If you are planning on incorporating your business, hiring an experienced accountant is one of the best investments you can make!
An accountant will give you 1 on 1 tax planning advice and give you a proper corporation structure based on your and your family’s tax situation. Once your accountant knows of your tax situation, he or she can then figure out the perfect structure when it comes to income splitting with your family, who will have control over the business, and how much control the founder should retain.
Forming a Holding Company
One benefit of using an accountant to incorporate your business is that an accountant will also be able to tell if you require a holding company to help you protect your profits. They can also set up a family trust to help your corporation reach its next level of success.
Creating a Family Trust
The purpose of a family trust when used in conjunction with a corporation is to:
- Income split with family members through the trust
- Transfer ownership tax free to the next generation
- Maintain control of the corporation with the founders
- Minimize estate taxes
When a corporation introduces a family trust, the value of the business must be established by a valuator. This value is attributed to the founder’s utilizing special shares (usually an estate freeze). This allows the beneficiaries of the trust to benefit from the future growth of the corporation.
Of course creating a family trust is more complicated and in depth than the above paragraph. Please be sure to talk to your accountant before further pursuing a family trust.
Maintaining your Minute Book
Your corporation’s minute book is probably the most important thing you need. A minute book is a collection of your vital documents that proves your business is a legitimate corporation. A minute book typically contains the following items:
- A certificate of incorporation
- Your corporate bylaws
- Director, officer and shareholder registers
- Share certificates
- Minutes of meetings
After every annual meeting, your minute book must be up to date, or else you could face some major penalties. Hiring an accountant to manage and maintain your minute book is an inexpensive way to make sure everything is organized and up to date and protect you from the tax man. You can learn more about minute books by reading my article “Incorporation Services in Mississauga.”
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.