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| Red Squirrel:
Oh yeah we have partnerships as well, but I thought that was if you have multiple owners. You can't really have a 1 person corporation though, unless the owner can be CEO and be every board of director member at same time too? either way all the filing stuff gets very complicated so while you could in theory do that yourself, you would be spending all your time on that, instead of actually doing whatever it is the company does. So you kind of want to hire a person to manage all that accounting stuff. For that tax thing I was thinking since the corporation owns the building and pays all the utilities, then they could write off those utilities. You then rent the building and pay the corporation rent. But yeah there are probably provisions to stop people from doing that. You're only allowed to use tax loopholes if you are already a billionaire and that usually involves overseas accounts and what not so you need to be a multinational corporation to take advantage of that. |
| drussell:
--- Quote from: Red Squirrel on November 15, 2020, 07:14:33 am ---You either do a sole proprietoryship, or a full blown incorporation or corporation (I'm honestly not sure what the difference is between the two). --- End quote --- There are sole proprietorships and partnerships, where you're basically just registering a trade name so a bank will open a bank account in the name of your company (say, "Red's Hot Dog Stand") but the company's accounting and taxes are filed as part of your personal taxes (or the two or more people if it is a partnership) but provide no financial liability protection for the parntners or sole proprietor like a corporation does for the shareholders (owners). --- Quote ---(I'm honestly not sure what the difference is between the two) From my understanding both inc and corp require you to have a board of directors, issue shares, etc... --- End quote --- For provinces that use a form of the Business Corporations Act rather than the older Companies Act (probably all of them now? BC was one of the last to still use the Companies Act and they changed like 15-20 years ago) you're allowed to whichever choice of the three suffixes Limited, Incorporated or Corporation or you may choose to use the abbreviation LTD. , INC. or CORP. and whatever you choose becomes the full legal name of your corporation (eg. Red's Hot Dog Stand Inc.) when you register it. You can't then change and use a different suffix without doing a name change procedure and paying the filing fee for that, but there is no legal difference between the three suffixes allowed. --- Quote ---so it's a pretty huge deal to manage and you basically need a team of people to fill all those roles. --- End quote --- No, it's not. I own several corporations and I'm the only person on any of them. I "wear multiple hats", as it were, holding all the required roles myself, but that's not difficult, as you really only need three roles filled. President, Secretary and Treasurer. Often the Secretary and Treasurer roles are held by the same person, even in multi-person corporations, simply holding the title of Secretary-Treasurer. So, yeah, I am the President, the Secretary-Treasurer, and I'm the sole Director (there can theoretically be up to 15 directors) as well as the only Shareholder (there can be an unlimited number of shareholders, they're the ones who actually OWN the corporation) so I own 100% of my corporation. --- Quote ---There's also lot of paperwork involved and the government site does not really explain in much details --- End quote --- It is a single page, I just filed the Annual Return for one of mine, "Saturn Computer Technologies Inc." the other day when I went into the registry (basically a privatized DMV shop here) and renewed the registration on the company van and truck. It is a simple form where you basically say if there have been any changes in directors this year (No) and list the largest 10 shareholders (so, drussell with 100%) and you pay the $80 (used to be $25 for many years) and you're good for another year. If you forget to file for two years, your corporation will be "struck" from the registry of corporations and you would have to go through the Revival procedure and pay a revival fee as well as filing all the missing Annual Returns. (Currently ends up costing about $600.) Obviously you need to also file a corporate tax return with CCRA, but to actually keep the corporation alive and in good standing, you just need to file the "Annual Return" with the province. --- Quote ---so you almost need an accountant or lawyer or something to figure it all out for you. Like you need to "file" once a year, and you need to have special meetings with minutes, so I imagine that has a certain format that is required too. It's quite involved. --- End quote --- It's actually very simple if you have the right structure from the start. My father formed hundreds of thousands of corporations for people here in Alberta from the early '80s right up until his death, starting when the AB government first privatized the "Name Search" procedure and he decided to become one of the first Search Houses, thinking it would be a good way to build up some additional accounting business (he was a CA, Chartered Accountant) to his fledgling accounting business. The searches and corporation forming, as well as stocking numbered "shelf companies" that were pre-incorporated, ready to transfer to someone (without waiting what sometimes used to take weeks to actually have filed with the government and get back) became such a huge business that he soon gave up the actual accounting to instead just help people like you form their corporations. He enjoyed having people come in, explain their particular situation (wow, some people had some crazy business ideas over the years, made for great dinner conversation many nights when we were kids :) ) and get them set up in the best way possible for maximum tax savings, etc. (like pay your wife a bit to be "secretary-treasurer" to help split income for lower tax,) with his accounting background. Your yearly shareholder meeting can be a good excuse for the corporation to pay for a night out at a restaurant where you hold your "meeting" to essentially resolve that everything stay the same as last year. ;D --- Quote ---I looked into it as I was thinking it would be cool to start a corporation in case I decide to monetize a hobby, and it would also act as a way to write off living expenses. --- End quote --- That's actually a great idea. I started my first company (the Saturn Computer one) when I wasn't even old enough to be a director yet (must be 18) so my dad was the original director, but I was the President, Secretary-Treasurer and 100% shareholder. :) --- Quote ---Like if I make my house owned by the corporation and charge myself rent, I could write off all the utility bills etc. But yeah it's quite involved and I don't even know if that would be legal. --- End quote --- You'd certainly want to talk to an accountant before trying any shenanigans like that. ::) If your owned a SECOND house and you were renting it out that would be fine, many rental properties are owned by corporations, but trying to "write off" 100% of your primary residence would throw up red flags at every turn with CCRA. You can deduct a portion of your mortgage, utility bills, etc. if you operate at least part of your business from home, but the rules are that it is supposed to be the proportional to the portion of the house that is actually used for the business. If you have one room that you use as a home office, you could reasonably deduct 10%, for example. They generally won't hassle you if you say it is up to about 33%, but if you try to say it is 50% or something, they're going to want justification and proof. You might still get away with that if you're using your whole basement and garage for your enterprise or something, but they're gonna ask questions. |
| VK3DRB:
--- Quote from: drussell on November 15, 2020, 12:01:00 pm --- --- Quote ---I looked into it as I was thinking it would be cool to start a corporation in case I decide to monetize a hobby, and it would also act as a way to write off living expenses. --- End quote --- That's actually a great idea. I started my first company (the Saturn Computer one) when I wasn't even old enough to be a director yet (must be 18) so my dad was the original director, but I was the President, Secretary-Treasurer and 100% shareholder. :) --- End quote --- No its not a good idea. It's dishonest to write of living expenses. In this country you'd be done for fraud if you were caught. But people do cheat on the system... until they get caught. I run a business and everything is above board. I don't cheat on anything and I pay every cent of tax I am supposed to pay, which is too much compared to Apple, Google, Microsoft and Chevron who are heavily into the tax avoidance business. But at least I can sleep at night, knowing my taxes are used for hospitals, schools, welfare etc, and I wont get a knock at the door. |
| drussell:
--- Quote from: VK3DRB on November 15, 2020, 01:14:08 pm --- --- Quote ---I looked into it as I was thinking it would be cool to start a corporation in case I decide to monetize a hobby, and it would also act as a way to write off living expenses. --- End quote --- No its not a good idea. It's dishonest to write of living expenses. In this country you'd be done for fraud if you were caught. But people do cheat on the system... until they get caught. --- End quote --- I was meaning the part about having a corporation if you're running any sort of business, not trying to illegitimately wrote off living expenses. Only actual real business expenses can be run through the corporation, but it still saves your overall operation money, gives you some flexibility in some tax situations (not paying yourself more than necessary in a single good year, for example, since corporate profits tend to be taxed at a lower rate, being able to claim back GST on business purchases, etc.) but that's what accountants are for. :) |
| Red Squirrel:
Of course I'd want to make sure it's legal before I do it. Basically I would need a creative accountant that knows how to play the system but still stay legal. Living costs just keep going up every year and I'm at a point where I will soon not make enough money, so got to start thinking of something. Ideally I still need the corporation to have some source of income though, so like if I start selling things, even if it does not do that well at least it shows an effort to make money. I think that is one of the legal requirements of a corporation. You can't just start a corporation that makes no money. I think it's also legal to write off a percentage of your utility bills if you run your business from home. But then running a business from home opens a whole other can of worms as cities and insurance companies don't tend to like that. So it's still a very gray area. Did not know you could fill all the roles of treasurer etc though. But even then all the paperwork involved does sound daunting as I would not even know where to start, like where do I even get the forms and who do I send them to and how do I fill them out etc. You also need to have official meeting minutes, no idea what format of that is. I guess there must be some accounting firms you can hire that would help guide you through all that? Also good to know about corp etc, so the only difference is really just the suffix? So if you feel corp sounds cooler than inc or vise versa you just pick the one you want? I'm still far from doing this but it's something I've been toying with for a while just so I have a more official name to put on any product I decide to release and it does provide a certain layer of liability protection as I don't think they can go after your personal assets like your house if someone decides to sue the company. (Assuming I don't put the house under the corp, that is) |
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