# Consultant needs to become Incorporated



## ions (Mar 23, 2012)

Hello,

I have a possible contract coming up that requires me to become incorporated. I am an IT Consultant.

What is the best method for becoming incorporated? Should I use an online service or should I consult a professional?

What is the price of becoming incorporated if you do it right?

I foresee mostly working in Ontario but is there any reason why I should not incorporate federally?

As you can see I am new to the subject and appreciate the feedback and recommendations.

Thank you.


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## Rainey (Mar 18, 2012)

I incorporated in a bit of a panic a couple of years ago to facilitate a specific contract offer. I took the fastest and cheapest option -- about $400 -- and it went fine. But not far down the road as I started sorting through various tax issues with my accountant we had to file a series of amendments and changes to the structure of the company. If and when I do it again for a new venture I'm contemplating, I'd spend the cash to do it right starting with a consult with an accountant who specializes in consultancies and then completing matters with a lawyer with a similar specialization. The cost would likely end up as $2500 but you'd like get much of that back in tax savings.


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## FrugalTrader (Oct 13, 2008)

If you have a spouse, then you may want to consult an accountant for the structure and lawyer for the paperwork, at least that's what we did.


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## Just a Guy (Mar 27, 2012)

I chatted with my accountant and did it myself. Incorporation isn't difficult it's about 3 or 4 forms mostly name, address, phone number type of thing (and what type of shares you'll issue, hense the accountant). 

The tricky part is writing up the minute book. For that I had a friend who was a legal secretary help. They are the ones who write them up usually anyway...

The accountant will tell you what you need, the legal secretary will do it properly, and you'll save a small fortune. 

I once called the same legal office and spoke to two different lawyers and got two vastly different prices. So, if you go that way, ask around before you hire someone.


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## ions (Mar 23, 2012)

Thank you for the responses. I appreciate all the advice.

I am single so that takes that out of the equation.

Just a Guy you mention that you did it yourself but then you also state the "accountant will tell you what you need" and you needed a legal secretary.

For what it's worth I am looking for incorporation for around $100K of revenue as a single IT Consultant. From the comments I feel I will need to work with an accountant even though I highly prefer to do everything on my own and have control.

Thank you for all the feedback


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## YYC (Nov 12, 2012)

Speaking as an incorporated IT Consultant myself, you definitely want to use an accountant for your taxes etc. The actual incorporation is pretty simple, but I would probably hire your accountant first and get their recommendations on share structure, etc. Their time won't cost you much, maybe nothing if you're going to use them for your taxes going forward, and it will save you hassle and perhaps $$ later.


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## Just a Guy (Mar 27, 2012)

I had an accountant before I incorporated. A chat beforehand to ask about share types and general information didn't cost me anything. Incorporating is basically filling out a couple of forms at a registries office (the price can vary depending on the registry office). The minute book you can pick up a generic one at staples if you wanted. 

I did file all the paperwork myself and had access to the other resources so I used them. If you're basically a one person shop, you set up voting and non-voting shares, and issue some to your wife for income splitting. If you're going to expand, then you may want to add various classes of voting/none voting shares.

The minute book can be done later.

Oh, and I'd get a real accountant who understands your industry. Accountants are worth it, lawyers...not so much


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## Cal (Jun 17, 2009)

Got it, you are trying to separate yourself from any liability if you do this:

http://nwbackup.net/wordpress/us-employee-outsourced-his-own-job-to-a-chinese-company/

:biggrin:


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## motd (Mar 19, 2013)

Just a Guy said:


> The minute book you can pick up a generic one at staples if you wanted.
> 
> If you're basically a one person shop, you set up voting and non-voting shares, and issue some to your wife for income splitting. If you're going to expand, then you may want to add various classes of voting/none voting shares.
> 
> The minute book can be done later.


Hi everyone, newb here (first post about similar situation to OP, here), what goes in this "minute book" and is it required? I'm guessing it's record-keeping in case CRA audit is performed? Also, what are the voting/non-voting shares and how do I set them up? Is it something my accountant does instead?


