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Control Your Tax Bill and Increase Your Profits

This is optimistic — how many of us can control our tax bills? We don’t have a lot of control over how the authorities tax us, but having said that, there are legal steps which can be taken to reduce income taxes.

What I am talking about today is incorporating a profitable business, filing on time and paying on time.

The Story

Sarah was a very successful contractor. Her carpentry business was showing a profit of $350,000 this year. Tragically Sarah was a better contractor than business owner and she had not yet gotten around to incorporating this business.

Sarah was going to pay tax on $350,000 personally which was going to be more than $150,000. If she had incorporated, then her tax bill could have been less than $50,000.

This post is not about incorporating and there are a number of considerations besides the tax savings. But if a business is very profitable then it is likely incorporated. You do not see a lot of multinational proprietorships. There is a transition in business from proprietorship to incorporation to holding companies and then maybe the business goes public.

Consider Incorporation If Your Business is Profitable

The corporate tax rates are lower than the personal tax rates. This is a fact. If…

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Tax and Financial Stuff You Need to Know
Tax and Financial Stuff You Need to Know

Published in Tax and Financial Stuff You Need to Know

Debi Peverill has been advising business owners and others for more than 40 years. She writes in and easy to understand and frequently humourous manner. She became a Chartered Accountant way back in 1980 and started her own public accounting firm in 1988. She knows lots of stuff.

Debi Peverill
Debi Peverill

Written by Debi Peverill

I am a Canadian Chartered Accountant who is very interested in helping people make money and keep it away from the government without breaking any rules.

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