HawthorneVillager.com

Hi Guys,

Lots of my friends are telling me to consider starting to work on contract as you get more perks especially if you are incorporated. Can anyone share their experiences. I dont even know the steps on how to be incorporated?

Thanks

Hi Bubume,

Your friends are keepers sir, they are absolutely correct when they tell you this!

Incorporating yourself is relatively easy, and can be done online. It costs about $300 dollars, and usually the websites can explain the actual process better than I can.

First, decide if you need a name or not, most folks who land "IT" contracts don't need this, and can normally get away with just a numbered corp. But a fancy name always looks and sounds cool, you will have pay extra for this coolness

Second, you need to decide if your going to register your business in Ontario, or Canada... What you decide here can impact you on the tax reporting side.

Third, if your pulling in more than 200K I strongly suggest you hire an accountant.

Now, once your setup there are lots of ways to direct how your money is used in the corp. Long story short, the more money kept in the corp, less taxes are deducted. This is usually accomplished by reporting expenses. Again, depending on complexity, accountants can execute on how to properly structure, you can even expense their cost (I am not an accountant :p).

Example of said "neat" thing? You can put your significant other on your payroll, which counts as income to get their own credit (for whatever scenario).

Does that make sense?

Years ago when I was looking into this, I found the Halton Small Business Centre to be very helpful. Check them out and look at this link: http://www.ic.gc.ca/eic/site/cd-dgc.nsf ... 03953.html

From what I recall, being incorporated makes your business a living and breathing entity. A lot of businesses incorporate so in the event that the company (again, which is a separate entity) goes bankrupt, the owner (you) doesn't lose personal assets in parallel.

_________________
What is the difference between ignorance and apathy? I don't know and I don't care.

thanks

Talk to an accountant before incorporating. Depending on how much you are making, it may not be worth while incorporating and having to file corporate and personal taxes each year.

The two big benefits to incorporating is a lower tax rate for the corporation, however, once you pay yourself though and take the revenue out of the business it no longer applies. The second being legal liability protection, as someone else mentioned if the company goes down it wont take you and your personal assets with it.

I found that it didn't make sense in my case, so I'm just self employed and file personal income taxes. I agree that it is best to speak to your accountant.

Very easy to do, all forms can be filed online, costs you $200 out of pocket

Biggest advantage to national incorporation is name protection. If you just want a numbered corp you can file in any province where you operate.

The government has a rather lengthy intro posted here that goes through most of the basics (although even they say consult a professional if you are unsure)
http://www.ic.gc.ca/eic/site/cd-dgc.nsf ... 03953.html

Just be careful. A lot of well meaning people will tell you to start a business so you can write off all your expenses. It is not neccesarily so. There are rules to determine whether or not you are in fact a business, and the government can use those rules to charge you back on previous exemptions if they deem you an employee rather than an independant contractor.

_________________
At Your Service Computer
At Your Service Security