BEING YOUR OWN BOSS

39 - Sunday, August 25, 1985 - North Shore News

When to incorporate

WHEN 1S IT time to turn
your business into a cor-
poration?

There is no simple answer,
says Rod Bergen, a chartered
accountant with Coopers &
Lybrand. But a good rule of
thumb is that there won’t be
much of a tax savings if the
net income of the business is
less than about’$25,000.

If, however, the net in-
come of your company is in
excess of $60,000, incor-
poration should be consid-
ered. .

Small, Canadian-owned
corporations, are eligible for
a special tax rate of (in B.C.)
only.23 per. cent on the first
$200,000 of net profit made
each Year. In comparison,
any profits going directly in-
to the pockets of the owner
of a® sole proprietorship
could be taxed at the highest
personal rate of over 50 per
cent.

Being a corporation thus
gives you the advantage of a
tax savings of about 30 per
cent, providing those profits
remain in the corporation
and are not paid out to you
as a salary.

Student business
consuiting group
open at SFU

THE SIMON. FRASER
University Student Business
Consulting Business. Group
(SBCG), the first of its kind
in 'B.C., is now open for
business.

Based on successful stu-
dent consulting groups
which have been operating
for over 10 years at eastern
universities, the SBCG pro-
vides consulting services to
small and medium businesses

The special tax rate for
small corporations, said
Bergen, might even be drop-
ped to 19 per cent in future.

To qualify for the special
rate, your company has to
be at least 50.001 per cent
owned by a Canadian resi-
dent. It must be a ‘‘private’’

company — its shares can
not sell on the stock ex-
change.

In B.C., 75 per cent of all

economic activity is
generated by ‘‘small’’
businesses. Some 85 per cent
of all employees in B.C.
belong to a companay that
has 20 or fewer employees.
Many of these small com-
panies would qualify for the
special corporate tax rate.
. Another benefit of incor-
poration is that it allows you
flexibility ii: che types of in-
come your business can
generate for you. Like the
sole proprietorship, a cor-
poration can pay each
member of your family a
salary, effectively splitting
your income.

But only a corporation
can sell shares. These shares
can pay dividends, which are

at an affordable price.
The consultants working
with the group have both the

business training provided -

by the university and

- valuable -work experience _

which they can draw upon.

‘They are all graduate or

fourth year undergraduate
students.

The SBCG works with
clients in providing a broad
See First
Page 47

FOR ALL YOUR REPCO.
IMPORT CAR PARTS

Contact:

DASH AUTOMOTIVE LTD.
834 WEST ISTH STREET
NORTH VANCOUVER

980-8344
OPEN SATURDAY 10 AM - 2 PM

Effective September 1st, 1985

We are moving one block south to:

1655 Capilano Road
North Vancouver, B.C.
V7P 3B3

(Entrance to Ranch Motor Hotel on Capilano Road)

Same Phone Number: 985-0441

Capilano Travel Ltd.

taxed at a much lower rate
than is a straight salary.
Typically, tax is only paid on
roughly one-quarter of all
dividend income.

A corporation can also
generate a type of income
known as a capital gain. To
keep this type of income in
the family, have family
members buy into the cor-
poration when it has just
been formed — when shares
won't cost much. Once the
value of these shares goes up
they can be sold to realize.a
capital gain.

Be wary, however,... of

loaning family members
money to invest in your
company. The latest federal
budget proposes tc broaden
attribution rules. You could
wind up being taxed on in-

Bir writs CONFIDENCE
IF YOU FIND fT AND
FOR LESS—WE'LL .
THE LESS RENCE

HOME FURNISHINGS:
Warehouse/Showroom . :
OPEN TO THE PUBLIC .

(2 blks, bontt the Avalon)
at 1075 Roosevelt Cres., N.Van.

12-4 Sin 980-8738

or drop by to see if you qualify

JA Serving the North Shore since ‘1906’

1900 Lonsdale Ave, North Vancouver

An Autoplan reminder —
An incorrect rate classification can: invalidate your Autoplan
insurance. If you drive to or from work or school, your vehicle must
be insured in rate class 002 (not 001—pleasure only). Be sure your
vehicle is rated in ‘the ace classification for its t use.

vestment income that family
members make with your
moncy.

is unclear, however,
whether a@ corporation

unto itself) can loan money
to a member of your family
attribution-free,

(which is a legal ‘‘person’”’

atiful british Colunibia

iW=0

licence plates are
your August renewal