QUESTION:
What kind of business entity structure / corporation, trust or both / will
be more suitable for minimizing tax implication when selling the property
involving flipping the estate in Canada, shortly after renovation.
Thank you.
--------------------------------------------
david ingram replies:
This is short and sweet.
If the intention is to spend the profits, fees are much cheaper and the tax
is the same or cheaper to simply operate as a proprietorship or partnership
rather than as a corporation. If there are multiple associated investors or
members of a family, liability issues dictate that a limited liability
partnership may be the way to go with the prime mover in the enterprise
taking the financial responsibility as the general partner. The general
partner could be a corporation.
If the idea is to acquire equipment or office building, than the small
business rates of a corporation are appealing. However, they are only (in
my opinion) of value if you do not need the profits to live on and intend to
reinvest them in equipment as opposed to inventory.
If you are operating on your own, operate as a proprietorship. A
corporation will cost you thousands extra in legal and accounting fees and
give you no liability protection because you are the director, driver,
manager and can be held personally liable in your role as an individual even
if the corporation has no assets.
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