Sole proprietorship vs incorporated???

Started by wantboost, September 10, 2022, 07:29:41 PM

Previous topic - Next topic

wantboost


What's your business setup?? I'm looking at just doing furnace cleanings/tuneup and thermostats what are your thoughts on being a sole proprietorship instead of incorporate ??? I won't be high income doing this part time

Admin

The quickest, easiest and cheapest way is as sole proprietor.  All you need is a business/HST number from the CRA.  Then business insurance and TSSA Contractor registration.  I don't think you need WSIB to do retail work.

rmuntz

Accountants can do amazing things if you incorporate. Even more if you have 2 corps.

Admin

Yes, but not for part time furnace maintenance.

But I'm interested anytime I can screw over the government.  How does the 2 corporations work?

rmuntz

They can pretty easily move money between corps, If I remember it's under the guise of management fees.

Of course, the goal is to have a zero at the end of the balance sheet, although you do need to make some money every few years  8..

G.P.

There are pros and cons to both. 
Sole proprietors - Company income gets added to your salary and taxes are calculated accordingly at ear end. You can pull $$ out of your company at any time without having to "document it" via cheques/payroll etc. but it will be shown on your annual T4 statement at year end. This is much easier when it comes to CRA, accounting and ensuring your books are up to date and good standing.  If you are bad at staying on top of every transaction, this is the route to take. I believe if you are making under $30K when you start you technically do not require an HST number.  You are the company hence you are personally liable for any mishaps/lawsuits/penalties the company may incur.

As the company grows and builds some assets/value, you start thinking personal liability and proper business structure for taxes and expansion. Employees etc. At this point I would consider incorporating.
It separates you from the business "on paper". Beneficial for liability but does not fully exclude you from it.   Just makes it harder for someone to personally sue you. Incorporating is more expensive to setup and maintain from an accounting perspective at year end. It is also harder to cut yourself a cheque at any given time to cover a personal expense you would like to purchase.

Incorporated creates a barrier between you and the company.  It is no longer considered your company but belongs to the shareholders.  You may be 100% share holder but at the end of the day but you are considered a shareholder as opposed to the Owner/operator.

wantboost

Is anyone here doing sole proprietorship???
I was thinking for just doing cleanings and thermostats part time
So don't want to incorporate. 
But the law suit thing has me scared abit.   Canada isn't like that states tho . I guess liability insurance would cover things first....