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Have been working full time, switching to at least part time contract work. I'm looking at starting a company and having all my contract pay go through it.

Assuming I'm also working at least part time at a different company, let's say my company (StackOverflowed Inc for now) makes $30,000 in a year. However, company spending wipes out most, if not all of that revenue (office space, car, gas, servers, outsourced work, etc). Do I owe taxes on what the company earned or what what the company has left over or some other measure? Assume I take no salary in the first year from my company.

Edit: For estimates on the year:

Not sure if it will help -- it will be roughly $30k in earnings, $1000 / year for IT costs, $20k for a company car, $1500 for printing costs, $2000 in travel expenditures, and about $2000 in misc costs.

So about: $30,000

minus $20,000

minus $ 2,000

minus $ 1,000

minus $ 1,500

minus $ 2,000

total: $ 3,500 remaining

Community
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StackOverflowed
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1 Answers1

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So the main reason that you aren't getting answers is that the question is not really answerable on this site without putting a lot of details about the expenses of your company online. Even then you will need someone who specializes in Canadian taxes to go through those details to be sure. Most of those people feel like they should be paid a decent amount per hour to go through the details.

That being said, I dealt with a similar question for my contract work company by just taking a couple weekends and calculating the taxes myself on estimated numbers. It was time consuming but not really that hard. I thought I might have to buy software, but all I needed was a small calculator. Along the way I learned a few details that helped me lower my overall tax exposure.

I found that Neil was generally correct that you are "taxed on profits" but it is worth doing the taxes yourself because the details can really matter.

rhaskett
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