How to save more when opening a Company?
Frugality is a virtue and how should one save the most when opening a company?
Many agents use the “Cheap, cut price, and worth the money” selling point in advertising. However, consider this – when the 3 major important matters of “company registration, taxes filing, and audited reports” are handled by 3 different companies A, B, and C respectively, with poor communication, the situation can easily go from saving money to losing money!
Case Study: Cheap Company Registration, Forcing Investors to Withdraw?
When starting a business for the first time, one tries to save on everything. Alan and Johnny went halves in starting a new business, with Alan responsible for raising funds and negotiating with investors, and Johnny responsible for the company’s daily operations, division of labor.
After comparing prices, they found a so-called “cheapest, fastest” intermediary to open the company, but trouble soon followed…
- After successfully registering the company, they were unable to open a bank account due to incomplete documents, and spent nearly 8 months negotiating with the bank.
The additional fees paid to the intermediary company for consultations and supplementing documents were 5-6 times more than the initial company registration fee. Not only did it increase the time cost, but the actual expenditure was over $3,xxx more than expected.
(2) Before the company had a bank account, they had been using one of the shareholders Johnny’s personal account for the company’s transactions, including keeping the $1,000,000 invested by a strategic investor half a year ago.
The company’s accounts and tax filing were handled by an accountant, but the “mixed personal and business” account led to very messy accounts, requiring the accountant to spend more overtime hours to separate the personal and corporate funds and income. The unsubstantiated accounts also resulted in itemized charges, and an additional $9,xxx had to be paid.
Furthermore, filing taxes using a personal account led Inland Revenue Department to classify all the account’s income as company income, causing the company to pay an extra $1xx,xxx in taxes unnecessarily.
The company filed an appeal, which led to an endless stream of letters from Inland Revenue Department, and each reply incurred an additional $3,xxx response fee, a huge waste of manpower and resources.
(3) For the annual audit report, the accountant’s messy records required the auditor to spend extra time making adjustments, resulting in an additional $2,xxx in fees.
(4) With no clear development plans yet, the investor’s capital and the shareholders’ personal funds have become “jumbled up”, and some capital is unaccounted for.
As the account holder, Johnny was clueless about the whereabouts of the funds. The partnership was built on trust, but the messy situation caused Alan and the other investors to lose confidence and decide to withdraw the $800,000 original investment, delivering a “bombshell” to the company.
Bank account opening, responding to Inland Revenue letters, supplementing accounting documents – all these added up to over $14,xxx. If the extra $1xx,xxx in taxes paid cannot be recovered due to lack of proper documentation, it would be an even greater injustice.
Finding a “one-stop” service would not have been this expensive, and the worst outcome is the withdrawal of investors, causing the company’s operations to be abruptly halted.
When running a business, there is more than meets the eye
“Maxi-Solution Accounting” has over 20 years of experience and has seen countless cases of companies trying to “save money and time” by carelessly finding intermediaries to open companies.
The various messy situations have convinced us of the importance of a “one-stop” service for company registration, tax savings, and auditing.
Starting from company registration, we understand the client’s background, business direction and vision, rather than just assisting with filling out forms and application steps.
A company lacking in planning is like a soulless shell, and will encounter a series of problems in actual operation.
How can one successfully open a bank account before getting the first business? Opportunities favor the prepared, and “Maxi-Solution Accounting ” has already planned ahead since the company registration stage.
Based on the actual development plan and implementation plan, such as customer sources, suppliers and related economic factors, we help the company build a “nice portfolio” to reason with the bank and provide evidence, avoiding all kinds of “loopholes” and traps that the bank may question.
Properly arranging the basic setup like company registration and bank accounts, we answer all doubts from the bank or Inland Revenue Department.
Submitting the annual audit documents on time lays a solid foundation before being able to discuss tax savings and business expansion.
Each industry has its unique business techniques. Consulting with “Maxi Solution Accounting,” an accounting company with over 20 years of experience, can help you avoid many pitfalls and facilitate the growth of your business.
“Maxi Solution Accounting” – an accounting partner that can help you prosper.
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