Re: incorporation

[Guest guest]

>The differences in taxation laws between Canada and the US are

>considerable. (snip) There are legal papers to be submitted each year as

>well, so add a lawyer' fees (200.00 min +++) on top of that.

The only paperwork (other than taxes) that needs to be submitted is the

Annual Report and the filing fee in BC anyway is $35. You don't need a

lawyer, you simply sign the form and send it in with your cheque. All it

does is verify that the names and addresses are correct and keeps the

corporation in good standing with the government jurisdiction that the

corporation is incorporated in. One doesn't even need to be operating the

business to keep the corporation alive. I've known people who've had

corporations that weren't operating at all for over 10 years, but because

they kept filing their annual reports and paying the filing fee, the

corporations still exist and can be used again in future if that person

wishes to start operating under that corporation again.

>We don't have to pay taxes on our year end inventories in Canada. That

>is so restrictive! I sure don't like that rule very much. Does that

>mean there will be a lot of things on sale tomorrow?

Dec. 31 year end only applies to proprietorships or corporations that have

chosen that as their fiscal year end date. With a corporation you can

choose any date in the year for your fiscal year end. Mine is Mar.31 for

example. I think you'll find lots of retailers putting things on sale this

time of year regardless.

As to inventory, it can " cost " you tax wise. For example this past year we

increased our inventory significantly, however that money that was invested

in inventory doesn't " show up " really until that inventory is sold...then

it becomes a cost of goods sold. At least that's the best I can explain it

from what my accountant said ;-) Inventory can cost you in other ways

too...if it's sitting there tying up funds and not moving...but as I

discovered some time ago the concept of " just in time " inventory doesn't

work in this biz and so it's quite irrelevant. If you don't have the

inventory you can't fill the orders. The trick is trying to find the

optimum level of inventory so that you can run your biz smoothly (and with

less stress) without having too much excess on hand.

Just a few more devalued pennies for the pile....

Here's hoping for a prosperous 2002 for us all!

Sherri-Lee Gagnon

Oshun - Your Wholesale Source for Quality Cosmetic Ingredients & Packaging

www.oshun.ca Order online with our Miva Merchant Warehouse Storefront

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[Guest guest]

I do books for about 50 corporations, and I am impressed that you file your

Annual Report yourself, not many do. I guess they don't know its as simple as

it is.

As for the inventory. Inventory is an asset and is only expensed when it is

sold (that's when it becomes cost of goods sold). I have met people who have

bought a ton of inventory in order to have a loss in that year, (and thereby not

have to pay taxes). What they found was just the problem you suggested; they

were overextended financially and had a lot of goods that would not be consumed

for a long time. It tied up their money to the point they were forced to

collapse the business. What a phone call to an accountant can do sometimes is

certainly worth the call.

The tax requirements in the states are much more complex than ours in Canada.

We think PST and GST and income tax is a pain, you should see some of the

calculations and forms they have to deal with. I used to do books for a

construction company that was building the Quiznos stores in the US. Each state

had different tax laws, drove me crazy. Construction in California was the

worst!! Each invoice has to be broken down into 2 or 3 categories. Well enough

of that, making soap is much more fun!

Happy Soaping and Happy New Year

The only paperwork (other than taxes) that needs to be submitted is the

Annual Report and the filing fee in BC anyway is $35. You don't need a

lawyer, you simply sign the form and send it in with your cheque