Each year I help over 500 clients file their Canadian and US tax returns as well as plan for both their Canadian and US investment accounts. I also regularly help new US clients plan for their move to Canada.
- I make about $190,000 gross and $130,000 net per year
- I work from home
- No employees, but lots of sub contractors (online help)
- I’m married with 2 children under 18 years old
- My wife have $20,000 in income per year
- I make $15,000 from a teaching pension in addition to the income above.
I get this question all the time and in each case it will depend on a specific set of facts. However let me do my best to give you a quick answer and if you have any other questions please give me a ring at 250-661-9417.
From a tax perspective it appears as though you may benefit from incorporating your business if you feel as though you can keep some earnings in the corporation year over year to help the business grow.
If you don’t need the full $130,000 per year for living expenses there can be a significant deferral of tax by leaving accumulated earnings in the corporation to grow at lower tax rates. Also consider that by incorporating you’ll have the ability to split some income with your wife if you planned on issuing her shares of the newly incorporated company.
If you ever decided to sell the shares of the corporation you would be able to shelter a significant portion ($750,000) of the capital gain providing that you met a specific set of prerequisite criteria.
Note however that if were to incorporate you would incur additional annual legal, accounting and tax preparation costs.
Those are some of the more significant considerations.
Give me a call at 250-661-9417 and we can discuss your situation in more detail.
Phil Hogan, CA