As a sole proprietor of a business, you may be considering different reasons why you should incorporate. One of those reasons may be your taxes and how incorporating can shift this liability for you.
A popular reason why people incorporate is actually for tax planning purposes. Often businesses find that as a corporation, there’s an opportunity to structure their affairs, and to minimize or defer taxes. A corporation does have the benefit of a lower tax rate and though the government has created some new rules regarding income sprinkling that are tighter than they were before, there are still opportunities to use this.
Income sprinkling means that you can share the corporate income between, say you and a spouse. So if your spouse is involved in your business as well, in a meaningful way, there’s an opportunity to share the corporate income with them and in turn explore opportunities to defer or even minimize your tax liability.
If you’re looking for support in incorporating your business, our associates at CBM Lawyers can help. We will walk you through each step of the process and lay out your different opportunities available, should you decide to incorporate.