Guest guest Posted December 30, 2001 Report Share Posted December 30, 2001 and that is a big difference between the US and Canada - our tax laws are actually designed so that taxation effects are not a determining factor in whether or not to incorporate. In all honesty, though, and this will seem like I'm being cruel and nasty, but I'm not (just rather forcefully honest), the VAST majority of home toiletry makers and suppliers of aromatherapy products will never make enough of a profit to notice a significant difference between the two tax alternatives...except for the reduction in income due to the higher expenses of incorporation! From what I can gather based on comments made on other boards and lists, a significant percentage of these folks are already in the lowest tax bracket and their business efforts are not exactly pulling them up significantly... Just my cynical $0.02 worth... Jules in Vancouver PS - don't think I'm against incorporation, BTW, I'm not - I just don't think it necessary for most of the people who ask about it, since they're usually asking from the POV of protecting their assets, not income tax structure! > > My accounted said the > >paperwork would be incredible if I incorporated or set up a limited > >partnership, or such. Hardly worth the effort for a business I work for > >free for (someday I'll make money!). lol > > > The problem with continuing as a sole proprietorship is the time that your > business takes off and finally makes money... > > remember that as the business grows, things like inventory also > grow... and last year, because I was a sole proprietor for most of the > year, the business's income, and the increase in inventory over the year > before were taxed at 37.5%...had I incorporated a year earlier, they would > have been taxed at 15%. that's a BIG difference. > > > > > > Your source for superb Essential Oils, Aromatherapy > Accessories, Information, Books and more! > Visit us at: <http://www.naturesgift.com> Quote Link to comment Share on other sites More sharing options...
Guest guest Posted December 30, 2001 Report Share Posted December 30, 2001 coming in late on this discussion perhaps someone has already mentioned the " S corp " option, also called (or the S stands for) subchapter corporation or closed corporation. described as somewhere between a sole prop. and corp. in terms of liability issues, doesnt cost much to go this route in terms of setting it up and most small businesses like ours wld incur no corporate taxes, any profits on the s corp go onto the personal return as " income " . though our acct charges a pretty penny to do the combined returns, thats something that could be done on one's own with a little (lot of) gumption if money needed to be saved. just another two cents, martha gandley oasis wellness inc www.oasis-massage.com Quote Link to comment Share on other sites More sharing options...
Guest guest Posted December 30, 2001 Report Share Posted December 30, 2001 The differences in taxation laws between Canada and the US are considerable. Incorporating in Canada creates the need to submit a corporate tax return that very few people are prepared to do, and so the expense of an accountant (300.00 min +++) becomes necessary. There are legal papers to be submitted each year as well, so add a lawyer' fees (200.00 min +++) on top of that. The advantage comes later when you have high income years and low income years and can " move " the monies to benefit yourself tax wise. As a corporate entiry, the amount of liability you bear depends on what you did, and how good the other persons lawyer is:-). 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? Well, I guess its time to sharpen the old pencil and start opening up all cupboard, drawers and boxes and start counting. Happy counting everyone! Hope your New Year comes with health, prosperity and joy. (and hardly any taxes) Re:incorporation At 03:55 PM 12/30/01 +0000, you wrote: > My accounted said the >paperwork would be incredible if I incorporated or set up a limited >partnership, or such. Hardly worth the effort for a business I work for >free for (someday I'll make money!). lol The problem with continuing as a sole proprietorship is the time that your business takes off and finally makes money... remember that as the business grows, things like inventory also grow... and last year, because I was a sole proprietor for most of the year, the business's income, and the increase in inventory over the year before were taxed at 37.5%...had I incorporated a year earlier, they would have been taxed at 15%. that's a BIG difference. Quote Link to comment Share on other sites More sharing options...
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