Tax / Business Planning for canadian entrepreneurs and businesses

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Permalink Reply by Saverio Filippis on September 5, 2008 at 10:02pm

Hello to all, I thought I might share some insights on benefits of incorporating your business. Incorporating has many advantages the biggest one being that you can put corporate tax savings into your corporations's pocket. Translation... freed up cash flow for your business allows you to apply cash to business needs (E.g.: additional marketing, new website design, new enterprise resource planning program to effectively communicate to your organization's business position, supply chain efficiency and financial status. These are just some examples the list is endless).
The general rule for canadian corporations that have over 90% of your companies assets generating revenue within Canadian soil get to take advantage of the small business deduction which is a federal abatement program which allows a company to remain at the 28% federal tax level up to $400,000 in 2008, rumored to possibly move up to 500k in 2009! That's 1/2 a mil at 28% tax level as opposed to nearly 45 - 48% level for other corporations who don't have the canadian advantage. Think of taking all this excess cash and investing through your corporation's name which brings excess returns of 10 to 15% a year considering you make good investments.

Another idea is to take all you earnings in excess of 400k giving to charity where you charitable donations are all tax deductible (dollar for dollar) unlike the personal tax donations which are set at a small percentage for tax credits. Feels good to give and get full benfits from it! Its a win-win situation - total sum game!

Well that's all for now folks, just some ideas to help everyone possibly prosper and thrive hopefully. It is imperative to market and network to build your business but it is also important to plan for the obvious wealth you will achieve. Better to be prepared to pocket your money rather than give it away to government agencies. Let me know your thoughts on these discussions if it is interesting and of use to you, or if there are other questions and subjects that you are interested in. Stay tuned as I will in the near future explain how to improve your personal tax situation by being an employee for you own corporation!

Cheers and happy networking,

Saverio
Golioth Enterprises

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