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-   -   Do not incorporate your business! (http://www.diychatroom.com/f18/do-not-incorporate-your-business-165196/)

Tor-electrician 11-30-2012 02:28 PM

Do not incorporate your business!
 
Do not incorporate you business unless you have a particular reason for that.

I did, and expenses on filing and paying taxes increased by 400% !!!!

But the time and effort needed to file the crazy number of complex tax forms increased 10 fold.

Incorporating small business if you make less than $150K a year is a very bad and costly mistake

TheBobmanNH 11-30-2012 02:50 PM

I wonder how this differs in Canada vs. the US?

Beepster 11-30-2012 03:05 PM

I am a CPA and I doubt the "400% increase" part of your quote.

However, I would not say everyone should incorporate. At the minimum you should form an LLC for liability protection. A single member LLC can still report income and expenses on his Schedule C just the same as a sole practitioner.

B

ddawg16 11-30-2012 03:31 PM

I would be inclined to think the 400% increase has more to do with previous income being under reported.....a very common issue with most start up small businesses.......

mpoulton 11-30-2012 04:21 PM

I don't really see how this thread is on-topic for this forum, but it is interesting to me so I'll jump in until a moderator shuts us down...

I do not know anything about Canada's business laws, so I have no idea what similarities or differences exist. However, I am an attorney in Arizona and a large part of my practice is small business law. In the US, it is a very poor decision NOT to form a legal entity for your business. I generally prefer LLC's over corporations for most new small businesses, depending on the specific facts and circumstances. Regardless of which entity type you form, though, there should be no significant increase in taxation. Corporations are doubly taxed, but the double taxation is often offset by other advantages like pre-tax growth of retained earnings. LLC's can choose how to be taxed, but are usually treated as "pass-through entities" - in other words, there is no tax consequence whatsoever for forming an LLC. It is also easier to track deductions and defend them in an audit when you have a business entity with separate banking and accounting.

The most important reason to form a business, though, is limitation of liability. The business world and the legal system function on the basic assumption that businesses operate independently of their owners and liability is limited to the business entity. If you decide to throw your personal assets and identity into the ring and play the game of business without the benefit of limited liability, you are taking a huge and unjustified risk.

canada-electric 05-24-2013 10:35 AM

LLC is a great alternative that is not available in Canada

what is available in Canada is the legalized robbery of electrical contractors.

7 years ago I paid $70 every three years in licensing fees.

I now pay $780 in licensing fees every year for doing the same work.

An increase 3333% from $23.40 to $780.

Canadian semi-socialism puts more and more parasites and regulators on our shoulders.

On top of the higher fees, every new parasite demands more forms, paperwork, and accountability

RWolff 05-24-2013 10:40 AM

I think if you re-read the first post, it's worded oddly:

Quote:

and expenses on filing and paying taxes increased by 400% !!!!
It doesn't say his TAXES went up 400% it seems to suggest that the expenses involved with FILING did, as in he was formerly using a CPA or someone who did his taxes each year for say $100 and now with the extra paperwork and filings they are charging $400 to do the same work.

At least that's how I read it...

Tor-electrician 05-24-2013 11:02 AM

correction:

expenses on filing, hiring a tax PRO, and paying various payroll taxes, workers' compensation, unemployment and disability insurance increased, etc. by 400% !!!!

corporate or business income tax did not increase

Limited liability advantage of the corporation is obvious and was not the point of the first post.

Drastically increased expenses was the point.



.

RocketGal 05-24-2013 03:26 PM

Ontario Trades College
 
The new Ontario trades college has to be the biggest waste - hard to see the gains in this added level of oversight.

mpoulton 05-24-2013 03:50 PM

Does the additional accounting expense actually matter? I pay about $500 more per year for preparation of a partnership return (for an LLC not filing as an S-corp) than I do for my personal return. To me, an extra $500 per year is insignificant compared to the money the business makes and the other advantages of having a separate business entity.


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