Ask the Master Newsletter Archives

Welcome to the previous editions of the Ask the Master newsletter. On your left you will find links to tips and the how to’s of running a Virtual Assistant practice. We hope you enjoy your stay and if you have a question you’d like answered send it to submission@vatp.ca.

Your Business Structure

Owning your own business means you can set it up to work for you. How is your business structured?

Warmly,
Mary-Lou Ashton
Master Virtual Assistant

Questions In This Edition
(Click on the links to go to that question.) What can I do to improve communication with a client?

• What is the difference between sole proprietorship and incorporation?
• Should I incorporate my business?
• What do I do once I have decided on a business name?
• Do I have to open up a business bank account?
• Do I need to be able to accept credit cards?

As a sole proprietor you are the business and you, as the owner, receive all the profits and, assume and accept all the risks personally. Business income or loss is reported on a personal basis to the tax department and not by the business.

Incorporation creates a new legal entity. With an incorporated business you detach yourself from the business in a legal and tax sense. In case of a lawsuit or judgment against your business, no one can seize your personal assets, e.g. your house, car, boat, bank accounts, etc. unless you have pledged these as collateral.

This is one of the big questions. Incorporation is the best protection for personal assets, however, there are other liabilities you may not be able to avoid by incorporating. For example, if you do not remit certain taxes, you could be held liable as a director of the company. Fees for incorporation can range between $600 and $2,000.

That said, given the nature of the services provided by a VA, with the exception of legal related clients, it is generally not necessary to incorporate however the best bet is to check with a law firm, accountant or local government office to research if this will be an advantage to your business.

If you have your business name it is a good idea to register it with your local government agency. While you may be able to still use your company name without registering it, it will not prevent someone else from picking and registering the business name and may create legal problems for you down the road. Also if you wish to set up a business bank account in the company name it must be registered.

It is not necessary, especially when you are starting out, to have a business account for your business. That said it, it adds to your professionalism to have one, so the decision to open a business account is a personal one.

Business accounts generally charge more for transactions however they do allow checks to be written or sent in the company name. They are also required when acquiring a merchant or credit card account.

If you decide not to open a business account you can still operate under your company name (registered or not) however checks must be written in your name. This can cause some confusion with new client initially so make this clear on your invoices. Be sure to open a checking account separate from your personal one to process your business transactions through.

This also is not necessary however it makes processing client payments quick and easy. Depending on your credit rating, length of time in business, number of transactions to be posted etc. you may not qualify for a merchant account or they may require a large security deposit. One way around this is to open a PayPal account. The challenge with this is your client must also have a PayPal account in order to process the transactions.