Incorporating... myself?

[Nufy]

I haven't decided on either yet....

A old school buddy told me about em and he uses it as well.

Still starting the company......

Any body need some Electrical / Controls PLC/HMI Designer/Programing work Done ????

[alltherage]

What is a "Personal Health Spending Plan?" Is it like... i can write off prescriptions? I don't think I've had a prescription for about 10 years. I should go to the doctor at some point.

That's neither here nor there. Back on track, this is cool, I like the support I'm getting here... CP never fails. Do I get to think of a crazy company name? Like MegaCorp or InteliSmart or something?

[Shazam]

$415 through arvic? Give me a break. Might as well get a lawyer to incorporate you then.

In fact, that's probably what you should do.

Now then, read the following carefully:

If you incorporate through a lawyer, they will keep your minute book. Make sure you go to the lawyer's office and ask for it. Do not let them keep it.

You will need to re-register your company every year. Do not let your lawyer do this. You can go to Mojo's, or a zillion other places around town, and get it done for around $20. A lawyer will charge you $200. Make certain you do this, or else your company will be shut down, and you will have to pay more than $20 to get it revived.

The easiest way to incorporate is to create an Alberta numbered company. If you want a named company, then you will have to do a NUANS search, and that costs money. An Alberta company is easiest because you'll probably only do business here.

It is recommended that you make yourself an employee of the company. This is not actually required but the CRA will frown upon you taking out only dividends from your company.

Do not pay EI, unless you really, really want to. You are the only employee of your company. Are you going to lay yourself off?

You need to pay both the employer and employe portion of CPP.

MAKE YOUR FISCAL YEAR END JULY 31!!! You can do all sorts of crazy, completely legal income deferral schemes by having your year end not match the calendar year. Trust me, do this.

Get an accountant for your taxes. My accountant charges about $300 for both my business and personal taxes. And he's damned smart.

Keep all your receipts. Get a file cabinet, get at least twelve files, one for each month, and throw your receipts in there. Be disciplined with this!

Talk to an accountant once you're incorporated. He will give you some advice on minimizing your first year's taxes.

[Circa89]

so what are the benefits of incorporating versus sole proprietorship ?
I have heard that if you want to Bankrupt the corporation the house etc can not be touched and that is why most people do it.
Is this true ?
do it for Bankruptcy protection or for tax breaks?
Why incorporate if sole proprietorship is free?

[Bill Bumface]

Don't pay someone to incorporate you. It's really easy to do it yourself.

Go to a registry that has business services. I think you'll pay ~$140.

Go to a bank and get a Corporate account- free

Go to Harry Hays and get a GST #

Find yourself an accountant. Expect to pay between 800 and 1500 per year. Shop around for one that isn't lazy and suggests paying you both in salary and in dividends.

[K1LLswitch]

Originally Posted by Circa89

so what are the benefits of incorporating versus sole proprietorship ?
I have heard that if you want to Bankrupt the corporation the house etc can not be touched and that is why most people do it.
Is this true ?
do it for Bankruptcy protection or for tax breaks?
Why incorporate if sole proprietorship is free?

liability is the main reason. If a corporation gets sued, it can lose all it's assets (which are probably minimal for most single employee corporations). If a sole prop gets sued, it is YOU who is getting sued and all of your assets (houses, cars, cash, investments, even RRSPs too I think) are at risk.

A corporation is treated like a person in the eyes of the law. Can be sued, has to pay its own taxes, can own property etc.

As far as loans etc. go, you're not really protected as any bank would make you sign a personal guarantee (basically co-sign the loan) saying that if the corp. doesn't pay, you will.

