Incorporate in Alberta?

[ali123]

Hey guys, I remember reading somewhere that incorporating in Alberta would give me tax advantages, right now I'm living in BC and I'm wondering if it's worth it?

Thank you, Ali

[ullyeus]

yes.

[ali123]

yes.

I was wondering why exactly and if I would encounter any problems?

Thank you, Ali

[ullyeus]

I was wondering why exactly and if I would encounter any problems?

Thank you, Ali

Yeah...I agree...it sure would be great if people actually provided some content and information when they were answering (and even more so...asking) a question....

[Octavius]

Hey guys, I remember reading somewhere that incorporating in Alberta would give me tax advantages, right now I'm living in BC and I'm wondering if it's worth it?

Thank you, Ali

It all depends...

If I'm not mistaken (and again, I could be hugely mistaken), you must incorporate in the province that which you plan on conducting business within. If you open up "Company A" in Alberta, incorporated provincially, you can open up as many "Company A" stores in Alberta...but only in Alberta.

You can't open up any "Company A" stores in BC, or anywhere else for that matter if you're only incorporated in Alberta. It reduces your ability to expand.

Incorporating Federally would solve this problem, but then you lose out on the tax advantages (if any) that you would get by incorporating only in Alberta via provincially.

I'm hoping someone else chimes in and either confirms/disproves my statements and hopefully provides more information to you.

[Octavius]

A provincial corporation CAN carry on business in another province so long as it files for an extra-provincial license from every other province in which it wishes to open an office or have a presence.

As for incorporating in Alberta, you are correct that corporate tax rates are lower for Alberta corporations. In fact, Alberta has the lowest of all the other Canadian provinces with a "general" corporate tax rate at 10%, and it has the 2nd lowest "small business tax" rate at 3% on the first $460,000 of active income (Manitoba has the lowest "small business rate" at 2% but only on the first $400K, and that rate is expected to drop to 1% in 2009). On the flip side, Alberta's small business deduction threshold will increase to $500,000 in April 2009.

So, from an income tax perspective, the rates are cheaper for Alberta corps. Just keep in mind though that you'll have to keep abreast of your inter-provincial license filings, as well as file for any sales tax regimes in each province you will be selling taxable goods and/or supplies. For instance, if you sell your goods in Ontario, you'll still have to charge Ontario PST (if those goods or services are taxable), even though your corp is from Alberta.

I knew I forgot something when I was writing my comment, I had an itching feeling that there was a way around operating in other provinces if you weren't incorporated federally but that it involved a bit of red tape, but I couldn't put my finger on it - hence my stating they were limited to the province of incorporation if they did nothing else.

Anyway, just wanted to say thanks for reminding me about that, and for the informative post as well

Learn something new every day

[Just Confused]

Of course, there are some businesses not registered extra-provincially and are in those provinces via Internet presence only. They claim they don't actually solicit business in those other provinces. Is that a legal grey area? Probably not...(dealon can confirm). But just like in the old days when some of us ordered things like camera equipment etc. via mail order from a business in the province next door just to avoid provincial sales tax.