OT contracting and incorporation

[Evan Leibovitch]

Zbigniew Koziol wrote:

>>> I typically leave money in my company which is only taxed at 18%
>> Exactly. To be more specific, dividend income is taxed lower than salary
>> income because dividends are paid after the company pays its own taxes.

> This suggests that incorporating makes more sense when there is
> certain sufficient amount of money that can be left for the "company".
> If not enough money is made to pay  "employee" than not much can be
> saved.

True to a point, but it's more complex than that, because a company can
declare a loss -- and that loss can be carried over to reduce the
(pre-tax) profit of a future year.

> A similar problem exists in case of "sole-proprietor" - if he does not
> make enough money than he can not "spend" and later to reclaim from
> tax agency.

To be honest, this kind of thing -- especially questions such as "what
constitutes 'enough'" -- goes beyond what most people on this list are
qualified to answer. The regulations (and sometimes arbitrary
interpretations of them) are complex and change at odd intervals. Your
mileage WILL vary.

> I also had been once forced to get registered, under sole-proprietor
> umbrella, because otherwise I would not get a job.

If you mean the $50 sole-prop/partnership registration, that gives you
NOTHING except the ability to accept cheques under a business name that
is not on your drivers' license. There Is No Umbrella short of
incorporation. Whoever forced you to do that was incorrect to assume it
offered anything besides a personal relationship under a different name.

> Is in Ontario required to have a separate office to be registered as
> corporation? I know that laws are different in priovinces.

To incorporate as an Ontario business you must have a Legal Head Office
in Ontario. The Legal Head Office can be a residence, and it need not be
the company's primary office location. Indeed, there are companies
incorporated in Ontario whose "legal head office" is that of its
corporate lawyer.

IANAL. AINAA.

- Evan
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