Posted on: 03-04-03 16:05:49
There are a lot of advantages of having a InC company.
- it is a separat legal entity, so does not mess up with your personal affairs
- being a separate legal entity, the liability is limited to your shareholding in it - if god forbid, anything wrong has to happen and the business owes money to outsiders, you as a shareholder do not have any personal liability towards it.
- while logically you can put all your (reasonably quantifiable and supportable) expenses as deduction in your incorporated company, it is easier to do so in an incorporated company as it is considered separate legal entity.
- A canadian controlled company has to pay tax at 22% for profits upto 200,000 while a sole proprietor is subject to normal individual taxation which is usually higher (unless you are earning very low income from your business).
- Splitting of income (giving salaries to your spouce, children) is easier in an inc. co
- one can start a company in say wife's ownership and he himself be employed by it. Though normally it is understood that no EI is payable on your employment because of close relationship with the owner, if one wants, he can pay EI for family members who draw a salary (split income) and then if for any reason the business goes down (as is normal in IT businesses), claim EI benefit for that time. (When in rome, do as the Romans do!!!)
- unlike India and most other countries, there is no necessity of getting the accounts audied for an INC co here in North america!
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Chandresh
Advice is free – lessons I charge for!!
Hi Chandresh,
I appreicate if you could provide your company website or contact info.
Thanks
I have another question related to the subject.
Is it necessary that one should have premises for an incorporated company. I mean is there any limitation that you cannot run a incorporated business from home?
Are business premises limited to govt approved areas or it can be anywhere you live?
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Manjeet Singh
No, there is no need of any special premises for running an incorporated company - you can do it from home.
However, each company is required to have a Registered office where it is supposed to keep a register of members, minutes of meetings etc. etc. This can be at a residential address or even an accountant's address.
If you operate office from home, you can even charge a rental from that company. In case your own home is rented, you can consider a part of it as being used by office and allocate that portion of rent for office use. This helps reduce your income and therefore taxes in business.
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Chandresh
Advice is free – lessons I charge for!!
I too have a similar question and would appreciate any reply.
If I am an individual tax filer and develop websites myself which generate some income for me.
Is there any way I can deduct the man hours I have put in in developing, running and maintaining the site?
Should I register as a business so that I can write off part of apartment rent etc as I live in rented accomodation? If yes, can I also put my spouse's name as an employee as she has spent hours developing and updating it?
Please advise.
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DIE HARD !
Yes you can do all that.......and it is always advisable to register a business - it costs only 60 bucks. However, if you are putting only yourself in business, it might not be too much of a tax saving, but if you split the income with your wife (and say children if they are old enough for some employment - say like filing, typing, cleaning etc.) so that the tax slab for the same amount can be much lower for each individual and may be not taxable atall like in the case of children of wife!
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Chandresh
Advice is free – lessons I charge for!!
Correction please:
children or wife
(though in this country even the first phrase is right!)
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Chandresh
Advice is free – lessons I charge for!!
