Gym owners/ future gym owners

[oharad]

Ok guys I am currently investigating the possibility of buying into an already established gym. or finding a partner and buying the gym straight out.

Anyone in or near Niagara Region that is interested PM me and we will talk.

Also can anyone explain to me the pros and cons of becoming incorporated?
and which is better for personal and business taxation purposes?

Thanks guys
-D

[smithmitchelle]

Hey Oharad, hope this helps. link is at the bottom

Benefits of Incorporating

Separate Legal Entity

The act of incorporating creates a legal entity called a corporation, commonly referred to as a "company." A corporation has the same rights and obligations under Canadian law as a natural person. Among other things, this means it can acquire assets, go into debt, enter into contracts, sue or be sued, and even be found guilty of committing a crime. A corporation's money and other assets belong to the corporation and not to its shareholders.

When a business is incorporated, its separate legal status, property, rights and liabilities continue to exist until the corporation is dissolved, even if one or more shareholders or directors sell their shares, die or leave the corporation.
Limited Liability

The act of incorporation limits the liability of a corporation's shareholders. This means that, as a general rule, the shareholders of a corporation are not responsible for its debts. If the corporation goes bankrupt, a shareholder will not lose more than his or her investment (unless the shareholder has provided personal guarantees for the corporation's debts). Creditors also cannot sue shareholders for liabilities (debts) incurred by the corporation, even though shareholders are owners of the corporation. Note, however, that if a shareholder has another relationship with the corporation — for example, as a director — then he or she may, in certain circumstances, be liable for the debts of the corporation.

The Canada Business Corporations Act (CBCA) places a number of obligations and responsibilities on directors. For example, it says that directors can be held liable for certain acts or failures to act. Chapter 7 of this guide Organizing Your Corporation: The Directors, contains further information on the role of directors.

Lower Corporate Tax Rates

Because corporations are taxed separately from their owners, and the corporate tax rate is generally lower than the individual tax rate, incorporation may offer you some fiscal advantages. However, we strongly suggest that you ask a lawyer or accountant to help you assess whether incorporating might save you money.
For more information on:
The tax benefits and implications of incorporation, consult the Canada Revenue Agency (CRA) publication Canadian Small Businesses Guide. This publication, which also covers such matters as business and professional income and payroll deductions, is available on the CRA website.

Greater Access to Capital

It is often easier for corporations to raise money than it is for other forms of business. For example, while corporations have the option of issuing bonds or share certificates to investors, other types of businesses must rely solely on their own money and loans for capital. This can limit the ability of a business to expand.

Corporations are also often able to borrow money at lower rates than those paid by other types of businesses, simply because financial institutions and other sources of financing tend to see loans to corporations as less risky than those given to other forms of enterprise.
For more information on:
How small businesses can finance their business ventures, consult the Canada Business website:
Continuous Existence

While a partnership or sole proprietorship ceases to exist upon the death of its owner(s), a corporation continues to live on even if every shareholder and director were to die. This is because, in the case of a corporation, ownership of the business would simply transfer to the shareholders' heirs.

This assurance of continuous existence gives a corporation greater stability. This, in turn, allows the corporation to plan over a longer term, thereby helping it obtain more favourable financing.

http://www.ic.gc.ca/epic/site/cd-dgc.nsf/en/cs01357e.html

[oharad]

Thanks Bro that answers alot !

gonna check out the web site too .... I am thinking I am gonna hafta talk to a lawyer and or accountant to see what is best for this business

[Gettin'r'round]

#1 Benefit of "inc" is that when you go bankrupt you walk way without losing everything. Provided of course that you don't have any biz loans guaranteed by you personally. Also Revenue Canada has gotten into the habit of wanting their money and will come and get it. Keep in mind that a biz collects GST, PST, WSIB (workers compensation) and the big daddy of them all, payroll deductions. Payroll taxes are how the gov't pays it's day to day expenses. I pay once a month while really big companies pay weekly. If it's late you get fined heavily.

Good luck in the gym biz, it's a tough one.