Business advisory

A Fraser Valley business advisor with a CPA designation is what advisory means here: the person who advises on the structure is the one who files the return afterwards.

Incorporating is not only a tax question

It is the question that arrives first and gets answered worst, usually by someone quoting a single income threshold. The tax answer is only decisive at some income levels. Five things actually move the decision: how much of the profit the business genuinely leaves in the company, whether limited liability matters in the work being done, and what the clients or the contracts require. The other two are what the setup and annual compliance cost, and whether the owner is likely to sell or wind up in the foreseeable future.

The tax case rests on the small business deduction, which applies the reduced corporate rate to active business income up to a business limit of $500,000. But the saving is a deferral, not a gift: it holds only on money left inside the corporation. Profit drawn out in full each year to live on collapses most of the advantage, because personal tax is then paid on the way out. An owner taking everything out is often better off unincorporated with none of the filing obligations. Should I incorporate works through all five, and the incorporation calculator puts your own numbers against them.

Sole proprietorship, partnership, corporation — what each one costs you

A sole proprietorship is the default: income on your personal return, no separate filing, no liability shield. A partnership adds a second person without adding a legal barrier between the business and the partners — each is generally exposed to obligations the other creates, which is the part most partnerships discover late and the reason a written agreement matters more than the tax comparison. A corporation is a separate legal person with its own return, its own accounts and its own compliance calendar.

Moving between them is not free and not always neutral. Transferring assets from a proprietorship into a corporation can trigger tax unless it is structured properly, and the structuring has to be done at the time rather than described afterwards. That is the single most common reason to have the conversation before the change rather than at the next year-end. Sole proprietor vs corporation and sole proprietor vs partnership compare them directly.

How you pay yourself is the decision you make most often

Salary, dividends, or a mix. Salary is deductible to the corporation, creates RRSP contribution room, is pensionable for CPP, and requires a payroll account with source deductions remitted on schedule. Dividends are paid from after-tax corporate profit, require no payroll account, create no RRSP room and are not pensionable. Neither is universally better, and the honest answer usually depends on how much you need personally, whether you want the RRSP room, and how you feel about paying both halves of CPP as your own employer.

What makes it advisory rather than bookkeeping is that the decision is made before the year closes, not at filing. Once the year is over the money has already moved, and recharacterizing it afterwards is either impossible or expensive. The salary vs dividends calculator runs both against your own figures, and tax planning is where the wider version of the conversation belongs.

Setting up so the first year is not a repair job

Most of what goes wrong in a corporation’s first year is set up in its first month. A fiscal year-end chosen without thinking about when the business is actually busy. CRA program accounts opened late, or a payroll account not opened at all before the first pay runs. A business bank account that never quite got separated from the personal one, so every transaction has to be sorted by hand at year-end. A minute book that exists as an unopened binder, which becomes a problem the day a bank, buyer or lawyer asks for it.

None of these are difficult; they are simply easier now than later, and each one compounds quietly. The incorporation checklist lists what has to exist, and choosing a year-end covers the date itself.

Moving a corporation between provinces

A corporation formed elsewhere can operate in British Columbia two ways, and they are genuinely different. It can register extra-provincially — it remains an Alberta or Ontario corporation that is doing business here, keeping its home jurisdiction’s annual filings alongside the BC ones. Or it can continue into BC, becoming a BC corporation and ceasing to be governed by the province it left.

Which is right depends on where the work will actually be done, whether the home province still has a real presence, and how much duplicated annual compliance is worth avoiding. Either way, the corporate tax return then allocates income between provinces, and a corporation with a permanent establishment in two provinces files accordingly. Moving a corporation to BC sets out both routes.

Closing or selling: the failures are ordering failures

Winding up a corporation is not one decision, it is a sequence, and almost every problem is a step done in the wrong order. Assets distributed to shareholders before the final tax is settled, leaving a liability with nothing behind it. Program accounts left open, generating demands for returns on a company that no longer trades. A final GST return not filed, so the registration stays live. Payroll closed without the final slips.

A sale has the mirror version: whether the buyer is acquiring shares or assets changes the tax outcome for both sides substantially, and the two parties usually prefer opposite answers. That is a conversation to have before a price is agreed, because it is part of the price. Closing or selling your corporation sets out the order, and investment income and capital gains covers what comes out the other side.