Trevor Barry

Question 1

How can incorporating a business affect an individuals retirement plan

Answer 1

• reduce personal tax owning by receiving dividends
• ability to set up an IPP
• reduce RRSP contributions by taking income as dividends
• incorporating business will likely increase the value overtime because of corporate tax sales and exemptions
• incorporating gives the ability to set up an individual pension plan allowing the individual to make larger contributions to retirement plan

Question 2

What are benefits and drawbacks of incorporating buisness

Answer 2

Benefits

• lower corporate taxes
• qualify for capital gains exemptions
• limited liability
• ability to sell all or part of the corporations
• control income
• corporate structure last beyond the lifetime of the corporation facilitating transfer or sale in the future

Drawbacks

• increased costs of tax filing
• burden of filing multiple tax returns
• detailed record keeping
• more costly to set up and administer