Entrepreneurship & Small Business

Started a new corporation - some questions

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  • Apr 21st, 2016 10:54 pm
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[OP]
Member
May 5, 2007
271 posts
3 upvotes

Started a new corporation - some questions

Hello,

I recently just started a new corporation.I won't be hiring an accountant until I know the business is for sure viable. I don't want to get into details of why I incorporated before I fully knew that, but it was a strategic decision (from a liability standpoint and the legitimacy of contracts). I will hire an accountant down the line, but for now, I'm wondering what I should do, and would appreciate any advice.

Is it OK to just track and log everything that I've done from an expenses perspective, and then the accountant will take over when I've hired him or her? I won’t have any revenue for a while.

Some questions:

1. I'm currently paying expenses from my personal credit card. What I'm doing is keeping all the receipts physically and electronically, and then keeping the credit card statements. Is this adequate? I'm assuming I'll just expense myself back once my accounts are up and running...
2. As I’m the sole owner and director of this corporation, do I NEED to issue myself any shares?
3. Do I need to inject money into my business account, so that later on, I can reimburse myself for the expenses? If I’m not generating revenue for a while, should I just put in whatever my initial investment was for launching the business?

Thanks!
6 replies
Deal Addict
Mar 16, 2006
2396 posts
820 upvotes
1. I'm currently paying expenses from my personal credit card. What I'm doing is keeping all the receipts physically and electronically, and then keeping the credit card statements. Is this adequate? I'm assuming I'll just expense myself back once my accounts are up and running...

That is no problem for now. When you get bigger, you want to get business card. It's easier and you won't get grilled as much when you get audited.

2. As I’m the sole owner and director of this corporation, do I NEED to issue myself any shares?

When you incorporated, didn't the person tell you how much shares you have? You must have 100% by default.

3. Do I need to inject money into my business account, so that later on, I can reimburse myself for the expenses? If I’m not generating revenue for a while, should I just put in whatever my initial investment was for launching the business?

I think you can loan it to your business and write off interest and pay yourself off. I could be wrong.
Sr. Member
Aug 1, 2005
517 posts
82 upvotes
_protege_ wrote: Hello,

Some questions:

1. I'm currently paying expenses from my personal credit card. What I'm doing is keeping all the receipts physically and electronically, and then keeping the credit card statements. Is this adequate? I'm assuming I'll just expense myself back once my accounts are up and running...
2. As I’m the sole owner and director of this corporation, do I NEED to issue myself any shares?
3. Do I need to inject money into my business account, so that later on, I can reimburse myself for the expenses? If I’m not generating revenue for a while, should I just put in whatever my initial investment was for launching the business?

Thanks!
This is not to be considered comprehensive advice:

1) Keeping receipts physically and electronically is fine. Credit Card statements alone are not sufficient to substantiate expenses. Keep in mind that there are further concerns with HST when it comes to record keeping and claiming input tax credits. Assuming you are under $30k in revenue so that you have not registered.
Side point that any credit card points you rack up are a taxable benefit if you use them personally (to the letter of the Act).

2) The company was probably setup with $1/10/100 worth (nominal) share capital - you are the only owner - talk to a lawyer about this.

3) Whatever you pay on behalf of the business is treated as a shareholder loan. You can repay these amounts to yourself later tax free. You do not have to charge interest on amounts loaned to the Company, but if you want to write off the interest in the Company, you *may* have to pick up the interest income as income personally. This depends on how you structure it - reimbursement of interest or amount charged on the loan. There could be T5 reporting required. You have to make sure you don't over-repay yourself as a loan outstanding from the Company to you can have adverse tax consequences.

Keep in mind deductibility of expenses depends on reasonable expectation of profit and that you have actually started a business or adventure in the nature of trade. Expenses before a business has commenced do risk being denied by CRA.

This is not comprehensive advice, suggest you talk to an accountant for proper advice.
[OP]
Member
May 5, 2007
271 posts
3 upvotes
fiendy wrote: This is not to be considered comprehensive advice:

2) The company was probably setup with $1/10/100 worth (nominal) share capital - you are the only owner - talk to a lawyer about this.

.
Thank you for the responses guys!

I had actually set the company up myself via incorporating online. I had indicated unlimited common shares and no share transfer restrictions. Currently, there are no shares issued. Being the sole owner, do I even need to issue shares?
Deal Expert
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Aug 2, 2010
15193 posts
4948 upvotes
Here 'n There
_protege_ wrote: Thank you for the responses guys!

I had actually set the company up myself via incorporating online. I had indicated unlimited common shares and no share transfer restrictions. Currently, there are no shares issued. Being the sole owner, do I even need to issue shares?
Yes, to yourself and it can be just one share. Owing share(s) in a company is evidence of ownership and if you don't own any shares you don't own the company.
Deal Addict
Aug 19, 2013
2397 posts
1080 upvotes
_protege_ wrote: Thank you for the responses guys!

I had actually set the company up myself via incorporating online. I had indicated unlimited common shares and no share transfer restrictions. Currently, there are no shares issued. Being the sole owner, do I even need to issue shares?
If there are no shares issued to you then you don't own the corporation. A corporation is owned through shares.
Sr. Member
Jan 13, 2005
881 posts
98 upvotes
Montreal
1. Keep everything separate. Else, lots of trouble potentially. Use Quickbooks online. it's cheap to start. (P.S. I have a spare copy I can sell you cheap if you want). You need some accounting software to do stuff. it's not worth the trouble to do excel for 50$ a year. When you will need to pay yourself or employees (15 or more), then QB online could get more expensive (else it is the cheapest options, QB desktop version is 300$ with payroll (cheapest options with more employees), on special.)

2 and 3. I agree with fiendy.

Issue 1$ share. (100 of them say).

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