Incorporation FAQs

incorporation_tips

Why Should I Incorporate?
Should I incorporate federally or provincially?
Should I use a professional to set up my incorporation? or should I do it myself online?
How much does it cost to incorporate?
How long does it take to get incorporated?

Why Should I Incorporate?

Short Answer:

You will increase your marketability and you will pay less tax.

Long Answer:

If you are presently a sole proprietor, in a partnership or an employee there are many reasons to consider incorporating your small business. Below are some of the benefits of incorporating.

Significantly Reduce Your Taxes

You can significantly reduce your overall income taxes by leaving income in your corporation that will only be taxed at approximately 20%, and avoid the highest personal income tax rates of 40% to 50%.

Build A Big Corporate Retirement Fund

Using the low corporate income tax rate of approximately 15.5%, you can retain income in your company, and use your company as a strategy to accumulate a significant retirement investment portfolio for yourself.

Get A Tax Free Loan

You may be eligible to borrow money from your company to buy a home or automobile without having to immediately declare the loan as personal income.

Receive Tax Free Retirement Dividends

Upon retirement, or during a sabbatical from working, your spouse and you can receive dividends of approximately $30,000 each from your company, and if you have no other personal income, the total $60,000 of dividend income can be received as personal income tax free.

Smooth Income

Should your IT contracting or consulting income fluctuate significantly from one year to the next, you can use your company to smooth out your personal income over two or more years, resulting in lower overall income taxes.

Protect Personal Assets

Your company provides you with limited liability from your corporate IT contracting work, resulting in protection of your personal assets.

Increase Your Marketability

Due to the increased tax audit risk from the Canada Revenue Agency (CRA – formerly Revenue Canada), many large customers and IT staffing agencies prefer to deal only with incorporated IT contractors rather than sole proprietor IT contractors.

Additional Tax/Financial Strategies Available

Corporations have additional tax and financial planning strategies available for your use such as the creation of individual pension plans, investment holding companies, joint venture companies, etc.

 

Should I incorporate federally or provincially?

Short Answer:

You should incorporate provincially.

Long Answer:

Setting up a federal incorporation is expensive compared to incorporating provincially, as it requires much more paperwork for filling and maintaining up to date accounts with both the Federal and Provincial Director of Corporations. Therefore small businesses that do not foresee expansion in other provinces may prefer incorporating provincially. Additionally, despite being registered under the CBCA, a company will be subject to provincial regulations and will be required to pay all the mandatory license and registration fee in some provinces.

 

Should I use a professional to set up my incorporation? or should I do it myself online?

Short Answer:

You should use a professional.

Long Answer:

Too often business owners take the advice of a friend and go online to incorporate. Be aware online registries do not give advice. Decisions have to be made as to how 
to distribute the shares to the shareholders, the importance of keeping a 
minute book, how to choose your year-end, or the ongoing obligations of a 
corporation. Most likely you will be the
 majority shareholder or only shareholder in the corporation as well as one of
the employees. Getting proper advice
from a professional may cost a little up front, however, can save you a lot of
money when you have a successful, profitable corporation.

 

How much does it cost to incorporate?

Short Answer:

CA4IT offers incorporation for $795 + HST. This fee includes the government filing fee, the name search fee, minute book, and seal. In addition we offer special disounts for clients that come through our referral network. Ask your recruiter if they are part of our network and what value added pricing is available for you.

Long Answer:

Our Paralegal Services Include:

Our Fee:

Preparing:

  • Articles of Incorporation for government approval
  • Minutes of the organizational director’s meetings
  • Minutes of 1st shareholders’ meeting
  • Subscription for shares
  • The officer and directors’ registers
  • Share certificates

HST/Business Number Registration

Initial Return / Form 1

Corporate Bylaws

$795.00 (Plus HST)

Other Services Included:

Government Filing Fee

Included

Name Search Fee

Included

Corporate Minute Book & Corporate Seal

Included

In addition we offer special disounts for clients that come through our referral network. Ask your recruiter if they are part of our network and what value added pricing is available for you.

 

How long does it take to get incorporated?

Short Answer:

Your articles of incorporation can be available in as little as one hour. Your complete incorporation package including minute book, seal and GST/HST registration takes between 3 – 5 business days.

Long Answer:

Your articles are processed immediately and can be available in as little as 1 hour if submitted between 8 a.m. and 4 p.m. (E.S.T.). If submitted outside of these hours, they will be placed in queue for automatic submission on resumption of regular service.

Your complete incorporation package including minute book, seal and GST/HST registration takes between 3 – 5 business days.