Dean Constand
   Certified General Accountant
      Dean Constand (CGA)
       Corporate | Small Business | Personal | Income Tax | Consultation
   

        Newsletter Page 1 - Toronto Certified General Accountant

      Newsletter September 2008

      Dear Client or Future Client:

      I hope that you had a terrific summer, and let’s cross our fingers for the good weather to extend
      into the Fall. This is the first of my quarterly newsletters; my goal is to keep you informed of
      issues relating to small business needs and personal income tax. The newsletter is divided into
      two sections: Small Business Needs and Personal Income Tax.

Small Business Needs

       Advantages and Disadvantages of Incorporation, and the Business Life Cycle

      Whether you have an existing business that is unincorporated or incorporated, or whether you are
      thinking about starting a business and you have to decide to incorporate or not, you need to be
      aware of the advantages and disadvantages of incorporation. For those of you who have an
      unincorporated business, knowing these advantages and disadvantages, and knowing what stage
      your business is in during its life cycle, will help you determine if and when to incorporate. Others
      who have incorporated businesses should be aware of the advantages of having a corporation, so
      they can use the corporation effectively to minimize taxes, and to help them take the next step in
      their business life cycle. There will come a time when your participation in the business will end,
      either by selling it, or by transferring it to children, or by closing the doors of the business, winding
      it down or by dying! There are tax issues relating to every one of these decisions. Death and taxes
      are indeed the only certain things in life.

      Advantages of Incorporation
  • Limited liability to the extent personal guarantees are not required by creditors
  • Lower small business corporation income taxes
  • Income splitting with family members
  • Flexibility in the timing of the receipt of income personally
  • Estate planning
  • Use of the capital gains deduction to shelter $750,000 of capital gains on the sale of small
    business corporation shares

      Disadvantages of Incorporation
  • Business losses are not available personally to offset other income
  • Additional costs of maintaining a corporation
      In this newsletter, I will discuss two of the advantages of incorporation: limited liability and lower
      small business corporation income taxes, intertwined with the disadvantages of incorporation
      noted above.


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Dean Constand (Toronto Certified General Accountant)                                       Email Contact: accountant@deanconstandcga.com

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