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Income Tax Filing Late or Not at All

I want to start a small business. Should I incorporate?

Why Incorporate?

Corporations are separate legal entities. Once a corporation is created, it can have a bank account, enter into contracts, have employees, produce goods and provide services.

It happens. Some people are late filing their taxes and get hit with interest and penalties. It can be substantial. Current annual interest rate charges are 9% on overdue taxes. Penalties can be 5% plus an additional 1% per month!

The main benefit of operating a business as a corporation is to provide you with personal protection from liability. If the corporation is sued for breach of contract, wrongful dismissal or product defect, it is only the corporation that will be liable. You and your family as a shareholder, officer or director will not be liable for any damages. Your house and personal assets will be safe from money that may be owned.

Voluntary Disclosure Program

The Canada Revenue Agency (CRA) offers taxpayers the opportunity to comply with tax filing requirements through its Voluntary Disclosure Program (VDP). This program is available for all types of taxpayers including individuals and corporations. If the application is accepted, CRA will provide prosecution relief, in some cases penalty relief and partial interest relief.

There are other benefits to operating as a corporation including accounting, taxes, income sharing, family involvement, branding and succession considerations

A lawyer, often working with an accountant, can help you assess your situation and submit a VDP application on your behalf. We provide advice and advocate on behalf of the taxpayer to get the best possible outcome. There may be an opportunity to argue extraordinary circumstances or financial hardship to obtain the maximum relief possible.

What are the next steps?

Choose a cool name for your business and we will conduct a name search. There will be other matters we will need to discuss with you.

Contact Kraemer LLP today and let Our Lawyers advise you on this and any other legal questions you may have.

Contact Kraemer LLP today and let us advise you on this and any other legal questions you may have.

Patrick J. Kraemer President & Managing Partner Kraemer LLP

Patrick J. Kraemer President & Managing Partner Kraemer LLP