Any body know how to register a company to save tax

[TaoWeng]

I heard that there is a way to register a company in Canada to save some of the income tax. Is anybody know how to do that?
Thank you for the info.

 

[northeast]

It depends on your situation. It is better to ask a CGA ( accountant).

 

[开喜]

光为了节省税而注册公司啊? 注册公司也要花钱的, 维持公司也要花钱的, 到底合算不合算啊?

 

[oread]

最初由 开喜 发布
注册公司也要花钱的,

The fee for online business name registration or renewal is $60 in Ontario

维持公司也要花钱的

This is the whole point of having your own business.

 

[胡说之]

Plenty of people get it wrong -- registering your own business is not a valid tax shelter for your T4 income.

 

[oread]

Oh how so?

最初由 胡说之 发布
Plenty of people get it wrong -- registering your own business is not a valid tax shelter for your T4 income.

 

[胡说之]

最初由 渐渐 发布
Oh how so?

Because CCRA won't allow you to deduct any business expenses from T4 income.

But de but, one exception -- T4 with code 99 is considered contract capital gain. CCRA gave me a hard time last year, the consulting company I worked for issued T4 with code 99, however I have to provide copy of the contract agreement, all the receipt of expenditure ... and 2 rounds of face to face talk, lots of sweat. (Even my accountant gave up, therefore I went to there alone for the last round, fortunately, my argument is accepted.)

When you work as permernent employee with benefit, and without other capital gain, you can not claim expenses against T4. Bien sur, you can carry over the capital loss (i.e. your expenses) to next fiscal year, so if you lost your permernent job(God forbidden) and started temporary contract, the accumulated capital loss would do you some good.

 

[dkwan]

To save taxes, you dont need to register an company to do that.

Canada Revenue Agency (CRA) allow business deduction if you are self-employed from T4 income. Register an company is quite a hassle, like annual T2 return, payroll ( even no body ), GST, PST ( if applicable ), etc...

So, people might think, network marketing is claim you are the boss. But CRA doesn't reconize the activities as self-employed because all your profit from sales or from downline will not give you any T4A( Sales based on commission ) at the end of tax year.

Reconized self-employed individual must
1) Have an registered business, OR
2) Have a provincial/federal issued license, ie. Mortgage broker, Life insurance agent, etc..

Continue on next post~

 

[oread]

What if you are deemed to be "self-employed"?

最初由 胡说之 发布


Because CCRA won't allow you to deduct any business expenses from T4 income.

But de but, one exception -- T4 with code 99 is considered contract capital gain. CCRA gave me a hard time last year, the consulting company I worked for issued T4 with code 99, however I have to provide copy of the contract agreement, all the receipt of expenditure ... and 2 rounds of face to face talk, lots of sweat. (Even my accountant gave up, therefore I went to there alone for the last round, fortunately, my argument is accepted.)

When you work as permernent employee with benefit, and without other capital gain, you can not claim expenses against T4. Bien sur, you can carry over the capital loss (i.e. your expenses) to next fiscal year, so if you lost your permernent job(God forbidden) and started temporary contract, the accumulated capital loss would do you some good.

 

[dkwan]

There are 2 pictures here.

1) Home-based business
2) Self-employed business

Some people is mixing up those ideas. They can be together or considered seperately.

Most of the self-employed is home-based but not necessary.

Home-based business is a business that your head office is your primary resident. Therefore, the business is using your resident's resource to make money ( like hydro, water, property tax, or mortgage interest payment... etc ). Therefore, some of the home-used bills can be credit towards the income gain from the business.
Example, if your business make 10,000 a year, and use 5000 in expenese I mentioned above ( which is about 30% of the total expenese of your house ), then you can have 5000 tax credit on the 10,000 you make from your business. So, only 5000 is taxable from the business. If your business did not make any money, since the 5000 is only tax credit, you cannot get them back. So, if you actually make money from the home-based business or this idea is not worth the hassle.

Self-employed business is working for/by yourself, but not necessary work at home. Most of them are paid by commission, or contract job. They are working in a office outside home. Then, all your expense that needed to generate income from your business can be tax deductible. Since commission job will be issue a T4A at end of year. Then if you keep your receipt for gas, cellphone, internet bills, food...etc can be claim againist your T4A.

Example of home-based business, some plumbers, painter, etc.. they will issue invoice/recipt for their services.

Exmaple of self-employed, mortgage broker, real estate agent, insurance agent..etc, they must have an head office to register them, cause they are either provincial/federal licensed.

 

[胡说之]

最初由 渐渐 发布
What if you are deemed to be "self-employed"?

Deemed by whom? You may consider yourself "s-e", the point is sometimes CCRA don't agree with it once what you submit is T4(code 00) -- you should get T4( code 99) or T4A from your employer, to get rid of all the ambiguity.

 

[开喜]

If you work for only one company on a full time basis - it is highly likely that you must be considered an employee. (A good example is an IT consultant who works full time in NT). If you have more than one companies that you are contracted with and work for them simultanenously, you can be considered Self employed. (A good example is an accountant/bookkeeper who runs from one office on Monday to another office on Tuesday and to another on Wednesday... ...)

 

[dkwan]

what if I work in this tim hortons A and tim Hortons B at the same time and sign contract?