Financial: Interested in Becoming an Entrepreneur?

Thinking of starting your own business? When it comes to starting your own business your age isn't important. You should be following the same business principles regardless of your age, with a couple of additions.

Don't invest personal assets
Be cautious in assuming risk

First Steps:

Don't risk your life savings
Make sure that you have enough funds to continue your lifestyle
Allow for increasing health care costs
Be clear about why you want to start a business
Make sure your reasons are valid since extra income can put you into a higher tax bracket

Types of Businesses:

Sole Proprietorship: Many retired people open a consulting business, which is usually low risk
Filing a tax return is easier because business income is reported on a special schedule
Corporation: Makes sense when more risk is involved (ie. a food related business) since your personal assets will be protected in the event of a lawsuit
Can be complex and costly in terms of legal and accounting fees
You must also file a federal and provincial corporate tax return

The Importance of Good Bookkeeping:

Keeping a proper set of books and records is vital regardless of the size of your business
Your system can be computerized or manual
Many software packages are available and training may be necessary to use them
Make sure to track your business expenses
Included are items such as: advertising, meals and entertainment related to prospective or current clients, and office supplies
Open a business account to keep your business and personal funds separate
Register any government accounts that are required (ie. a GST account if your gross revenues are over $30,000 in a calendar year)
You will need a payroll account if you have employees

Other than the satisfaction that you’ll feel from being your own boss, operating a business can give you tax and RRSP advantages that will allow you to increase your RRSP contributions. Hopefully, this will ultimately add to your savings.

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