STRUCTURING FOR THE SELF-EMPLOYED and BUSINESS OWNER

Before starting a business, it is necessary to structure it properly.  Here are the main ways a business can be structures:

·          SOLE PROPRIETORSHIP.  This is a type of business entity which legally is not separate from its owner.  Taxes for this type of business are paid on the individual’s personal income tax return.  The sole proprietorship is good to use for smaller home-based businesses or businesses that are unsure if they will make over $35,000.

·          CORPORATION.  A corporation is a legal entity used to conduct business.  Corporations exist as a product of corporate law and their rules balance the interests of the shareholders and the employees.  This type of business pay a lower tax rate than most individuals.

·          HOLDING COMPANY.  A holding company is a company that owns part, or all majority of other companies’ shares.  It usually refers to a company which does not produce the goods or services itself,  Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies.

·          INTERNATIONAL BUSINESS CORPORATION. This is an offshore company formed under the laws of some jurisdictions as a tax-free company which is not permitted to engage in business within the jurisdiction it is incorporated. 

·          TRUST. A trust is an arrangement whereby property is managed by one person for the benefit of another.

·          LIMITED PARTNERSHIPS. This is a form of partnership that has both a General Partner who runs the business and Limited Partners who put in the capital. 

Proper structuring is your first step to building a successful business so make sure you consult with a professional on which structure bests fit your business and personal goals. 

108 Arbour Ridge Close NW – SOLD

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108 Arbour Ridge Close NW

This is an absolute exquisite home that you are going to fall in love with. When you enter you are greeted with beautiful hardwood floor that stretches throughout the main level living areas which match the amazing valley and mountain views. There are two bedrooms on the main level and a full size 4 piece ensuite and walk in closet off of the master bedroom along with it’s own private balcony entrance. There is a formal dining room area, which currently used as a piano room. The kitchen is one to dream of with granite counters, walk in pantry, breakfast eating bar, nook and to top it all off a fireplace that is shared with the living room. There is an abundance of natural light in this west facing backyard. The basement is a fully finished walkout with 2 more bedrooms, curved staircase from the main level and open family room with plenty of room for a pool table. There is also a third large room that is currently being used as a office that also boasts a 2 sided fireplace. This is a home that you must have on your list. Don’t miss out!

TAX PLANNING WITH THE SELF-EMPLOYED OR BUSINESS OWNER

Self-employed people or business owners have a great edge in tax planning over the employed.  They get to deduct expenses from their income and pay less tax later, whereas the employed do not get to deduct expenses from their income and have to pay tax on every pay cheque.

Here are the many ways for the self-employed and business owner to save on tax:

• Structuring
• Deducting business expenses
• Use dividends
• Make spouses and dependents over 18 shareholders of the corporation
• Pay family members wages
• Utilize shareholder loans
• Utilize Private Health Service Plans (PHSPs)
• Always stay under the “Small Business Deduction Limit”

I’ll be writing more about these tax saving strategies for the self-employed and business owners in my next blogs.  Check back here next week!

1521 McAlpine Street – SOLD

1521 McAlpine Street in Carstairs, AB

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Welcome to this beautifully designed home that you will fall in love with.  Everything that you are looking for in a new home, this home has.  This is a 1,371 sq ft, 2 Bedroom + Den, 2 Bath home with gorgeous hardwood throughout the main living spaces and exquisite tile and carpet in the remainder of the home.  The kitchen has upgraded subway tile designed backsplash, a walk in pantry, stainless appliances and a large island plus a built in desk.  The living space is all vaulted with featured pot lights through out the perimeter of the room, high end hanging lights and a cozy fireplace.  Both bedrooms are of good size and the master ensuite has a large walk in closet, corner soaker tub and separate shower.  This home also features a 92% efficient furnace and flow through hot water boiler system. The lot that this home sits on is oversized with plenty of room to develop a second double garage if so desired.  Don’t miss your opportunity to live in Carstairs premier community of West Highlands.

This home is built by Terra Banah Builders of Calgary Alberta.

Terra Banah Builders Website – www.terrabanahbuilders.com

For more info and video on Carstairs and Builder CLICK HERE...

USING TAX SHELTERS AND TAX PROGRAMS

Everyone should look at the possibility of using a tax shelter and/or a tax program as part of their overall tax plan each year.  They are very efficient in saving tax.  However, people must understand that CRA will scrutinize many of the tax shelters and programs.

