incorporating... paperwork question

[AndyL]

Save me a few redo's at the registry... Seem to recall I had trouble with this last time...

Just need to get myself personal WCB coverage, which requires incorporated or ltd company...

http://www.servicealberta.ca/pdf/Forms/REG3047.pdf

Section 1 - Leave blank? just going for a 1234567 Alberta LTD name

Section 2 - Classes/# of shares? What the hell do I put here? 1 share / 2 shares?

Section 3 - None I'd assume?

Section 4 - minimum maximum # of directors ? It's just me... Should I toss the wife on there?

Section 5/6 - None?

Thanks in advance!

[canadian_hustla]

Section 1 - Leave blank? just going for a 1234567 Alberta LTD name leave blank

Section 2 - Classes/# of shares? What the hell do I put here? 1 share / 2 shares? break down what kind of shares you want to issue i.e. Class A are usually voting, Class B are usually voting as well, C's, D's, E's not necessarily voting. Most private companies have 100 class a's/b's shares (50 for you, 50 for partner), but then again I have seen companies with 10, 20, 50 shares issued as well

Section 3 - None I'd assume? none but you should consult a lawyer if you are planning to bring in other shareholders

Section 4 - minimum maximum # of directors ? It's just me... Should I toss the wife on there? usually minimum is 1 and maximum is 10, EDIT if you add you wife on their she will need to be with you when you open the account, get business credit, etc. better to leave her out

Section 5/6 - None? speak to a lawyer but in your instance i would assume none

[AndyL]

Yeah, basically just need a limited company to get WCB coverage - I'd like to just stay sole proprietorship - but can't get WCB as such, has to be incorporated or LTD to get it...

Thanks much!

[Bisklimpkit]

One small thing to add...if your wife doesn't work or you think you're going to make way more than her, you should get X-number of class A shares for yourself, and the same number of another class of shares for your wife. That way you can pay yourself or her dividends out of the company, making it an easy way to income share.

I've been doing this for the last 3 years and only this year am going to take a wage from the company in order to use up some charitable donations. Because it's all been dividends we've paid very little personal tax (under $2000/year combined).

Keep in mind that if you go the dividend route, you won't be contributing to CPP unless you choose to, and that your RRSP contribution limit will not go up. I've found it very work it, though, as the total tax paid on my income is only around 16%, instead of the 30-odd% a person typically pays when an employee.

[xDiMSuMx]

Section 1 leave blank

Section 2 is share structure
Class A, B, C, etc. are the names of your shares
If you have more than one class of shares, differentiate between the classes (voting, non-voting, dividends, etc)
If you only have one class of shares, it is assumed that they all have the same priveleges, rights, restrictions
List max number of shares you can issue for each class
They don't want to know who the shareholders are until the first annual return, just the max the company will issue

Section 3 some people like to list restrictions on share transfers like "share transfers must be approved by majority of shareholders or directors"

Section 4 if you put in a specific number, the corporation must always have that number of directors.

Section 5 if there are no restrictions on what business your company does then put none

Section 6 special rules if you have any, sometimes people put in rules for meetings of shareholders/directors, general meetings, appointing directors

[AndyL]

Originally posted by Bisklimpkit
One small thing to add...if your wife doesn't work or you think you're going to make way more than her, you should get X-number of class A shares for yourself, and the same number of another class of shares for your wife. That way you can pay yourself or her dividends out of the company, making it an easy way to income share.

I've been doing this for the last 3 years and only this year am going to take a wage from the company in order to use up some charitable donations. Because it's all been dividends we've paid very little personal tax (under $2000/year combined).

Keep in mind that if you go the dividend route, you won't be contributing to CPP unless you choose to, and that your RRSP contribution limit will not go up. I've found it very work it, though, as the total tax paid on my income is only around 16%, instead of the 30-odd% a person typically pays when an employee.

Interesting - hadn't thought of this... Is it really that easy or does it complicate the heck out of the tax return?

[Bisklimpkit]

I've never done my own taxes, so I can't say how much it does or doesn't complicate things. I pay about $1500/yr for accounting fees to get my corporate and personal taxes done, but from what I can tell, he's saved me close to $20k over the last 3 years, so I think it's well worth the investment.

If you're considering doing this, I'd recommend sitting down with a good tax accountant just so he can tell you all the pros and cons of it.

[DRKM]

Originally posted by Bisklimpkit
One small thing to add...if your wife doesn't work or you think you're going to make way more than her, you should get X-number of class A shares for yourself, and the same number of another class of shares for your wife. That way you can pay yourself or her dividends out of the company, making it an easy way to income share.

I've been doing this for the last 3 years and only this year am going to take a wage from the company in order to use up some charitable donations. Because it's all been dividends we've paid very little personal tax (under $2000/year combined).

Keep in mind that if you go the dividend route, you won't be contributing to CPP unless you choose to, and that your RRSP contribution limit will not go up. I've found it very work it, though, as the total tax paid on my income is only around 16%, instead of the 30-odd% a person typically pays when an employee.

What I do with my TSFA account is buy shares in my own corp. You can only buy 50% of the shares mind you. Anyway you then can offer dividends that will go to the TSFA account and these dividend are tax free.

[AndyL]

So I could set myself up to draw a base salary - then payout additional in dividends into a TFSA; which I could then payout to myself and my wife... That's interesting

[Aaron@Tuner]

Originally posted by DRKM


What I do with my TSFA account is buy shares in my own corp. You can only buy 50% of the shares mind you. Anyway you then can offer dividends that will go to the TSFA account and these dividend are tax free.

The corporation has to be on a listed stock exchange for you to do this. You can't hold shares of a private company in a TFSA or an RRSP account AFAIK.

[dannie]

Originally posted by xDiMSuMx
Section 1 leave blank

Section 2 is share structure
Class A, B, C, etc. are the names of your shares
If you have more than one class of shares, differentiate between the classes (voting, non-voting, dividends, etc)
If you only have one class of shares, it is assumed that they all have the same priveleges, rights, restrictions
List max number of shares you can issue for each class
They don't want to know who the shareholders are until the first annual return, just the max the company will issue

Section 3 some people like to list restrictions on share transfers like "share transfers must be approved by majority of shareholders or directors"

Section 4 if you put in a specific number, the corporation must always have that number of directors.

Section 5 if there are no restrictions on what business your company does then put none

Section 6 special rules if you have any, sometimes people put in rules for meetings of shareholders/directors, general meetings, appointing directors

This guy has it bang on. The only thing I would change is that I would not make your directors a single number. Make it a minimum/maximum number. Min 1 Max 10