馃攳
Incorporation in Canada | 15 Secrets the Taxman Doesn't Want You to Know Vol III - YouTube
Channel: Thomas C Chan - Financial Services
[0]
in crop or not to in crop adits the
[3]
question does it say if we own the
[6]
business you can beat the tax system you
[9]
make the tax rule and pay much less tax
[11]
compared to an employee is this a myth
[14]
or fact in today's video we'll explore
[17]
the benefits or having a corporation
[19]
which type of the corporation fits you
[21]
and what kind of tax advantage that you
[23]
have hey everyone is Thomas here madam I
[26]
said better life will continue going
[28]
over the book fifteen secrets that tax
[31]
band doesn't want you to know if this is
[33]
your first time here the channel is to
[35]
learn how money works and how you want
[37]
to work with money in Canada you have
[39]
any questions related to your finance
[41]
feel free to reach out in the comments
[43]
section below
[44]
your support will be my biggest
[46]
motivation let's jump into it setting up
[49]
a company it's not as complicated as you
[51]
think we don't need a physical building
[54]
to call yourself a business owner
[56]
now withholding company is merely some
[58]
paperwork and a name attached to it and
[60]
the name can be like abc123 a bunch of
[65]
numbers with no meaning is okay too you
[67]
can register the company yourself
[69]
although I recommend to let your
[71]
accountant or lawyers to deal with it
[73]
there are only two benefits for having a
[75]
corporation for liability and tax
[78]
purpose normally for employees the flow
[81]
of income goes like this first money
[84]
earned
[85]
then money get taxed and you spend the
[87]
rest of the money to food gas daily
[90]
expenses on the other hand if you are
[92]
going quotes a business owner then the
[95]
patter will be like this manured
[97]
but you spend at first dental leftover
[100]
gets taxed through a corporation we can
[103]
spend the earnings before the government
[104]
gets their hands on it
[106]
so you see why are the high income
[108]
earners like lawyers dentists car
[110]
mechanics always have a corporation if
[113]
your business deal with more than one
[114]
customer once your income reaches to a
[117]
certain level is time to consider to
[119]
incorporate or not there are two ways to
[122]
set up business structure in Canada
[124]
first time is the unloaded liability
[127]
company such as sole proprietorship
[129]
which is owned by one
[130]
person or partnership which is owned by
[133]
two or more people need a way the
[135]
business involves you and your partner
[138]
only all expense and income are factored
[140]
into your income tax you're responsible
[143]
for all the debts and obligations of the
[146]
business which also means that in the
[148]
defence things did not go well any
[150]
claims could go into your personal
[151]
assets John runs a construction company
[154]
in a sole proprietorship one day if it
[157]
gets sued because a project that had
[159]
built failed not only he may lose his
[161]
company and possibly everything in his
[163]
assets including his house partition is
[166]
similar if Tom and Mary decide to open a
[169]
restaurant together if something happens
[171]
to one side it affects to all partners
[174]
and possibly to their personal hazards
[176]
is quite scary when there's no limit on
[179]
the liability sole proprietorship or
[181]
partnership have simple business
[183]
structure it has a lowest out of cost it
[186]
costs less than $200 registered to the
[188]
government's the income expands attached
[191]
to personal income so if your business
[193]
is losing money you can reduce your
[195]
total personal income but as the company
[198]
grows it's better to move it to the
[200]
second type which is the corporation
[202]
because one now the liability goes to
[205]
the company only to you have a more tax
[208]
advantage and free as easy to move
[210]
assets taxed efficiently if they have
[213]
increasing value in the long run the
[216]
second type is the limited company
[217]
example will be like ABC Ltd one two
[222]
three Corp or ANC the any name doesn't
[226]
make a big difference but they are all
[229]
under the same category compared to sole
[231]
proprietorship or partnership the cost
[234]
to set up limited company is high in
[236]
enforce bookkeeping payroll GST you can
[240]
CPP and year etc and CRA will monitor a
[244]
