hypothetical corporate question for sole proprietor

[quazimoto]

I'm sure somebody must know this. I've been considering incorporating my company for some time now of which I am the sole proprietor. There are many gains for doing so and if I do incorporate I won't pay any taxes since the net revenue of the business will always be zero.

That being said, hypothetically as I am en employee of said corporation could I then charge myself EI premiums knowing that I do not work from December to February in order to collect said EI in December to February each year? Does that make sense?

The other big thing I get for incorporating is lower merchant fees associated with interac, visa, mastercard and amex so many good reasons to do so.

[yohan4ws]

Speak with an accountant man, need to make sure the numbers jive.

[benyl]

Originally posted by quazimoto
I'm sure somebody must know this. I've been considering incorporating my company for some time now of which I am the sole proprietor. There are many gains for doing so and if I do incorporate I won't pay any taxes since the net revenue of the business will always be zero.

That being said, hypothetically as I am en employee of said corporation could I then charge myself EI premiums knowing that I do not work from December to February in order to collect said EI in December to February each year? Does that make sense?

The other big thing I get for incorporating is lower merchant fees associated with interac, visa, mastercard and amex so many good reasons to do so.

Corporate tax rate is much lower than personal. You are better off leaving the money in the company than paying yourself as an employee. you should pay yourself with dividends at the end of the year.

First $30K in personal dividends is tax free. Depending on how much you make, you may not have to pay personal tax.

Talk to an accountant.

Also, the whole EI loop hole is a douchebag move.

[lint]

How will your net revenue always be zero? If your business never turns a profit (and you never pay taxes) you are setting yourself up for an audit. There is a big difference between tax planning and tax avoidance. Find a good accountant.

[Masked Bandit]

So if there are all these advantages of incorporating (sp?), why would you not? What's the down side?

[ramminghard]

As the sole shareholder any salary you make is EI exempt. You only pay tax and CPP on any salary and/or bonus.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/ei/mplymnt-eng.html

[quazimoto]

I wouldn''t say its a douche move. If you are paying for the insurance you are entitled to it. It was something that was brought up by my friend who works in the fisheries way out east. It was really something I was contemplating. Ironically the EI premiums would be roughly half of what I would get back.

A douche move is not paying your taxes lol. I've been paying way too much in tax for the last 10 years. At least I'm honest on those taxes!