Pros-cons of home office/incorporating?

Income tax policy, rules, problems, strategy and software. Property and consumption taxes too.
Post Reply
myreg2002
Newcomer
Newcomer
Posts: 2
Joined: 16 Mar 2017 12:54

Pros-cons of home office/incorporating?

Post by myreg2002 »

I am self-employed in Toronto. I am currently not incorporated but am considering becoming an Ontario corp. Some of the things I am concerned with is whether:
1) When I incorporate will I lose the ability to write of my home office?

2) Even if I can write it off when I am incorporated (or more to the point I assume my corporation would claim the office expense), will the home office write off be much "less valuable" to me as an incorporated operator than a non incorporated sole proprietor (due to taxes on corps being lower than my personal tax rate)?

Some key facts:
-- I make around $90k per year revenue/income (zero expenses)
-- Our condo rental is $3k/month (thanks downtown Toronto....) and we will continue to rent over long term (please, no debating renting vs buying thanks :-) )
-- I can leave most of the money in the corporation over the long term as my spouses salary can pay our expenses

I know that the money left in the corp would be taxed lower. So even if the condo rental/home office write off is "less valuable" to the corporation than to me as an unincorporated individual, is the loss in value from that eclipsed by the fact that the money can stay in the corp over the long haul?

Thoughts and or suggestions re: how I could crunch the numbers on this would be appreciated! Thanks
User avatar
Peculiar_Investor
Administrator
Administrator
Posts: 13267
Joined: 01 Mar 2005 14:52
Location: Calgary
Contact:

Re: Pros-cons of home office/incorporating?

Post by Peculiar_Investor »

Welcome to FWF.

Have you also considered that incorporating will bring along additional costs, including but not limited to: costs on lawyer(s) to setup and establish the corporation (likely one-time) and on-going costs for accountants to prepare corporate tax returns. It is often said that the tax code is the lawyer and accountant employment act.

You don't mention the industry of your self-employment. Just in case you are not aware, you need to be careful with the issues involved in being The Incorporated Employee | Advisor.ca.

Unfortunately I don't have expertise to address your specific questions, so hopefully another FWF'er will provide some viewpoints.
Imagefiniki, the Canadian financial wiki New editors wanted and welcomed, please help collaborate and improve the wiki.

Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams
Post Reply