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stupid accounting question

kuba

TRIBE Member
can someone run an incorporated business, say, inc'd in 2001, AND at the same time, file their returns as a sole proprietor?

example: someone starts an incorporated business but decides that the corporation isn't going to make him any money, or for some reason, just decides to file all his taxes under his own name, and does a seperate return for the corporation showing a loss, or, a small gain

help?
 

Jennika

TRIBE Member
I don't think so... the business has to file it's tax return every year based on it's definition and any income/expenses have to be included within.

but I'd double check with someone who knows for sure
 

SneakyPete

TRIBE Member
Not sure if I am understanding what you're asking...


but I guess he could give himself a large salary, large enough to give the incorporated business a loss. He would have to pay personal tax on this salary though.
 
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kuba

TRIBE Member
this has nothing to do with me, i'm not incorporated, and I can't get into specifics as to what it has to do with other than to rephrase the question:

can someone have a corporation AND file taxes under their own name?
 

Poot

TRIBE Member
And it would then be employment income, not business (sole proprietor) income.

I'm not sure what you're asking, kuba?
 

Rude1_247

TRIBE Member
So you want to avoid corporate tax by expensing your profits through a salary, then file a personal tax return using that salary????

thats dumb.
 

SneakyPete

TRIBE Member
A business is either a corporation, partnership, or sole-propietor. It can't be both if that's what you're asking.
 

Boo

TRIBE Member
kuba said:
this has nothing to do with me, i'm not incorporated, and I can't get into specifics as to what it has to do with other than to rephrase the question:

can someone have a corporation AND file taxes under their own name?

I think I know what your asking, and a corporation and a person can file taxes under their own name.. in fact they MUST do both.

The corporation has to file a corporate tax return - nope you can't just all of a sudden say that the business doesn't exist any more and that he is trading as a sole trader. The business must be wound up and assets disposed - ie transferred back to the person. He technically doesn't own them any more, the business does (same with liabilities, contracts etc)

As for filing a personal return, everyone is required to do this no matter if they own a business or not. But to answer your question, he can't report the business income form the corp. on his personal return - they are seperate.

he can report salary, dividends etc - not trading income

capish?

edit: a corporation is legally a "person" under the law. So just think of it as reporting someone else's income on your return because you have more deductions to use. Doesn't work that way.
 
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kuba

TRIBE Member
bah!

so what you're saying is that someone CAN own his own business, file a corporate tax return, and also at the same time file his OWN PERSONAL tax return as a sole proprietor?

I will buy somebody a beer the next time I see them if they call me at work and hear me out. It's a stupid question, I know, but it's very relevant for something at work today..

FREE BEER!
 

stanimal

TRIBE Member
kuba said:
this has nothing to do with me, i'm not incorporated, and I can't get into specifics as to what it has to do with other than to rephrase the question:

can someone have a corporation AND file taxes under their own name?
yes, but i'm not sure if you're phrasing the question how you want to.

a corporation is a separate legal entity - the company must file a corporate tax return. even if the company is comprised solely of one person, its assets/liabilities, revenue & expenses are still separate from the person.

the person almost must* also file a personal tax return, stating all employment income, etc.


sorry i'm not an accountant, but that's my general understanding.
 

Boo

TRIBE Member
what I'm saying is that the "business" (the incorporated one) fiels the return. The corporation pays the taxes, earns the income/ expenses etc. If the owner happens to be the one filling it out the form it doesn't matter.

Now the owner can run a SEPERATE business (not incorporated) and report trading income, but he absolutely CANNOT report the corporation's income in his own personal return.

He didn;t earn the income, the business (ie seperate person) did. It doesn't matter if he happens to own the corporation. If the corporation makes money, it pays a dividend, and that money is included in a personal tax return only.

Just because (say) I own 51% of shares in Tim Hortons, i would not put $10 billion as my personal earnings, and the relevent deductions as if it was a small business, since Tim Hortons Corp. is completely seperate entity.

And just because the business (ie Tim Hortons) filed a return and paid taxes, doesn't mean that I don't have to.

2 "persons" - 2 returns
 
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stanimal

TRIBE Member
also if the company (corporation) has earned revenue, you can't just not report it on your corporate tax return and claim it as income on your personal tax return.

what if you get audited? were the payments made out to the company or the individual?
 
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quantumize

TRIBE Member
a personal tax return is seperate from a corporate return.

In fact the reason most people incorporate their companies is to get this personal liability and the company liability seperated.

a corporations tax return cannot be merged with any personal account as far as I know.
 
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