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Whenever you decide to incorporate your business, you will have to choose between federal and provincial incorporation. You should always ask yourself a question when you are going to start a business- "Should I incorporate?". Well, that totally depends on the situation and your business requirement .
Business incorporation is not a must for all business, so you need to know when to incorporate your business.
Incorporating your business also has a few benefits. Most of them are related to tax. So we will take a look at some of the tax benefits of incorporating.
Incorporating your business can help you to determine when you receive the income. That is a real tax advantage. The benefit of incorporating your business is that you can get your income at a time when you have to pay less tax. This is one of the tax benefits of incorporating.
When you incorporate your business, you get the potential for tax deferral. This helps you to understand the tax savings just in case you belong to the lower slab in the tax rates. Having a tax deferral is another on the list of tax benefits of incorporating.
If you are looking for some other tax benefits of incorporating, then you should add income splitting to it. Shareholders are paid dividends by the corporations. We all know that the shareholders have no involvement in the activities of business. If you make your family members the shareholders then what you do is you redistribute the income within your own family members.
Small Business Tax Deduction
If you want your business to qualify for Small business tax deduction (SBD). The SBD is calculated at a rate of 17% on the first $500,000 of taxable income. All this can reduce a lot of your net business tax and that is surely the best of the tax benefits of incorporating
The above points are some guidelines which can help you decide on when to incorporate your business ATS Accounting can be of great help when you want to know the tax benefits of incorporating.