tax tips traps and fatal mistakes of a startup
TRANSCRIPT
Tips - Structure
• Unincorporated
• Less start-up costs
• Expense can reduce income from day job
• Easy
Tips - Structure part 2
• Incorporate
• Off calendar year end
• Salary vs Dividends
• Multiple founders - have their shares vest over 3
years.
• Expanded deductions
Tips – Income Tax
• Borrowing Money
• Insurance (life and health)
• Hybrid Expenses• Home
• Auto
• Cell phone
• Internet
Tips - HST
• Registered for HST
• HST is a net tax
• Registered to file monthly to get money back sooner
• Consider the Quick Method of HST
Traps - Structure
• December year ends
• Taking a wage while still at their day job
• Not planning for EI
• Not planning for personal tax deductions
Traps – Maximizing RRSPs
A TFSA and a Corporate Savings Account
could yield more money in retirement
Fatal Mistakes – Personal Services
• An incorporated employee
• Limited write-offs and an awful tax rate
Fatal Mistakes – Subcontractors
• Set own hours
• Use their own equipment
• Risk of profit or loss (not just hourly)