Case Studies

 
How to Start Your Business (Without Really Trying)

An entrepreneur calls on us to help him carefully build his business from the ground up

In 2011, Jamie Delgado made a bold leap, and went out on his own as an engineering consultant. He’d attracted two promising contracts, and wanted to try his hand as an entrepreneur. He had multiple questions about what seemed like an overwhelming process. Meeting regularly over the period of a month, we handled them all.

Putting together your own business, and have no idea where to start?

Sole proprietorship, or incorporate right off the bat?

If you have your own business, you know this question well. There are many differences between the two, but when it comes to taxes, sole proprietorships include all of your earnings in your year-end tax returns, whereas incorporating allows you to leave any excess earnings in your business, where they’ll be subject to a much lower tax rate (13.5%).

So when does it make sense to incorporate? Based on Jamie’s projected earnings, and the fact that we could set up share splitting with his wife and 20-year-old daughter, we advised him to incorporate.

What’s the best banking structure?

Jamie was going to be doing international business and wanted to be careful about setting up his banking accounts. We connected him to a trusted advisor at and internationally renowned banking organization, and helped him explain his needs for his business.

How does GST work, and how do I get set up to file?

This is where we started to really step in. We set up a GST account with the CRA directly, and created Jamie’s books, so that he’d be set up to file at the end of the year.

What do I do about bookkeeping, payroll, and other administrative tasks?

After creating Jamie’s books, we offered to either continue his bookkeeping ourselves, or train him and his wife on some easy-to-use accounting software to help them manage it themselves. They opted to keep us on hand for the first year, so Jaime could focus on what he does best – engineering.

Today, Jamie’s wife has stepped back from working full time and is managing much more of the accounting and management of the business.

Jamie is flourishing, and we remain on hand to support him with whatever he needs.

Our advice to incorporate from the beginning has also paid off – for the past two years Jaime’s family has paid considerably less tax than in previous years.

Have a million questions about setting up your business?

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A Very Valuable Re-Org

A mid-sized law partnership discovers that a complex new structure is easy – and worthwhile – to implement in the hands of the right professionals

Thorsten & Michael were successful owners of a mid-sized personal injury law partnership.

Each year their personal income (which was quite substantial) was reported on their personal income tax return, which meant they were each losing roughly 44% of their income to taxes.

They knew something needed to change, but were worried about how complex that change could be.

We suggested a re-org.

If done successfully, the partnership would be split into three corporations: one main corporation, and two smaller law corporations for each partner.

Each year, the company’s profits would be split between the two corporations. Each partner would draw a salary, and that remained would only be subject to the small business taxation rate of 13.5%.

It took Thorsten & Michael almost two years – and hundreds of thousands of unnecessary dollars in taxes paid – to decide to give the proposed structure a try.

An additional tax expert was brought on do manage the complexity of the task. He was responsible for ensuring all the necessary paperwork and contracts were done to the letter.

How does GST work, and how do I get set up to file?

The team worked diligently over a couple of months, and sorted out all the required changes, with very little work falling to Thorsten & Michael.

In the first year of the new structure, each partner paid almost 50% less in taxes than they had in the previous year.

The company was also structured to include the potential for two other law corporations, should Thorsten & Michael wish to bring on new partners

Today, each partner is saving roughly 20% of their salary from taxation. They’re able to invest that extra money and watch it accrue interest. The new structure is well-organized enough to protect their assets and allow for up to two new partners in their business.

Losing too much of what you make? Call us for a free consultation.

Come in for a free consultation.

Are you an entrepreneur with years of unfiled taxes hanging over your head?

An entrepreneur realizes that, when it comes to filing back-taxes, the first step is the hardest (and, really, the only hard part of the whole process)

Allistar Eagle was an in-demand photographer living in Vancouver. He loved his work and his business was flourishing.

Unfortunately, the idea of compiling his taxes and submitting them left him cold.

Over the years he had started gathering together his paperwork over 100 times, only to get distracted and never finish the job.

Finally things got so bad (and he got so many calls from the CRA) that Allistar contacted us.

We assured him that all he needed to do was gather together whatever documents and receipts he had at that moment, and come into the office.

Two years later, he made it through our door for a free consultation.

As it turns out, Allistar’s paperwork was in much better shape than he thought. He was sent home with a short list of other materials to gather, a sense of relief – not only had he started the process, but it was going to be much easier than he’d imagined.

Within 3 weeks the current year was complete, and after that the process got even faster – the remaining 5 years were done in 2 months.

Our firm also managed communication with the CRA on Allistar’s behalf from the moment he walked through the door for his first consultation. Because nobody needs that kind of interruption when they’re running their own business.

If you’ve ever had the misfortune of being a non-filer, you know that making that first step – getting through the door of an accountant’s office – is the hardest.

Get yourself through our door today for a free consultation.

A retired self-made man wants to ensure that his family receives as much of his legacy as possible, without suffering huge tax hits when his estate is settled.

Meet Mr. Harrison: a long-time entrepreneur who had amassed a considerable fortune by the time he reached age 80. Retired and interested in keeping life simple, his wealth was sitting in an investment holding company.

His one concern?
Ensuring the legacy he passed onto his 3 adult children when he passed was secure.

His one request?
That we avoid fancy corporate structures, and keep things simple.

We reviewed two things on Mr. Harrison’s behalf: his will, and the inventory of his estate. Based on what we found, we made two recommendations:

  • That Mr. Harrison move from splitting his will in thirds (one equal chunk of the estate to each of his three children), to a trust system. Why? Heavy taxation.
  • Rather than being taxed on one straight sum, by moving assets into three trusts (one per heir), his children could choose to slowly remove the money at their discretion, drastically reducing the annual income they’d be taxed on. That he start to liquidate his investment holdings company immediately. Why? Double taxation.

If Mr. Harrison had passed away at that moment, the value of his investment corporation (a considerable amount) would be included on his final tax return and the estate would take a huge tax hit.

Simple changes created a huge impact, and Mr. Harrison’s legacy is now secure for his future generations.

Then, if his children were to liquidate the company and take the value in cash, they would be taxed on it again.

The Results

The trust system was established immediately, to protect Mr. Harrison’s personal wealth for his children. In two years over a third of the value of his investment holdings company was removed from the corporation, to protect it from double taxation.

Interested in keeping what’s yours in your estate?

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