Corps have other advantages too, like tax deferral (as mentioned earlier), easier to transfer/sell (you sell your shares vs. selling all of your assets). Corps can have an easier time getting financing (ie. you can sell off some shares for $$$ - you have no debt, you just get less when you distribute the income). Also don't have to pay EI (as mentioned)

Disadvantages are mainly it is complex. Lots of regulations, lots of registration/filing requirements, taxes are totally different, GST etc. Corporate tax rates can be higher, unless you qualify as a small business corp. Also dividends are paid on after tax $$$ (ie. already been taxed) but get added to your own tax return as well as income, for some good old double taxation (you do get a credit that offsets some of this, depending on the tax bracket you are in).

Basically, it depends on the type of business you are in, your exposure to risk, whether any tax advantages are held by being a corp. in your business situation, and whether you can handle the admin (or pay someone to handle the admin) of all the added corp tax/filing needs.

Hope that helps :-)

[K1LLswitch]

Originally Posted by hulkrogan

Don't pay someone to incorporate you. It's really easy to do it yourself.

Go to a registry that has business services. I think you'll pay ~$140.

Go to a bank and get a Corporate account- free

Go to Harry Hays and get a GST #

Find yourself an accountant. Expect to pay between 800 and 1500 per year. Shop around for one that isn't lazy and suggests paying you both in salary and in dividends.

I think it's more than $140....I was just looking the other day at one of the registries and it was $279 for a numbered corp and $329 for a named corp (with NUANS search).

I think the $140 is just the "government portion", but the registry can add their own admin fee on top of that.

[macker]

Originally Posted by Nufy

I'm looking into this as well. Don't forget the administration fee.

Any PHSP's you recommend there Slava ???

I'm looking at Olympia Trust and or Costplus......

Did you look into www.customcare.ca or www.hubfinancial.ca
Both have really good PHSP offerings!

[troutman]

If you have a spouse, you can pay her to be your "book-keeper" and reduce your taxes further.

[zarrell]

Originally Posted by K1LLswitch

I think it's more than $140....I was just looking the other day at one of the registries and it was $279 for a numbered corp and $329 for a named corp (with NUANS search).

I think the $140 is just the "government portion", but the registry can add their own admin fee on top of that.

I incorporated a month ago and got it done at Southland registries. $205 including tax for a numbered corporation.

[CubicleGeek]

You are going to a very expensive registry if they're charging $330 for a named company. I was charged $250 for a named company including search at the The License Company in Bow Valley Square. I just got one done last month.

[Shazam]

$800 for an accountant is very expensive for a one person business. If he's charging you for more than four hours of work, get a new one.

$330 for incorporating without a lawyer is awfully expensive. That's what I got charged - through a lawyer!

Probably won't matter for the OP, but many companies won't deal with sole proprietorships. Gotta be incorporated.

[MolsonInBothHands]

Originally Posted by Shazam

$415 through arvic? Give me a break. Might as well get a lawyer to incorporate you then.

In fact, that's probably what you should do.

LOL. Yup, go to the lawyer, so they can submit the request to ARVIC, and then tack on their fee. My wife does book keeping services for several lawyers, and the ones she asked told her if the corporation was simple enough (eg. you and your immediate family) then may as well go to ARVIC.

Everything else is bang on regarding the disipline with receipts. The wife does a few oil field contractors books as well, and if you just bring in a shoe box full of receipts that may or may not be applicable for the last year and a half, you will pay for her time to sort through and post them.

[Shazam]

I paid less than $300 for a lawyer to incorporate me. Only did so because I had to transfer some shares over from my sole proprietorship and needed him for some help with it.

[alltherage]

Sorry to bump...

I think I might want to go Sole Proprietorship. I'm not really investing in a new idea or anything that will put me in any kind of debt, so I think this makes more sense because the disadvantage seems to be unlimited liability, which would be ok with me because the risk of something going wrong would be almost 0.

Anyone know of any other risks not outlined here that might change my mind? I found the information here: http://www.cba.ca/en/viewPub.asp?fl=...&docid=40&pg=5

[Bill Bumface]

Originally Posted by Shazam

$800 for an accountant is very expensive for a one person business. If he's charging you for more than four hours of work, get a new one.

Really? $900 is the lowest out of anyone I know.