Which method yields lowest taxes for 2 partners? - Page 2
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Thread: Which method yields lowest taxes for 2 partners?

  1. #11
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    Since the OP claimed they were going to make $120k/year it's doubtful that either of them would fall below the threshold, so they may as well both get a gst/HST number and collect/file right from the beginning. I think all this talk about the 30k threshold is just confusing him. There is no savings here for them.

    I'm not JustAGuy (without spaces), or Donald, or <insert name here>.

  2. #12
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    Quote Originally Posted by asadim View Post
    If liability was not a concern which option would you recommend to save on taxes?
    Since you want to have all the money in your pockets, presumably in the year which is was made, there is no real tax advantage to any of the set ups. The tax code was set up this way to avoid what you are trying to do. Incorporating does add drag and additional paperwork.
    The benefits of a corporation are that you can keep the money in the corp (after paying corporate taxes) and reinvest and don't have to pay the personal level taxes (dividend or income) until you pull it out of the corp. So it's not a tax savings so much as tax deferral on the original earned amount.

  3. #13
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    It seems for the assumed income option 1 is the way to go. Thanks everyone for pitching in! I learned a lot.

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  5. #14
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    This question really depends on your personal cash flow needs. A corporation is generally used as a vehicle to defer tax. I would get an accountant to run numbers for you.

    On Active business income (consulting work) you can be looking at 15% tax on income 500k or less and if you don't have taxable capital employed of 10 mill.
    as a sole proprietorship or partnership, you are still taxed at marginal rates which means at 120k per year you are going to be at the highest tax bracket per year.


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