Pros and Cons of a PREC - AZ Accounting Firm
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Pros and Cons of a PREC

AZ Accounting Save Tax

17 Jun Pros and Cons of a PREC

PRO:    Once you incorporate, your brokerage will pay your commissions to your corporation and not to you personally as a Sole Proprietor.  Your business profits are taxed at a corporate rate of 12.2% rather than a higher personal tax rate.

PRO:    A PREC will allow you to defer your tax obligation to a later date.  If you earn more money in a year than you need to cover your living expenses, you can choose to withdraw your earnings at a future date.

PRO:    You may  be able to split your income with a member of your household who is in a lower tax bracket.  The result is that you can withdraw more money from your PREC while paying less tax than if you withdrew it all yourself.

CON:   There are higher costs associated with owning an incorporated business.  Initially there is the cost to set up the incorporation, as well as the requirement to file a corporate tax return annually (T2) in addition to your personal return (T1)

Recommendation: 

Speak with a qualified financial professional to assess what’s right for you based on your business and personal situation.  Contact AZ Accounting Firm at 877-252-2003 for more information

 

 

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