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blankall · 05-25-2017, 05:33 PM

I'd take troutman's advice and speak to an account.

I'm making the same decision myself, and as far as I can tell, there are 2 main reasons to incorporate:

1. To shelter your personal assets in the event creditors or litigants go after your business. Whether this is necessary will depend on the nature of your business and the amount of insurance available to you. This is where speaking to a lawyer who is familiar with your industry might be helpful.

2. For reasons of tax deferral. Corporation pay far less tax, but only so long as the money stays in corporate solution. So if you are earning far more than you are spending, it may make more sense to keep the money in corporate solution. So for example, if you earn an extra $100k from your business and can keep that in corporate solution, you'd only be paying the much smaller corporate tax rate. You can then earn investment money on those extra saved funds. So you might be able to keep $90 in corporate solution and earn income on that, instead of having $60k outside of corporate solution and earning income on that. You still have to pay the full tax rate on any investment income you earn while the money is in solution.

My accountant stated that it will cost me an extra $4k or so to run a corporation. Plus I have a bunch of room in my TFSA and some room in my RRSP deductions, so I decided that it doesn't make sense for me this year.

So it's basically a financial calculation over whether it makes sense for criteria 2.

05-25-2017, 05:33 PM	#10
blankall Ate 100 Treadmills Join Date: Mar 2006 Exp:	I'd take troutman's advice and speak to an account. I'm making the same decision myself, and as far as I can tell, there are 2 main reasons to incorporate: 1. To shelter your personal assets in the event creditors or litigants go after your business. Whether this is necessary will depend on the nature of your business and the amount of insurance available to you. This is where speaking to a lawyer who is familiar with your industry might be helpful. 2. For reasons of tax deferral. Corporation pay far less tax, but only so long as the money stays in corporate solution. So if you are earning far more than you are spending, it may make more sense to keep the money in corporate solution. So for example, if you earn an extra $100k from your business and can keep that in corporate solution, you'd only be paying the much smaller corporate tax rate. You can then earn investment money on those extra saved funds. So you might be able to keep $90 in corporate solution and earn income on that, instead of having $60k outside of corporate solution and earning income on that. You still have to pay the full tax rate on any investment income you earn while the money is in solution. My accountant stated that it will cost me an extra $4k or so to run a corporation. Plus I have a bunch of room in my TFSA and some room in my RRSP deductions, so I decided that it doesn't make sense for me this year. So it's basically a financial calculation over whether it makes sense for criteria 2.