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## ted2011 (Jun 1, 2011)

Hi

I thought I'd reopen this thread rather than start a new one. I just incorporated myself yesterday for an IT contract with the GoC via a technology consulting firm. I'll be the only employee and I plan on keeping things as simple as possible but have a couple of questions.

1. I get paid by the consulting firm. Does the corporation need it's own bank account for deposits from which I then pay myself a salary?

2. I received a CRA Business Number when I set up the HST account. Will the corporation have it's own business number?

3. Is something like QuickBooks useful for managing the finances?

Thanks for any answers.


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## YYC (Nov 12, 2012)

1. Yes. If you are incorporated it will be useful to have a bank account for the corporation.

2. The business number should belong to the corporation. Do you mean you set up HST for yourself individually? I don't think this is what you want, you want your corporate to charge HST.

3. Yes, but we pay a bookkeeper who comes to our house for an hour or two a month to keep things on track.

I would add that if you are married, it's worth considering making your spouse a shareholder too (different class of shares, speak to an accountant or lawyer about the specifics). It's an excellent way to split income to make it as tax efficient as possible.


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## ted2011 (Jun 1, 2011)

Thanks. I set up the business number and HST as a sole proprietor. I'll need to set them up for the corporation.


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## ions (Mar 23, 2012)

I visited an accountant last week. (I still didn't incorporate my company. I am still running it as a Sole Proprietor.)

He is charging $900 to incorporate my company and $1850 annual fee to give me advice and enter my tax forms. The $1850 covers my corporate taxes and my personal taxes entry but does not include book keeping. I will have to provide him with a detailed spreadsheet with all my numbers at the end of the year.

Also since I have a software product (IP) he recommend I set up a separate corp for the software which is another $900.

What are your thoughts on the pricing?


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## Just a Guy (Mar 27, 2012)

The fees seem to be around average. Remember if you set up a second corporation, you double your accounting fees (minus the personal portion, probably $350 in your case looking at your numbers) so you can add another $1500 to your bill annually.


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## ions (Mar 23, 2012)

Thanks for your response Just a Guy.

The accountant said the $1850 would cover both corporations since the IP will have minimal activity. The IP corporation is just there to make the possible future sale of the IP easier in the future.


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## JamJam23 (Nov 8, 2013)

I would look at this:
http://turbotax.intuit.ca/business-tax-software/business-incorporated.jsp

A lot cheaper than $1850...


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## wendi1 (Oct 2, 2013)

I don't know where you live, but in Ottawa, I paid $1200 a year for simple accounting with a CGA: I update the Quickbooks, remit the HST/Corp Tax/Payroll Tax monthly, give her the Quickbooks file yearly - she prepares the corporate tax return, HST return, T4, and advises me on how much to remit.

This was a pretty good price. I have since downgraded to a bookkeeper who does the same for me for less than $600 a year, now that I know what's what. I still need to talk to someone from time to time, so a software package alone would not do it for me.


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## ted2011 (Jun 1, 2011)

ions said:


> I visited an accountant last week. (I still didn't incorporate my company. I am still running it as a Sole Proprietor.)
> 
> He is charging $900 to incorporate my company and $1850 annual fee to give me advice and enter my tax forms. The $1850 covers my corporate taxes and my personal taxes entry but does not include book keeping. I will have to provide him with a detailed spreadsheet with all my numbers at the end of the year.
> 
> ...


I recently set up a corporation for IT Consulting with me as director and the sole employee on the payroll. After incorporating I called CRA and they set up my HST, Payroll and Income Tax accounts which can be accessed by CRA's _My Business Account_. I didn't use an accountant. I just did it myself online for $200. I'm using QuickBooks online for my accounting software and so far so good but my accounting is pretty simple I think. I plan on using Inuit's corporate tax software to do my own T2 although that's going to cost $200.


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