September 10, 2008, 6:00 am

Why Canada Is The Best Place To Start A Company

by: The Financial Blogger    Category: Alternative Income,Assets and Net Worth
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I wonder if sometimes laws are made against or for us. I mean, when something is bad for an individual, it is automatically good for someone else. This is actually the case about having high tax rate. After writing my post about companies and tax management, I thought of other advantages of having a company in Canada. Those advantages might be found in other countries as well but since I didn’t start any off-shore company yet 😉 I will talk about what I know.

Procedures and paperwork

Starting a company is quite demanding in term of time to fill in all the required paperwork. Things have to be sent to different government departments and in a defined order. For example, you can’t ask for your tax number until you have your company bank account. You can’t have your company bank account until you have your incorporation number. Then, you are better off doing a name search to make sure you can use the name of your company before requesting an incorporation number. All those hassles discourage a lot of people. Therefore, if there are less individuals thinking of starting a company, that leaves more space for yours!

This is a small market

The Canadian market situation could play in your favour or can burn your company down in no time. If you don’t manage your incorporation correctly, you might not live very long. However, if you are able to hit the right niche and reveal your leadership, your competitors might not have enough of the rest of the market to survive. I guess this is the main reason why we see so many oligopolies in Canada (oil companies, banks, coffee shops, etc.)

Tax structure

In high tax rate countries, companies are the best vehicles to make money. Since several expenses become tax deductible within an incorporation, it’s like have a 40% rebate on everything that is being bought! In addition to that, you are allowed to receive the taxes you paid on services and goods. So if your business structure doesn’t have to charge taxes (food for example), you will receive a tax return every quarter on all the goods and services you purchased. I know, life is beautiful sometimes 😉

Cheap operating cost

Rent, employees and our dollar that is going down again will help maintain your cost lower. Depending in which field you are operating (clothing would definitely not be a good example), your cost of doing business can be pretty affordable.

In the end, I am a big believer that if you have a good idea and you are ready to work hard, you will definitely succeed!

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One thing that applies to the US for individuals that apparently only applies to companies in Canada (correct me if I’m wrong), is we can now write off sales tax on our tax return. We don’t get the tax back, but we are not taxed for that money either.

Granted that is not much but some of us probably spend several hundred or thousand just on taxes and that does lower our AGI. Could possible lower our tax bracket.

by: The Financial Blogger | September 10th, 2008 (11:17 am)

You are right,
Only companies with a tax number are able to write off sales taxes on their tax return. The funniest things though, is that any company can have a tax number, regardless if they have to charge taxes or not for their services/products.

For example, my company has a tax number which enables me to write off sales taxes on my company expenses (for example a computer or internet access). But my company don’t have to charge taxes to its customer 😀

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