Quote:
Originally Posted by squiggs96
You don’t have to set up a corporation to have a business. There are a lot of reasons to have a corporation but there are also a lot of reasons to have a sole proprietorship. There are many things that can be done in both structures (e.g. claim GST ITCs, earn income, write off business expenses) but there are key aspects in each one that can’t be done in the other. Telling someone to incorporate a business, when you don’t understand the person, her business, or the differences, is bad advice. What if she incorporates, but is deemed a personal services corporation? She would then have to claim that income at the highest rate and many of her expenses would be denied. I would recommend not giving blanket advice like this, especially when it’s not your area of expertise. It’s the same reason I don’t tell people how to swim or how to pronounce things in Greek. It’s not my specialty.
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To be clear, I’m not saying that setting up a corporation is right for every situation and I said right in my post that I’d need more information but here is some general stuff and I’d be happy to help out if she wanted to provide more details. I ran my business as a sole proprietorship for 5 years and a corporation for 5 years. If I had understood the business opportunity earlier, I wish I would have set up the corporation earlier. This was also the advice of my tax accountant for what seems a somewhat similar business model.
If it just turns out to be a way to make some extra money and have some fun helping out friends then that’s awesome and clearly a corporation is not the way to go. But if at some point she sees it as a business opportunity then I’d recommend incorporating.