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Discussion Starter · #1 ·
This is a question about having your own business as a corporation.

So you charge tax (HST in Canada) on the entire invoice. At the end of the year this Tax goes to the government.

Also the corporation has to do it income tax (which I think is lower then personal income tax) at the end of the year.

Then your corporation pays yourself, then I am personally taxed.
 

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I don't know about Canadian taxes but many individuals get incorporated for the protection it offers. It is not a fail safe but it is harder to get money from your personal accounts in the event of a lawsuit.

I am a sub S corp. Basically it is similar to sole proprietor but offers the protection. Anything the business makes is taxed to me as income and I can withdraw it from the business.

It is always good to leave some in there for bills etc.
 

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This is a question about having your own business as a corporation.

So you charge tax (HST in Canada) on the entire invoice. At the end of the year this Tax goes to the government.

Also the corporation has to do it income tax (which I think is lower then personal income tax) at the end of the year.

Then your corporation pays yourself, then I am personally taxed.
When you die they tax the pennies on your eyes.
 

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One advantage a corp has over an LLC, is that they are fairly close to the same except and LLC pays self employment tax at around 15% I believe
 

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One advantage a corp has over an LLC, is that they are fairly close to the same except and LLC pays self employment tax at around 15% I believe
That self employment tax is the other half of social security that the employer usually pays for the employee.

With an LLC, you pay it on the entire nut. With a corp, you only pay it on the reasonable salary that you take from the corp, not on the remaining profit.
 

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Hack Work said:
That self employment tax is the other half of social security that the employer usually pays for the employee. With an LLC, you pay it on the entire nut. With a corp, you only pay it on the reasonable salary that you take from the corp, not on the remaining profit.
correct
 

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This is a question about having your own business as a corporation.

So you charge tax (HST in Canada) on the entire invoice. At the end of the year this Tax goes to the government.

Also the corporation has to do it income tax (which I think is lower then personal income tax) at the end of the year.

Then your corporation pays yourself, then I am personally taxed.
Yeah....sounds right. So at the end of the day, after we have paid taxes on the same money not once, not twice, but three times.......we get to take home our reasonable salaries and get to buy the things we need with that salary, only to................................. PAY 15% SALES TAX on pretty much everything we buy.:censored:
 

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Discussion Starter · #8 ·
Rollie73 said:
Yeah....sounds right. So at the end of the day, after we have paid taxes on the same money not once, not twice, but three times.......we get to take home our reasonable salaries and get to buy the things we need with that salary, only to................................. PAY 15% SALES TAX on pretty much everything we buy.:censored:
Crazy! So would it be cheaper (but less safe) to not be incorporated? Less taxing? Or is this why everyone says keep the money in the company.
 

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Crazy! So would it be cheaper (but less safe) to not be incorporated? Less taxing? Or is this why everyone says keep the money in the company.
Thats exactly why they say keep most of your money in the company and only pay yourself as little as you need to be comfortable. Also take money out of the company as a dividend and not as payroll unless you are putting into CPP and EI etc.

Found a good read on this topic

http://www.fool.ca/13-steps-to-financial-freedom/step-8-the-great-dividend-tax-advantage/
 

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Crazy! So would it be cheaper (but less safe) to not be incorporated? Less taxing? Or is this why everyone says keep the money in the company.
Yeah my accountant and many people I talked to said don't bother incorporating because it'll cost too much.

The magic number varies by who you ask, but you gotta have some serious income before it's beneficial to incorporate. I'm sole proprietor, but the day it's financially beneficial to incorporate, I will. But I leave that brainy stuff up to the money brains.
 

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Yeah my accountant and many people I talked to said don't bother incorporating because it'll cost too much.

The magic number varies by who you ask, but you gotta have some serious income before it's beneficial to incorporate. I'm sole proprietor, but the day it's financially beneficial to incorporate, I will. But I leave that brainy stuff up to the money brains.
My problem is I dont think my accountant has the brains. I am in a jam with her I get no advice. I just found out a fellow electrician has a PST exemption number and will "buy" potlights etc PST exempt, "resell" them to the customer, and then charge a labor " fee" for installing them.
 