much tighter as well on the cloud trust
[247]
the Canadian government give a huge
[249]
support to small business owner for this
[252]
video I will only talk about the CCP see
[254]
the Canadian control project corporation
[257]
where pretty much 90% of the small
[260]
business under CC PC
[262]
first for any amount less than $500,000
[266]
business active income the corporate tax
[268]
is between 11 to 15 percent depends on
[272]
which province your business is at
[273]
compared to 50% personal tax rates if
[276]
you make $500,000 alone and that is a
[279]
huge game ready next as the company
[282]
owner you have more control in paying
[285]
the shareholder which is usually
[287]
yourself again
[288]
usually in the form of income and
[290]
dividend since dividend has another tax
[293]
advantage so overall the shareholder
[296]
saves quite a bit from the two taxes but
[299]
keep in mind dividend is not considered
[301]
an act of income so it does not
[303]
contribute to your personal power our SP
[306]
rule also it might hurt your personal
[309]
boring power when it comes to mortgage
[311]
the other advantage C CPC has has 10
[315]
years of growing the business one day if
[318]
you decide to retire you can dissolve or
[320]
sell your practice to others there's a
[323]
lifetime of eight hundred and eighty six
[326]
thousand tax exempt order let's say
[328]
John's business start as Cyril and grows
[331]
to a million dollars when he sells it
[333]
the growth is a million dollars - the
[337]
eight hundred eighty six thousand which
[338]
is one hundred and fourteen thousand
[340]
fifteen percent of that will be taxed
[343]
which is fifty seven thousand to the CIA
[345]
imagine if you sell an investment
[348]
property and the million dollars as to
[350]
capital gain fifty percent the five
[352]
hundred thousand dollars will be capital
[354]
gain tax so 250 thousand goes to the CIA
[357]
a big difference in Hue but of course
[360]
CIA is always the smartest person in the
[363]
room they last CCP see to have a huge
[366]
tax advantage under the small business
[368]
deduction but now see how a targets and
[371]
text very heavily on the corporate owned
[374]
investment for example Tom as a
[377]
construction consultant and he has a
[379]
table 1 2 3 doc Inc since most of the
[383]
expense can be paid by the company to
[385]
have managed to save a million dollars
[387]
under the business account it does not
[390]
want the money to lose to an inflation
[392]
so it decides to invest a company's
[394]
money to stocks
[396]
no property at least some in the term
[398]
deposit sound pretty reasonable right
[400]
and here's the fun part under the C CPC
[403]
tax rule for every dollar you earned on
[406]
the interest fifty one percent goes to
[409]
the CIA
[410]
so for John if it gets five percent
[412]
return from the company's investment he
[414]
needs to give $25,000 as tax and that's
[418]
not it
[419]
if the passive income is more than fifty
[422]
thousand per year the five hundred
[424]
thousand dollars small business
[426]
deduction rule will start to freak
[428]
meaning instead of xi as a small
[430]
business tax rate now goes to 27 percent
[433]
again the house always win many small
[437]
business owners are very involved into
[439]
their day-to-day practice and that they
[442]
fail to take time to keep track of the
[444]
tax implication and plan for the long
[447]
term they all feel that the accountants
[449]
will keep them advice but in most cases
[452]
they only report and do what they are
[455]
told now a lot of accountants give
[457]
advise on how to receive a maximum tax
[460]
advantage on what changes can be made to
[463]
lower taxes keep in mind there's no tax
[466]
rate saving for the corporation but
[469]
there are ways to create tab shelter
[470]
accounts for small business and beside
[473]
income and dividend there are more ways
[475]
to take it from the corporation tax
[477]
efficiently and that is another topic
[481]
for next time I will put all the useful
[484]
links down below and a subscription box
[486]
if you're a small business owner do you
[488]
pay yourself in salary or a dividend
[491]
tell me more in the comment below this
[494]
is Thomas if you want to learn how money
[496]
works and how you want to work with
[497]
money then I will see you in the next
[500]
video
[502]
you
Most Recent Videos:
You can go back to the homepage right here: Homepage