Incorporate or Sole Prop or something else?

[Material Girl]

Do you think it's better to incorporate a company when you're just starting out? Or is it better to be more grassroots? I'm thinking that it would be better to incorporate because of less potential liability in a crises, but it seems you have to have a few officers instead of just making all the decisions yourself, which could present challenges. Plus, with a corporation you can't really write things off. What would be the best way to pay lower taxes with an incorporation in Canada? Anyone here know this stuff? I would appreciate any solid advice.

[winipcfg]

I will serve on your board of directors.

[Dameon Angell]

Be grassroots to start off, always. You base your clients on a small group of local people. You try it out on a small scale to see if it would work. Then incorporate later if you get results.

[Material Girl]

Well yeah, but the thing is... pretty much all of our dealings will be on a national or international level. If it was limited to a local economy then yeah, for sure. I just don't think we want to be a sole prop while dealing with huge corporations because you just never know what they might pull. We're starting out with one industry but plan to branch into a few others. I'm thinking if we register a holdings company corporation, that might be the best way overall to cover it. But I'm still not quite sure. I guess you can't really write off as much stuff with the corporation. Too bad Conrad Black didn't know that.... :P

[Eric is God]

Do you think it's better to incorporate a company when you're just starting out? Or is it better to be more grassroots? I'm thinking that it would be better to incorporate because of less potential liability in a crises, but it seems you have to have a few officers instead of just making all the decisions yourself, which could present challenges. Plus, with a corporation you can't really write things off. What would be the best way to pay lower taxes with an incorporation in Canada? Anyone here know this stuff? I would appreciate any solid advice.

Are you looking for 100% auditor proof advice or just some general knowledge? I might be able to dust off my old Canadian tax law book tomorrow as I'm taking my 3rd vacation day in the last 8 months. Keep in mind there are legal fees to incorporate but if you are going to be dealing with large corporations it seems like the best idea. If you incorporate you would need to distribute ownership via shares (not the publicly traded kind) which is generally how important business decisions would be made. Of course you can write things off with a corporation. Things may have changed since I first learned this stuff but you should be able to write off just as much, if not more, things as a corporation than a sole proprietorship.

[iLDuce]

Can I humbly suggest that you don't waste your time and/or money?

[404 Not Found]

Incorporate...in fact S-Corp yourself.

C-Corps are out of date anymore and in an S-Corp they no longer come after you personally when or if it fails.

You hit the nail on the head when you noted "potential liability".

[Material Girl]

If you incorporate you would need to distribute ownership via shares (not the publicly traded kind) which is generally how important business decisions would be made.

This is what scares me. But I think if I split it up among my closest people it might be okay. I just don't want to waste precious time arguing about something that I KNOW is right. Time-sensitive decisions are essential and if I'm stressing myself out arguing with the shareholders and stressed about that, I won't be able to focus on the important things.

Why do they do that anyway? It's my company, it's my decisions that will bring us to success, it's my money going into it. Seriously, why?

[Material Girl]

Incorporate...in fact S-Corp yourself.

C-Corps are out of date anymore and in an S-Corp they no longer come after you personally when or if it fails.

You hit the nail on the head when you noted "potential liability".

I don't believe S-Corps are applicable in Canada. What are the main differences between a C and an S?

[Epinephrine]

This is what scares me. But I think if I split it up among my closest people it might be okay. I just don't want to waste precious time arguing about something that I KNOW is right. Time-sensitive decisions are essential and if I'm stressing myself out arguing with the shareholders and stressed about that, I won't be able to focus on the important things.

Why do they do that anyway? It's my company, it's my decisions that will bring us to success, it's my money going into it. Seriously, why?

A corporation isn't 'your company'. It's a private entity unto itself. You can have a certain amount of control over it, but it's never fully yours.

[Material Girl]

Why??? Where is the logic? Please enlighten me.

What's the legal maximum on how much of a percentage of the shares I can hold? Is it legal to give the others to my own family?

[Soul Survivor]

You should research more. Please don't take offense to this, but if your asking for advise on a game forum it's a safe bet that you shouldn't doing anything yet. What type of business is it? Are you canadian?

[Epinephrine]

Why??? Where is the logic? Please enlighten me.

What's the legal maximum on how much of a percentage of the shares I can hold? Is it legal to give the others to my own family?

Even if you own 100% of the shares yourself, it still isn't 'yours'. For instance, if you owned a store that was a corporation, you can't just take money out of the till anytime you wanted to buy stuff... because the corporation is a separate entity from you. All money from the corporation has to flow to you via dividends or salary and appropriately taxed. As well, you can't use the corporation to buy yourself personal things which have nothing to do with the business (i.e. pay for your fishing trip if you can't show it has business value in the documentation).

That is why you are not liable for things the corporation does, because you are not the corporation.

Once you start treating the corporation as an extension of yourself, then you will be Conrad Black

[Eric is God]

Even if you own 100% of the shares yourself, it still isn't 'yours'. For instance, if you owned a store that was a corporation, you can't just take money out of the till anytime you wanted to buy stuff... because the corporation is a separate entity from you. All money from the corporation has to flow to you via dividends or salary and appropriately taxed. As well, you can't use the corporation to buy yourself personal things which have nothing to do with the business (i.e. pay for your fishing trip if you can't show it has business value in the documentation).

That is why you are not liable for things the corporation does, because you are not the corporation.

Once you start treating the corporation as an extension of yourself, then you will be Conrad Black

It would be hers in the sense that all the business decisions would be up to her as long as she held >50% of the shares. Everything Epi said is correct though. The accounting implications of a corporation are more complicated than a personal business because you would have to withdraw profits in the form of dividends or your personal salary. As long as you understand that you can't treat it like your personal piggy bank you shouldn't have any issues.

[Material Girl]

I do absolutely understand that. I'd just give myself a bonus instead. Is that legal? Is it legal to make my own family the BOD? Is the actual equity split up with the BODs or what? Is it legal to put my own money in and say it's their share? Lawyers please. :wub:

And here's another interesting thing to think about:

If a woman and a man are living commonlaw, what exactly happens if they split up? Somebody told me everything goes 50/50 but I find that hard to believe. Also, if you are married without a prenup and you can prove your spouse has cheated on you, does that matter when tallying up who gets what? Just curious.

And Soul Survivor, I am doing research. I'm reading government crap that's boring as hell and sometimes I think I should marry a lawyer or something. I'm meeting with a lawyer and stuff, so don't worry - I'm not basing 100% on this thread. But I do think that there are a few very smart guys here that know about this stuff and can give me some much-needed friendly advice.