Calgarypuck Forums - The Unofficial Calgary Flames Fan Community - View Single Post - Incorporating your self to become a contractor

Mccree · 12-01-2007, 09:42 AM

I have only seen it a few times but there is a rule that states that EVEN thou you are a corporation. IF you only have ONE OR TWO customers then you can be considered to be a personal services corporation and you get no access to the small business deduction and you get taxed at the highest corporate rate which is about 35%. The effect is that you do not get any tax savings as you play corp tax at 35% (vs 14% with the small business deduction) and then you play personal tax at on your draws (wages/div's). It can make you effective tax higher than the 39% you would play as an unincorpated business.

12-01-2007, 09:42 AM	#24
Mccree #1 Goaltender Join Date: Sep 2003 Location: Calgary Exp:	I have only seen it a few times but there is a rule that states that EVEN thou you are a corporation. IF you only have ONE OR TWO customers then you can be considered to be a personal services corporation and you get no access to the small business deduction and you get taxed at the highest corporate rate which is about 35%. The effect is that you do not get any tax savings as you play corp tax at 35% (vs 14% with the small business deduction) and then you play personal tax at on your draws (wages/div's). It can make you effective tax higher than the 39% you would play as an unincorpated business. __________________