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economist suntribune june 11 1986 b9 incorporation the costs can be high one of the most important con siderations affecting your busi ness is its form of ownership corporation or proprietorship usually the relative tax position afforded by each is a major deter minant in which form to choose an incorporated company is treated as a separate taxpayer under the income tax act this means any income or loss of a par ticular business operated through a corporation is treated separate ly from the shareholder prop rietorships on the other hand are considered to be extensions of the ownermanagers and are not tre ated separately any income or loss of the business is simply added to the tax return of the own ers and taxed accordingly the various phases and circumst ances of your business will deter mine how these tax considera tions can work for you for instance when starting a new business or considering a new sideline for an existing busi ness the probability of incur ring startup costs and not mak ing money is usually high losses in the first months or years of a new venture are not uncommon by utilizing the unincorporated forms of ownership these losses may be available to the owners personally thus reducing tax on any other income they have this is obviously a benefit in that im mediate tax relief on these losses may make the project more vi able revenue canada is in effect paying for part of the bill established business on the other hand if your busi ness is established and earning m6ney incorporation may have advantages in that the income tax rajte on income from the business may be much lower than the per sonal tax rate paid by the owners of la nonincorporated company factors other than tax howev er also warrant consideration in determining the best form of own ership for your business some of thje nontax advantages of in- coboration are limited liability sharehol ders have a limited liability for the acts and obligations of the company creditors can only look to assets of the company to satisfy indebtedness not to personal or real property of the shareholders however this does not apply if the shareholders have made per sonal guarantee because the ma- jot creditor of many small businesses is a bank and banks usually insist on personal guaran tees the limited liability advan tage may be negated continuity or permanence the company can exist as long as shareholders wanted to keep it operating incorporation avoids many of the pitfalls that develop on the death of a partner or a sole proprietor because the shares can be willed and passed to heirs of the deceased without dissolving the company although not al ways without some personal tax grants available financing a limited com pany enables a business to raise capital more easily through share or bond issued more government grants are available for corpora tions than for proprietorships transfer of ownership the corporate form of organization converts ownership of land build ings machinery and other fixed assets into more readily transfer able common andor preferred shares organization a limited com pany both demands and encour ages delegation and specializa tion in management the legal re quirements of incorporation can help to promote better manage ment practices and potentially greater efficiency of operation of course there are also dis advantages to the incorporated form of ownership cost the expense of incor- poration includes a provincial government fee and the profes sional fees of a lawyer and accountant a considerable amount of legal work is necessary to draw up shares forms minutes of share holders meetings articles and memorandum of association etc and the services of a good accoun tant are necessary to ensure that the relevant tax consequences have been considered plenty of red tape more legal requirements there is a considerable amount of red tape related to incorpora tion including the election of officers filing of annual reports with the registrar of companies the number of meetings which must be held and the mainte nance of an adequate bookkeep ing system dissolution a corporation is much more difficult and expen sive to dissolve than other forms of ownership also although the corporation does not legally die even if its only shareholder does there has to be some common sense provi sions including key person in surance otherwise the business can be extinguished very easily in summary the question of in- corporation is not easily answered in many situations the costs are high and the advan tages such as limited liability may be of minor value unless the business is large enough to gain a wprthwhile tax saving professional advice should be sought to determine the right form for your business john kane fca is a resident of unionville and a partner in the toronto office of thome riddell chartered accountants the appliance centre presents hie 1986 barbecue show great savings on the best selection of natural gas and propane barbecues broilmaster natural gas bbq bw3cn 593 sq in 40000 btu topoftheline deluxe wagon model 3 piece multiposition porcelainized cast iron grids dual up- front controls swing down front and 2 side redwood shelves reg 561995 special 57995 1c69 only xtj mo also available in propanebw3c special 554995 tank extra the appliance centre canadas barbecue headquarters has arranged a spectacular showing of the latest most innovative natural gas and propane barbecues anywhere so drop into your nearest appliance centre and take advantage of the great price reductions on a huge selection of barbecues you can even put your purchase on your gas bill installation arrangements are available and may also be financed best selection of gas and electric appliances the appliance centre coaaamersoas store location ricrmond hill 500 elgin mills road 8875847 1 1 cm mills m voa mackenzie dr o hwt t 3 shepherd natural gas bbq s2000 wfsng 510 sq in 40000 btu dual up front controls 2piece porcelainized grids ample front side and bottom shelving heavy duty construction reg 28995 special 26995 731 only 9 mo also available in propanes2000 wfs special 524995 tank extra monthly payment plan alto no dowr sales tax extra no penalty for early unit price o s57995 plus credit broilmaster propane bbq bw5c 418 sq in 40000 btu deluxe heavy duty construction ample front and side redwood shelving modem upfront controls 2 piece 2 level porcelainized cast iron grids reg 43995 special 39995 tank extra s1a82 only xvf mo also available in natural gas- bw5cn special 542995 monthly payments i payment with approved credit based on five year financing at a nominal interest raltou 75 per month or 21 per year payment for example unit price of 126995 plus credit charges of fife 5 for a total of 1731 x 60 equalling 43860 charges of 36145 for a total of 5 15 69 x 60 equaling j94140 unit price of j399 95 plus credit charges of s249 25 for a total of 1 10j2 x 60 equalling 564920 pen1ng june 15th second time around books ltd is pleased to announce the grand opening of second time around books records markham 154 main street north markham on sunday june 15th 1986 1000 am 600 pm for dealing in the selling buying trading of excellent quality paperback books records hardcover books cassette tapes music collectables compact disks childrens books magazines paper collectables 4716866 sa 7tjv we welcome you to markhams and unionvilles exclusive art materials store we are located just north of markham village lanes m the drawing board artists materials we are currently offering 20 off on all artists material ralph calabretta 2944162 msb flaifaate toootfante hmovmtnt company home renovations extensions call paul 4 7 16859 alfsen house art gallery moving to 2nd floor south side 2941088 showing at okeefe centre june 1828th oum mmmm sv v- vm- y s i 7