intelligence. Choose a candidate who is a lifelong learner and both self and socially aware.
  • Phase three/training: This phase involves scheduled professional development for the chosen successor(s). This may include job rotation (for knowledge and experience), mentoring in soft skills (communication, interpersonal relations, empathy, diplomacy), position shadowing and/or taking over when the person presently in the role is on vacation. 
  • Phase four/transition: This involves the present position holder retiring/stepping down and the chosen successor formally taking the role. 

Succession planning keeps a business moving forward, prepares a company for inevitable changes, assists in retaining strong performers and supports the continuity critical to a company’s future. A succession plan is a good idea at the start-up, growth and maturity stages of a company. It’s worth the investment of time and effort.

Need help with a succession plan for your company? Looking for business advice? Contact Cook and Company Chartered Professional Accountants. We are based out of Calgary, Alberta, serving clients across Canada and the United States. We provide high-quality tax, assurance and succession planning services for a wide variety of privately-owned and managed companies. Contact us for a complimentary consultation.

 

References: 

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Advantages of Hiring a Bookkeeper

Advantages of Hiring a Bookkeeper

Business owners need accurate, up-to-date financial information in order to make good business decisions, maintain CRA compliance, support readiness in case of an audit and provide preparedness for the possible future sale of the company. Keeping track of business transactions and ensuring accurate books is complex and time-consuming. A bookkeeper can help. 

What are the duties and responsibilities of a bookkeeper?

A bookkeeper is a person whose job is to keep records of the financial affairs of a business. He/she undertakes a variety of tasks including:

  • Recording the financial transactions of your business (incoming and outgoing) and posting them to various accounts
  • Processing payments
  • Conducting daily banking activities
  • Developing a system for organizing sales, purchases, payments and receipts
  • Identifying trends and how they apply to your business
  • Producing various financial reports
  • Reconciling reports to third-party records such as bank statements
  • Providing a complete set of year-to-date accounting records
  • Supplying information regarding the performance of your business

Advantages of hiring a bookkeeper:

  • Saves you time: Bookkeeping tasks are time-consuming and tedious. Hiring a bookkeeper relieves you of these duties, allowing you to dedicate your time to growing your business. 
  • Saves you money: The cost of outsourcing your bookkeeping is usually less than employing a full-time bookkeeper. A bookkeeper’s detailed records will save you money by reducing the time your CPA needs to analyze your accounts.
  • Prevents errors: Mistakes are costly. Having a bookkeeper means your books are up-to-date, organized and accurate. 
  • Eases budget creation: A bookkeeper will examine your revenue and expenses, providing you with budget tips that help reduce spending, assist in efficient business operations and contribute to profitability.
  • Enables better business decisions: By identifying spending patterns and sales trends, providing forecasts of seasonal ups and downs, recognizing money-making opportunities, avoiding cash-flow problems and finding ways to increase income and/or decrease spending, a bookkeeper provides you with the information you need to make good decisions for your business.
  • Contributes to effortless tax season:  A bookkeeper provides up-to-date accounting records and a year-end financial statement making it easier to prepare accurate and complete tax returns and avoid tax penalties.
  • Allows maximum tax deductions: Proper bookkeeping allows you to take advantage of all possible input tax credits and deductions. 
  • Ensures compliance with the law: A good bookkeeper complies with the latest legal regulations and remains up to date with recent legal changes. 
  • Provides audit preparedness: Accurate and up-to-date records ensure a smooth audit process. 
  • Promotes ease of securing loans and/or investments: It’s easier to secure capital when you’re able to clearly outline your business’s performance and financial position. 
  • Reduces risk: A good bookkeeper can detect fraud and/or embezzlement, helping you spot suspicious business transactions.  

Businesses benefit from the assistance of a qualified, professional bookkeeper. These professionals help companies through all stages of start-up and growth.

Need professional bookkeeping and accounting services? Looking for business advice? Contact Cook and Company Chartered Professional Accountants. We are based out of Calgary, Alberta, serving clients across Canada and the United States. We provide high-quality tax, assurance and succession planning services for a wide variety of privately-owned and managed companies. Contact us for a complimentary consultation.

References:

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Reviewing Recent Changes to Small Business Taxation

Anyone who wants to utilize the tax planning options available to them and avoid complications or penalties should always stay updated on tax policy. There are several changes to Canadian tax law going into effect this year, so let’s look at some that are relevant to business owners.

 

Small Business Tax & Capital Cost Allowance

 

In a positive development for many Canadian business owners, the small business tax rate will be reduced to 9%, effective in January of this year. This is down from the 10% rate established in 2018, which was a reduction from the previous 10.5%. Meanwhile, temporary amendments are being introduced to the rules dictating capital cost allowance. These will enable full first-year write-offs for the purchase of certain machinery and equipment, specifically those that are used to manufacture and process goods and for clean energy equipment. A temporary enhanced first-year CCA rate of 100% has also been introduced for eligible zero-emission vehicles.

