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Hi everyone,

Just hoping you can help me decide whether it's best to be self-employed or a small business. I am a health professional working as an independent contractor (recently graduated so I still have tuition that can be carried over) - I fall under the exempt bracket for hst/GST

My income will be about 90k for 2014 in British Columbia. I would be contributing 20k for my rrsp. And have over 100k of tuition that can be carried over. And I am currently paying off my student loans so I can use my student loan interest as tax deduction.

With tuition credits, student loan interest and rrsp making about 90k in BC - Would it be wise to be a small business or remain self employed (for tax purpose I understand there's more liability with assets being self employed).

Thanks so much!
 

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As I understand it ... being a business is irrelevant to liability, it is the business structure that matters.

Businesses which are sole proprietorships or partnerships have unlimited liability where personal assets would be used to pay business debts.
Ones that are corporations, however - have limited liability.

http://www.canadabusiness.ca/eng/page/2853/
http://www.theglobeandmail.com/report-on-business/small-business/sb-money/business-funding/inc-or-ltd-which-sounds-better/article4258956/


Cheers
 

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Is the question to incorporate, or not to incorporate?
You don't indicate what sort of health professional you are, but my understanding is that some health care professionals cannot shield their personal liability under a corporation. For example, I understand that doctors may still be held personally liable for their professional actions even if they are incorporated.

Check out the section under "Limited Liability. Not exactly..." :
http://www.liveca.ca/what-is-a-professional-corporation-and-is-it-right-for-my-practice/
 

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For tax purposes, being self-employed is the same as being a small business. Unless you are a corporation, you would use a T2125 to complete your tax return. The credits (tuition and student loan interest) have the same impact against your self-employed/business tax owing; your RSP contribution room is calculated the same way. And your CPP premiums are calculated on your net self-employed/business income, then doubled as you must pay both portions of the premium. As a self-employed/business you must decide whether to opt in or out of EI; once you opt in, you cannot opt out, so consider this decision very carefully.
 
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