Should I incorporate? That really depends on your situation and needs. Before making a decision, please consider the advantages and disadvantages of a sole proprietorship versus corporation.
Sounds complicated doesn’t it?
Here’s an example of a business earning $100,000 in income under the Sole Proprietorship vs. Corporation in BC in 2015.
Now don’t forget, the corporation has to pay out the salary to the owner to access the profits. So let’s suppose the owner wanted $70,000 in salary and leave $30,000 in the business for future investment.
|Net Income||$100,000||$30,000 (reduced by $70,000 Salary)|
|Business Taxes Payable||$23,850||$4,050|
|Employment Taxes Payable||$13,603|
|Total Taxes Payable||$23,850||$17,653|
There are a lot of differences between a sole proprietor and corporation, it’s important to get your business set up properly, please seek professional advice.
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