When to incorporate to your tax advantage

Doing so can make sense for a growing business, but not necessarily for personal investments.

Matthew Elder 9 January, 2017 | 6:00PM

Corporations generally pay income tax at lower rates than individuals, so it's not surprising many owners of small businesses -- as well as high-net-worth investors -- wonder about setting up a corporation to house their affairs.

In many cases, it makes sense to go corporate -- more so in the case of the business proprietor than the investor -- but, as with most tax-related decisions, it depends on specific circumstances.

A key consideration is the initial set-up cost (legal and accounting fees) and the ongoing expense of annual financial-statement preparation and filing corporate tax returns. But, ultimately, what counts is the amount of after-tax income that is received by the business proprietor or the investor as an individual taxpayer.

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Matthew Elder

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