We get asked all the time whether or not we think people should incorporate. We look at it two simple ways and in this week’s Weekly Tax Planning Tip we share our thoughts with you. Check it out…
Hi there. It’s John Paul McDonald from Campanella McDonald Chartered Professional Accountants. I’m just about to run into the gym here. Before I did, I thought I’d answer a question that we get asked all the time. In fact, I got asked twice yesterday, so I thought it was a good one. Just to let you guys know our point of view on this. Should I incorporate, so we look at it two simple ways. One is risk, second is tax planning opportunities. So risk we’ll cover very quickly. Are you at risk of losing your money, or losing your personal assets? So are you an IT Professional where you’re really not at risk of getting sued unless you’re, you know, writing code and, and you know, that kind of opens it for a bit of risk, but are you really at risk of getting sued or are you in the construction field where, you know, getting sued is a lot higher of a risk than an IT Professional.
100%, we need to incorporate you for it. A professional, we tend to say, you know, we’re not sure, it becomes more of a personal, a personal thing, rather than a risk thing. Secondary becomes a tax planning opportunity. So are you making $100,000 in your corporation? So are you using it all? Are you taking it all out for personal benefit? So are you using that $100,000 to pay your mortgage, to pay for your property tax, your home insurance, stuff like that? So if you aren’t using all that money, then we say, leave it in the company, take out what you need to live to pay your personal expenses, and then we can reinvest in the corporation using pretax dollars to invest in things like real estate, a stock market, or reinvest in your business itself, or reinvest in other business. So that’s how we look at whether or not you should incorporate. I hope it helps you guys and, until next time, thanks. Bye now.