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Discussion Starter · #12 · (Edited)
I'm doing more research and I came across this "Many people have heard that corporate income is taxed twice: once to the corporation itself and then a second time when earnings are paid out to the corporation's owners (shareholders). This is true only for earnings paid out to shareholders in the form of dividends -- that is, profits paid by the corporation to its shareholders in return for their investment in the company. In practice, this sort of double taxation seldom occurs in a small corporation. The reason is simple: Shareholders rarely pay themselves dividends. Instead, they work for the corporation and pay themselves salaries and bonuses. Because the corporation can deduct salaries and bonuses as ordinary and necessary business expenses, it doesn't have to pay corporate tax on them. (Dividends, on the other hand, are not a tax-deductible corporate expense, so both the corporation and the shareholder must pay tax.) As long as you work for your corporation, even in a part-time or consulting capacity, you can avoid double taxation by taking home profits in the form of a salary and bonuses rather than dividends."

I'm thinking the money that goes to you is taxed at a personal income tax rate and is not taxed first by the corporation income tax. Whatever doesn't go to me personally however is taxed at a corporation rate/level.
 

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You're honestly better to talk to an accountant about this stuff right now. If you're too cheap to pay an accountant to get their advice, then corporation is not for you. A corporation is much more complex to run, the tax structure is more complicated and you'll pay more to have an accountant manage that business.

BUT if you make a lot of money, you can use many tax advantages with a corporation that you cannot get through sole proprietorship to save you money and easily pay for that expensive accountant and then some.
 

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An accountant doesn't cost you money, he makes it for you.

The more you pay for a good accountant, the better job he is going to do in saving you money which will cancel out his cost and then some.
 

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That self employment tax is the other half of social security that the employer usually pays for the employee.

With an LLC, you pay it on the entire nut. With a corp, you only pay it on the reasonable salary that you take from the corp, not on the remaining profit.
an LLC has the option of electing to be taxed as an S corp to take advantage of this.
 

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My problem is I dont think my accountant has the brains. I am in a jam with her I get no advice. I just found out a fellow electrician has a PST exemption number and will "buy" potlights etc PST exempt, "resell" them to the customer, and then charge a labor " fee" for installing them.
And, when he gets an audit or a trust examination, the CRA will have his balls in a vice.

I had a trust examiner sit in my office for six hours over a trivial matter. Do you really need this $hit? At the end of it all, I wrote him a cheque for a lousy three hundred bucks. I would have paid him twice that just to get him out of my life.
 

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Yeah my accountant and many people I talked to said don't bother incorporating because it'll cost too much.

The magic number varies by who you ask, but you gotta have some serious income before it's beneficial to incorporate. I'm sole proprietor, but the day it's financially beneficial to incorporate, I will. But I leave that brainy stuff up to the money brains.
I'm incorporated. Yes you don't want to pay accounting fees unless you make serious money. I don't.

Over the years I've learned to file the various forms for an incorporated company and basically run it as you do... I take all money left over and the company makes zero. Every year. The T2 Short form works in this case.

I had an accountant for many years but being a small operation it was costly for what he was doing.
 

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I'm incorporated. Yes you don't want to pay accounting fees unless you make serious money. I don't.

Over the years I've learned to file the various forms for an incorporated company and basically run it as you do... I take all money left over and the company makes zero. Every year. The T2 Short form works in this case.

I had an accountant for many years but being a small operation it was costly for what he was doing.
If you cant afford some basic services your either not charging enough or your doing it wrong. Becoming incorporated is practically free.
 

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I'm incorporated. Yes you don't want to pay accounting fees unless you make serious money. I don't.

Over the years I've learned to file the various forms for an incorporated company and basically run it as you do... I take all money left over and the company makes zero. Every year. The T2 Short form works in this case.

I had an accountant for many years but being a small operation it was costly for what he was doing.
"I take all money left over and the company makes zero. Every year."

That seems to go against the entire point of being incorporated.

Things might be very different up there, but I still think you would MAKE money by spending a few hundred on an accountant.
 
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