Our Comprehensive Incorporation Process Maximizes the Benefits of Incorporation.
Our ‘STEP BY STEP’ approach and 'inclusion process' (considering items affecting your personal life, such as asset ownership, that may be useful in a corporation) is beyond what most services provide. We carefully work with you to establish your corporate structure to maximize the tax savings and numerous other benefits of owning a Corporation.
After the initial free consultation, if you wish to proceed, we will send you a documentation package to complete. It does not take days to do this, less than an hour of your time - more if you have a business already established that involves asset and debt transfers to the Corporation.
All time spent is well worth it.
Substantial tax savings and tax postponements (see Tax Benefits below). Corporations usually save and postpone tens of thousands of dollars of tax per year.
The owners (shareholders, directors) are not personally liable* for corporate income tax (unless they conspire to remove funds from the company to avoid corporate tax).
*Exceptions: Trust funds (GST/HST, payroll), Noncompliance penalties (not filing tax returns).
The corporation is automatically deemed to be a business for profit. Issues such as whether or not an undertaking [that could be deemed by Canada Revenue Agency (CRA) a personal non-business activity] is a business and therefore qualifies for use of expenses for business purposes do not usually exist.
Most any type of business activity (consulting, services, ventures for profit) can be transferred to a Corporation for tax favoured treatment and asset protection.
Liability for corporate acts and debt are usually limited to the Corporation. Personally exposed liabilities can be transferred to corporations except those related to professional activities. Note: some legislation requires personal liability of directors for issues such as safety worker’s compensation, non-compliant acts, environment, fiduciary responsibility to Corporation.
A much higher degree of privacy and non-disclosure for private (non-public) corporations’ activities than for personal affairs. Institutions must treat corporate and personal assets as separate holdings.
Flexibility for protection of assets, transferring or sales of assets to / from Corporations, estate planning, asset continuity and payments to family members.
Perpetual existence: Corporation continues on after the incapacity or death of the individual shareholders.
Assuming proper setup and administration has been performed (part of the unique Turnkey Incorporation Service provided by TaxWatch Canada LLP), the tax benefits can be:
Low Corporate tax rates (generally 15% or lower – depending on provincial tax rates – of net income under 500K annually).
Income splitting via payment of dividends for multiple classes of shares owned by the business operator and any other person as decided by the directors. These dividends can usually and repeatedly reduce personal tax on withdrawals from Corporations for personal use.
No CPP (an annual cost to self-employed proprietorships reaching up to $4,800.00) if corporate earnings are paid to shareholders as dividends.
More favoured timing regarding everything from deadlines for tax returns to taxation on withdrawals (use of profits) from the Corporation for personal use.
Allowances that are treated in a tax preferential manner (some tax-free) can be paid by the Corporation to shareholders/officers (that reduce the effective Corporate and personal tax burdens).
Usually there is a deferral of tax (still at the lower corporate rates) of up to 1.5 years for income included in newly established Corporations compared to the timing of taxes payable personally.
Special one-time benefit. Tax-free withdrawals from the Corporation (e.g. Goodwill or other assets transferred from an existing business to a new Corporation). Essentially, the Corporation buys the business assets (including what could be a substantial amount of goodwill) from you at amounts you choose. You receive from the Corporation, in exchange for the assets you transfer to the Corporation, some shares and a promissory note issued to you. Please be careful about the price exceeding either undepreciated carrying value and fair market value and the tax elections required. More details in the Guide.
CRA Treatment: Corporations are recognized by CRA as a tax favoured and quite compliant arena. Tax audits are less frequent probably because the tax rates (and therefore tax recovery amounts) are low.
OUR STEP BY STEP PROCESS:
Once we receive the completed Documentation Package from you, we will call you to clarify your objectives and financial situation which may affect incorporation matters. We will answer your questions and together ensure the Corporation fulfills, to the best extent possible, your tax, asset protection and other expectations - and most likely for some of your family members or partners as well.
Confirm the structure - federal or provincial - that is best suited to your needs.
Search for desired Corporate names that are available for use and registration (in priority of choices). Alternatively, you may choose to use a numbered company.
Finalize name of Company. Receive required documents.
Team review of client objectives and best choices (shareholdings – single or multiple, tax requirements for special shares, officers, directors.)
Prepare application for incorporation and file.
Receive formal Corporation articles.
Register Corporation for business number and GST/HST (if applicable), prepare a custom minute book as required (by-laws, share certificates, shareholder, director resolutions and appointments, share register, other).
Prepare a report to you containing detailed instructions regarding use of the Corporate name, banking, employee and shareholder benefits and tax-free allowances, record keeping, short and long term tax planning for the shareholders and Company. Also included is a most interesting dialogue on the use of Corporate funds - answering the questions about distinguishing business and personal use of corporate funds and how use of corporate funds for personal items can be managed. Eye openers galore. GST/HST implications are also included.
Assist with purchase agreements (asset transfers), tax-free rollover elections if necessary.
Be available to answer any questions that may come up.
TaxWatch Canada LLP offers full accounting and tax preparation services if you want a long term relationship.
Download our publication: The Seven Huge Advantages of Using a Corporation
Have a Corporation in Dissolution?
If your corporation is in the process of being dissolved, we can assist you with filing Annual Returns to return to active status.
If your corporation has already been dissolved, we have a step-by-step process to reinstate the corporation.
Read more info about Incorporation on our FAQs