One of the most exciting moments in the process of becoming a mortgage broker was learning that I could incorporate after two years in the business. Phenomenal, I thought.
Surely every mortgage broker licensed for two years was also incorporated … how could they not be? Over the years as this topic has come up within groups of long time brokers it never fails to amaze me how few of us are actually incorporated.
But let’s take a look at the pros and cons, shall we?
Arguments against Incorporating:
“It costs (too much) money.”
This is not an argument. This is an (illogical) excuse. Anything worth doing in business costs money. Investments in improving one’s business structure create benefits which, over the long term, greatly outweigh the initial and ongoing costs.
“It takes (too much) time.”
“My accountant/lawyer/landscaper/buddy/uncle’s-cousin’s-barber’s-brother said not to do it.”
Basing key business decisions on multiple opinions is never a bad idea; basing it on multiple opinions of people who have not actually done the very thing you're asking for their opinion on is a bad idea. In the case of accountants and lawyers almost all will have, themselves, incorporated. It is typically more beneficial to focus on the information supplied by people that chose to take a specific action, more so than on those who chose not to take action.
Gather informed opinions. Ask each one of those people if they, themselves, are incorporated. Then ask them for their own ‘why’; speak with 5 people who are incorporated and within their 'why' you will find likely find your own motivation.
Ask those who DO. Their knowledge (based in experience) is far more useful than that of those who DO NOT.
For instance: An accountant’s role is largely that of translator of your financial data into the CRA system. The majority of accountants are not, by definition, long-range business planners with knowledge of specific benefits of such strategies as investing in whole life insurance policies within your own corp. in place of personal RRSPs.
Once again I was extremely lucky in life; having had an extremely creative, skilled, and deep thinking accountant as a close family friend. It was his guidance that led me to be incorporated all those years ago, through which I learned the value of retained earnings, carrying losses forward, limited liability, the Smith maneuver, etc.
Although he has since retired, the reins were handed off to the strategic-thinking accountant with whom I work closely today. These are not the easiest guys to find. It is also worth keeping in mind that as with many things in life, you get what you pay for.
Carrying losses forward, income splitting, cleaning up write-offs, and perhaps the single biggest advantage - Corporate Asset Transfer investment strategy are all huge benefits of having inc. status.
Being incorporated is likely the single greatest piece of my own retirement investment strategy.
Bottom line: Be Incorporated!
Dustan Woodhouse is a B.C.-based broker with Dominion Lending Centres.
Having had stellar accounting advice from a very creative and intelligent individual at an early age, I found myself incorporated at the age of 19. The rewards reaped from this business structure over the past 23 years have been many. As such, my personal experience shapes the Pro-INC bias of this post and, in particular, for brokers, Realtors and CFPs.