There are a lot of good reasons for getting your taxes done as early as possible instead of waiting for the deadline. Many times your Toronto accountant can be instrumental in giving you some good tax tips based on your last year’s tax situation. It could be that this year would be a good year for you to switch your business from a sole proprietorship to a Corporation. However, if this is the case then the sooner you do it the better. If you leave doing your taxes until the deadline then you are just postponing the advantages that these types of tax tips could bring you.
Having a business as a sole proprietor or as a corporation each will have their own benefits. It could be that when you started out with your small business as a sole proprietor it was more to your advantage, but as it has grown it may now have placed you in a position where the Corporation tax benefits would be more beneficial.
One important factor is the limited liability that you gain with a Corporation. In the eyes of the business laws a Corporation is view as being a separate entity or almost like a separate person. So once incorporated the business assumes the liabilities rather than the actual owner. In other words your personal assets as a person are separate from the business, and usually cannot be touched if a lawsuit were to occur against your Corporation.
Then the second aspect that makes incorporating attractive is that the tax rates that are applied against a Corporation is much less than those applied against an individual tax payer, which is what your sole proprietorship business is seen as.
You can also make use of dividends in a Corporation whereas you do not have this option with your personal business.
Your tax accountant can gather a lot of information regarding whether changing your business is a good option for you partly because of your financial information. Once you decide to make the transition from sole ownership to Corporation there are several things you will need to do. You will need to close your accounts with the various government bodies such as the CRA and then go about the legalities of registering your Corporation. Some of these tasks your accountant can assist you with, while for others you will need to rely on other types of professionals such as business Incorporating lawyers perhaps.
Once you have become one of our business clients here at Toronto Accountant we would be apply to discuss the pros and cons of incorporating your small business and whether it could be right for you.
