Incorporation Guidance and Corporate Tax Planning in British Columbia
Thinking About Starting a Corporation in BC?
Incorporating a business in British Columbia or federally involves legal, tax, and administrative steps. While JD Tax & Accounting Inc. does not file incorporation documents directly, we work with qualified legal professionals and help clients navigate the tax and financial considerations that come with starting a corporation.
Your legal structure affects how you pay yourself, qualify for deductions, and plan for future ownership transitions. Our role is to provide incorporation guidance, coordinate with your lawyer, and assist with post-incorporation setup.
We offer a free 30-minute consultation to help you understand the steps involved and determine whether incorporation is right for your situation.
Key Considerations Before You Incorporate
- Startup and annual costs of incorporation, including accounting and bookkeeping expenses
- Whether to include a spouse or family members as shareholders
- Share structure and future flexibility, including classes of shares
- Recordkeeping and bookkeeping system setup
- Salary vs. dividend compensation for owner-managers
- Use of a family trust to hold shares
- Small Business Deduction (SBD) eligibility
- TOSI (Tax on Split Income) rules and income splitting restrictions
- Implications of selling your business in the future
- Incorporating rental properties and holding companies
- Professional corporation requirements (if applicable)
- Tax implications of holding investment income or portfolio assets in the corporation
- Federal vs. provincial incorporation differences
- GST/HST, WCB, and payroll registration needs
- Use of Ltd., Inc., and Corp. designations
- Distinguishing between deductible and non-deductible business expenses
Tax Planning for New Corporations
01.
Corporate Structure Review
02.
Bookkeeping Setup
03.
GST, Payroll & WCB Registration
04.
T2 Tax Return Planning
05.
Salary vs. Dividend Analysis
06.
Deductible vs. Non-Deductible Expenses
07.
Compliance with CRA Reporting
2025 Corporate Tax Updates to Be Aware Of
The following changes may impact both new and existing corporations operating in British Columbia or federally:
Passive Investment Income
The CRA monitors passive income in CCPCs. Earning over $50,000 may reduce or eliminate access to the Small Business Deduction (SBD), affecting overall tax benefits for small businesses.
Small Business Deduction (SBD) Criteria
Businesses with taxable capital between $10 million and $50 million are subject to a phased reduction of the SBD. The deduction is fully eliminated beyond $50 million.
Mandatory Electronic Filing for T2 Returns
As of 2024, tax preparers who file more than five T2 corporate returns annually are required to submit them electronically to the CRA.
Revised TOSI Guidance
JD Tax & Accounting tracks TOSI updates, including CRA guidance on excluded shares and reasonable return tests, helping clients in family-owned corporations allocate dividends correctly and stay compliant.
