Well a lot of entrepreneurs Who start their businesses understand that stay and always start taking money out of their business immediately says Edmonton bookkeeping. They do starts to wonder exactly when they’re going to be able to get paid. As well as how much they’re going to be able to get paid.
They often wonder this, because they can only live for a certain amount of time on their savings. And they wants to be able to ensure that as they grow their business, they’re going to be able to pay all of their bills.
This is why it’s very important that they hire a very good accountant. Who’s going to be able to figure this out on behalf of the shareholders. By truly understanding each of their personal circumstances. So that’s they can help figure out not only how much they need to take care of their corporation each month. And when they need to start taking that money
An accountant will do this says Edmonton bookkeeping by doing a personal balance sheets and personal income statement for each of the shareholders. This will help the account calculate each shareholders personal net worth. As well as a figure out what Resources they have personally.
the resources might be necessary so that they can take that money out of their personal life and use it to live while they are increasing the revenue of their business says Edmonton bookkeeping. Or, it might be necessary to take this money out of their personal life to put into their own business if that becomes necessary.
The personal balance sheet will have the shareholders list all of their assets that are actually in their own name. And this might include things such as the vehicle they own, the house if it’s in their name. But it might also include things such as their savings like an rrsp, a tax free savings account to name a couple.
The second half of the personal balance sheet will list all of the liabilities that are in the shareholders name. And it might include the things such as their mortgage, the amount left owing on their car, and credit card debt. Edmonton bookkeeping says the accountant will simply subtract all of their liabilities from their Assets. In order to figure out what resources they have personally.
The personal income statement on the other hand is going to deal just with the expenses of the shareholders. The top half will be all of the fixed expenses of the shareholders. And these are the expenses that are consistent month to month, and typically needs to get paid in order for the shareholder to live. Examples of fixed expenses might be the rent or mortgage payments so that they have a place to live. Their utility bills, phone and internet costs or car payment.
The second half of the personal income statement says Edmonton bookkeeping. Are the variable expenses. And these are the most easily to control. Because they’re not a recurring monthly bill. Some of them can be quite easy to minimize. Such as meals and entertainment or clothing budget. But others minimize but not eliminated completely such as their grocery bills.
When entrepreneurs that’s their personal circumstances calculated. Their accountants will easily be able to tell them how much they absolutely need to live. And when they can start taking that out of their business. So that they can focus on growing their business.
Edmonton Bookkeeping | How Much Should Shareholders Get Paid
In order to help ensure that shareholders can eventually start drawing an income from their corporation says Edmonton bookkeeping. They should hire a great accountant for their business. Their accountant will help them figure out if they’re going to be able to starts taking an income from their business. And help calculate how much that’s going to be.
Well some shareholders are not going to need to start taking money out of their corporation right away. Because they either have a second job that earns them T4 income. Or they have other family members who are running the income to pay most expensive.
However, Edmonton bookkeeping says other shareholders might have a family of dependence. And they are the only income provider. Therefore not only do they need to take a living wage when their business. They need to do so right away in order to survive.
No one way is the correct way to be an entrepreneur says Edmonton bookkeeping. And often, people are drawn to become entrepreneurs so that they can minimize their tax payments.
In fact, the Fraser Institute says that the average Canadian pays 43 percent of their income in taxes. Including Source deductions from their paychecks including income tax, CPP and EI. But also this amount includes things such as fuel tax, GST and carbon tax to name a few.
Because half of the average Canadians wages typically go to taxes. Minimizing those taxes is an extremely beneficial goal says Edmonton bookkeeping. They will use the money that they save on taxes to help fund their business. But also to give themselves an increased wage. Or to accumulate wealth for the betterment of their future.
Therefore, they need to be ensuring that they find an accountant who’s going to be able to help them not only get paid, but help them minimize their tax payment. Admission bookkeeping says that this Austin boils down to whether a shareholder will get paid in dividends, or in salary.
The answer to that question is usually a mix of the two. Depending on the exact Financial circumstances of the business. As well as the personal circumstances of the shareholders. It is not typically 100% dividends. Or 100% salary. Or even fifty percent of both. It’s a more complex issue. I typically requires a chartered professional accountant to answer properly.
Entrepreneurs should take into consideration that if they take a salary, that will be taxed at all of the typical Source deductions that come off of people’s Paychex. Including CPP, EI and income tax. That’s why they should not take a hundred percent salary necessarily.
Edmonton bookkeeping says the dividends on the other hand are not taxable as long as they remain in the corporation. But are a disbursement of the prophets of the corporation. And if the corporation did not earn any profits. then the shareholders cannot take dividends.
Therefore, the shareholders will likely take their monthly drawers. And then the accountant will figure out at the end of the year. what percentage of salary and what percentage of dividends they will be claiming on their year-end finances.