Allied Self-Employed Resources

Archive for the ‘Incorporation’ Category

As a Self-Employed owner what are some ways that I can save on my taxes?

Hear are 4 easy tips for the self-employed and business owners to save on their taxes and make your money go further:

1. Splurge on office furniture

If you are self-employed or a small-business owner, consider accelerating the purchase of new business equipment or office furniture that you may have been planning to do in 2010. You are permitted to deduct under the “half-year rule,” one-half of a full year’s tax depreciation in 2009, even if you bought it on Dec. 31. For 2010, you can then proceed to claim a full year’s depreciation. For computer equipment purchased after Jan. 27, 2009 and before February 2011, you can write off 100% of the cost in the year of acquisition — with no half-year rule.

2. Consider a low, low loan

The government’s prescribed interest rate is set at the all-time low of 1% until at least Dec. 31, 2009, providing couples with a significant income-splitting opportunity. Under this strategy, the higher-income spouse loans funds to the lower-income spouse at 1%, with interest paid annually by Jan. 30 of the following year.

If the loan is made before Dec. 31 while the prescribed rate is 1%, any investment returns above the 1% rate can be taxed in the hands of the lower-income spouse. Note that even though the prescribed rate varies quarterly, you need only use the rate in effect at the time the loan was originally extended.

3. Contribute to your children’s future

If you have a child or grandchild who has never participated as a beneficiary in a Registered Education Savings Plan and who turned 15 sometime in 2009, Dec. 31 is the last chance to contribute at least $2,000 to his or her RESP to be allowed to collect the 20% Canada Education Savings Grant for 2009 and create eligibility for the grant in 2010 and 2011. If you miss the deadline, the child or grandchild will not be eligible for any grants in the future.

4. Give big

Dec. 31 is also the last day to make a donation and get a tax receipt for 2009. Keep in mind that gifting publicly-traded securities with accrued capital gains to a registered charity or a private foundation not only entitles you to a tax receipt for the fair market value of the security being donated, but eliminates any capital gains tax as well.

Allied Self-Employed Resources Inc. Calgary, Alberta

Your Own Business, Your Future Success, Your One Resource

How will I be able to get bank financing for a house or vehicle if I am receiving most of my income in a corporation?

Most banks will accept your corporate income for financing. Most of the problems that banks have with using your corporate income for financing is the information that they receive on the income and expenses and how it is reported. This is where quarterly accountant supervised reports go a long way to assist you in your financing requirements. A banker is always impressed when you have a certified accountant able to answer their questions.

Allied Self-Employed Resources Inc. Calgary, Alberta

Your Own Business, Your Future Success, Your One Resource

If I am already a sole proprietor why should I incorporate and what can ASR do for me?

The first good reason to incorporate is to save you money. A corporation is taxed at a lower tax rate than you are as a sole proprietor. Why pay more taxes when you can keep that hard earned money in your pocket.

The second reason is that if by chance there is an accident on a job-site that causes injury or damage that can be attributed to your negligence the insurance company will hold you personally responsible. You can be personally sued for the total damages which could cost you everything that you own.? If you are incorporated, your corporation places you a step further away from being liable on a personal level. We also recommend that you carry liability insurance so your corporation does not suffer total loss if an accident or injury should occur.

At ASR we can assist you in this process to make it easy with professional advice and service.

Allied Self-Employed Resources Inc. Calgary, Alberta

Your Own Business, Your Future Success, Your One Resource