WHAT IS A TAX SHELTER?

Tax shelters are defined in the Income Tax Act.  In general terms, a tax shelter includes either a gifting arrangement or the acquisition of property, where the tax benefits and deductions arising from the arrangement or acquisition will equal or exceed the net costs of entering into the arrangement or the acquisition of the property. 

WHAT IS A TAX PROGRAM?

A tax program is an arrangement where you get the tax benefit immediately, but will most likely pay it back later.  Most tax programs use tax deferral

The most important thing to know about using tax shelters and tax programs is that they are deeply involved in funding charities and foundations for humanitarian causes.

Want to learn more about tax shelters and tax programs? You can send me an email through info@kustomdesign.ca and I will gladly help you with any of your questions. Looking forward to hearing from you!  Have a great day!

ALLOCATING TAX DEDUCTIONS BETWEEN COUPLES

Like tax credits, there are also a number of tax deductions that couples need to look at during tax planning.  Here’s a list of possible tax deductions that can be split or allocated between couples.

• RRSPs (REGISTERED RETIREMENT SAVINGS PLAN).  The contributor is the person who puts the money in and gets the tax benefit, and the annuitant is the person whose account the RRSP contribution goes to.  Simply have the spouse who needs the tax deduction make the RRSP contribution.
• CHILD CARE EXPENSES can be allocated to either spouse.
• MOVING EXPENSE  can be allocated between spouses depending on how much income each one has.
• INTEREST & CARRYING CHARGES.  Money borrowed to invest should be borrowed by the spouse who is going to claim the income.  Couples can also share the deduction by both being on the loan or line of credit.

If your spouse has no income, you can claim them as your dependent.  This allows you to claim all of his/her personal exemptions.  If you are a single parent, you can claim your child as an eligible dependent giving you the equivalence of your spousal personal exemptions.

Weekly Market Update – Week of May 5, 2009

Over the past week the number of listings has dropped, as did the number of sales.  As we head further into the spring market, we may see the listing count decrease even further.  The monthly statistics report came out from CREB this last week, and it showed that the Absorption Rate is down to 4.4 months.  What this means is that if no other properties came onto the market, and we just sold all current listings in Calgary at the rate of current sales, it would take 4.4 months to sell everything.  Over Christmas and into 2009 we were at over 11 months Absorption Rate.  A balanced market is between 2.5 and 4 months, and we are almost at a balanced market, which is a good thing.

Sink Holes Nextdoor?

For the second time in less than 10 months, residents of a Beltline condo complex were forced to evacuate after a sinkhole appeared in the parking lot to the rear of the building.

A fire department spokeswoman said the 13 residents who were evacuated wouldn’t be allowed back into the building Friday night and that emergency management officials were finding them accommodation.

“They won’t be getting back in tonight,” Deb Bergeson said. “We have to await tests and evaluations by city engineers that are going to determine whether this building is structurally sound or not.”

She said the sinkhole is about 3.5 meters wide and roughly three meters deep.

The condo complex is adjacent to a development under construction.

A resident of the condominium said he discovered the sinkhole when he returned home to find the wheel of a pickup truck had fallen into the hole, the opening of which he estimated to be about a metre wide.

The hole is very worrying for resident, said Tony Dossett, as it sits just meters away from where a sinkhole appeared in July behind the condominium complex in the 300 block of 13th Avenue S. W.

“The front of the vehicle is down in the hole and the vehicle looks like it’s been jacked up in the rear.”

Fire crews managed to get the truck out of the parkade. With two sinkholes, Dossett said he’s particularly concerned there’s a void underneath the building and is worried about the structural integrity of the building.

“Obviously there’s concern that there might be more sinkholes and this could ultimately lead to parts of the building itself actually crumbling,” Dossett said.

“There are structural cracks in the stairwells and stuff. It’s a concern.”

Dossett said the sinkhole from last year was filled in with concrete.

Friday evening’s incident also marks the second time in a week that a serious sinkhole has developed in the Beltline.

On April 24, a large sink-hole developed underneath 4th Street S. W between 10th and 11th Avenues.

The sinkhole was adjacent to a construction site that ceased work over the winter.

Such sites, city officials said at the time, are of particular concern because the shoring which holds back the walls of the pit is only supposed to be temporary.

One block of 4th Street is shut down indefinitely as crews pull up the sidewalk to try to pinpoint the cause of the sinkhole.

Source: Calgary Herald