I've been running my business on etsy for the past few years and have seen each year double my retail from the previous. This year I'm on track to make 20K, and I thought perhaps I might want to start taking this hobby a bit more seriously and start making some plans. I have a site that I've started on Shopify, that I'd like to put more effort into in the coming months so that I have two income streams instead of just one.
I know that as a Canadian business, if I go over 30K I need to charge tax. This is a big assumption - but at this point I'm assuming I'm going to cross that thresehold next year. I have a sole proprietorship, but what I'm wondering is, since I'm going to need to start charging taxes, should I also incorporate and have the better tax breaks while I'm at it? I'm a business of one, but have recently hired a VA part time to do some small administrative tasks. I'm not concerned so much about the protection of assets or raising capital as I am the tax break advantages.
What do you guys think?
Tax benefits of incorporating are great. You get to start writing off business expenses (Meals/Travel/Entertainment/Supplies/Office) and incorporating will also allow you to apply for commerical loans and lines of credit that won't wont appear on your personal credit report.
There are several banks that offer commercial credit lines that report only to the business credit bureaus, that you can use to finance marketing expenses and supplies.
Since these new accounts will only show up on the business credit bueraus, you will be able to shelter yourself individually from your businesses expenses.
There are TOO many benefits to having your company incorporated. Even if you continue to make $20,000 a year and don't charge sales tax.
The sooner you incorporate the better :)
CEO at FullTurnMarketing.com
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