 

Accelerated Investment Incentive

 

Similarly to the temporary enhancements for CCA deductions mentioned above, the government is also rolling out what it calls the Accelerated Investment Incentive. This is designed to encourage capital property investments made by businesses and applies to businesses across the spectrum, whether small or large. The primary component of this incentive affords businesses an enhanced first-year allowance of CCA deductions on certain capital property. In addition to this, however, its secondary component effectively allows for an enhanced CCA rate that is equal to three times the amount you would normally be able to claim for that first year.

 

New Rules for Passive Income & Split Income

 

While the changes noted above are advantageous for many Canadian businesses, there are of course plenty of adjustments in effect for 2019 that will present challenges. Most prominently, the more passive investment income a business holds above a threshold of $50,000, the more constrained its access to the small business deduction will be. This renders the first $500,000 of your company’s income far more vulnerable to taxation. Additionally, the CRA’s new rules on Tax on Split Income are in effect this year, notably expanding their scope to adults. Speak with your CPA to find out how these developments affect your business and how to adapt to them.

 

You can always count on the team at Cook & Company to keep you updated on the latest developments in tax law. If you have any questions regarding the latest tax changes affecting business owners, our Calgary accountants are here to help. Call us at (403) 768-4377 today!

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Employee vs Contractor: Why Does the Classification Matter?

Everything your company accomplishes depends on both the work of your employees and the services rendered by the contractors you retain. These two types of individuals are treated differently when it comes to taxation, and accurate classification is crucial for several reasons.

Broad Distinctions

Employer-employee relationships and payer-contractor relationships can exhibit some minor similarities, but a wide range of factors make them legally distinct from one another. Typically speaking, an employee follows certain requirements determined by the employer such as reporting location and hours. A contractor, meanwhile, usually dictates when, where, and how they do their work. Employees generally use supplies and tools provided by the employer, while contractors often invest directly in the means of their own work. The risk of incurring losses or the chance of making a profit are also usually factors specific to contractors and not employees.

Taxation and Benefits

Unlike contractors, employees are provided benefits by the employer (such as health insurance and pensions), are more difficult to terminate, and can receive severance pay. They also qualify for employment insurance. Unlike employees, contractors can take advantage of far more tax deductions for work expenses but must also pay both employer and employee Canadian Pension Plan contributions. Considering the costs saved on EI deductions, CPP, and benefits, not to mention various logistical advantages, business owners may seek to hire contractors whenever they can. This is why the CRA is diligent about penalizing worker misclassification.

Why It Matters

Today’s economic landscape is more complex than ever. Countless types of working relationships manifest in different ways. Additionally, the criteria that the CRA uses to define employer-employee and payer-contractor relationships can be quite elaborate. Despite this, it’s crucial for businesses to avoid misclassification at all costs. If you classify a worker as a contractor and they are eventually found to be your employee, you could be liable for unpaid income tax deductions (with interest and penalties) plus unpaid CPP EI, overtime, and vacation. Wrongful termination lawsuits and other forms of litigation are also common consequences of misclassification. If you’re in doubt, consult a professional to be sure!

Are you unsure of whether to classify someone as your employee or an independent contractor? Whatever guidance you and your business may need, our Calgary-based CPAs are always at your service. Give our office a call at (403) 768-4377 to schedule a meeting with us today, we’d love to help!

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How a CPA Can Help You Plan Your Business Succession

Operating a profitable business is no simple task, but ensuring that it will remain viable across generations is a challenge in and of itself. Far too many promising businesses fail to make the transition properly, but with the help of experienced CPAs, you don’t have to be one of them.

 

Planning Ahead

 

Any skilled CPA knows that planning ahead is everything, whether it’s getting the most out of tax planning opportunities or carrying out effective risk management. Business succession is no exception. Depending on the structure and scale of your business, as well as your intentions for succession, the process should begin at least five to ten years in advance. A chartered professional accountant will therefore play the integral role of factoring a future succession into various aspects of your accounting and tax planning. They will help you optimize the company finances to make the transition of ownership and management as effective as possible.

 

Minimizing Tax Liability

 

Business succession can be a taxing process, both figuratively and literally. One of the more important forms of taxation to take note of in this context is capital gains tax. The disposition of company assets (including shares and property) may amount to capital gains that are subject to a significant tax burden. You may be selling personal shares to an outside party, selling company-held shares and/or property to an outside property, or handing assets down to an heir. Whatever the case may be, a skilled CPA can help you maximize the value of your succession by exploring a wide range of tax planning strategies that may apply to your circumstances.

 

Why It’s Crucial

 

Roughly 30% of family-owned businesses make it through a generational transition, and even fewer stay in operation into a third generation. The importance of having all hands on deck when it comes to succession therefore can’t be overstated. CPAs are not the only people you need to work with during this process, but they’re an essential component, especially if you hire corporate accountants and tax specialists who have experience with a broad range of business types. Foster a strong relationship between your company and a dependable CPA and you’ll be all the more prepared to ensure the longevity of the business you’ve worked so hard to build!

 

Our Calgary-based team of chartered professional accountants won’t simply fortify your company’s finances and tax strategy in the short term. They’ll help you turn your successful business into a powerful legacy. Give us a call at (403) 768-4377 for a free consultation today.