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Start a new company for our property business?

Q: My Dad and I are considering investing in a property together and flipping it after we conduct some improvements. He already has a small renovations business and a few trades people as employees. We plan to use the same trades people for the improvements on our investment (flip) property. We’re wondering if we should start a new company for this venture to allocate expenses, track accounting and benefit from potential tax advantages. Would running this flip through a new company make more sense than doing it as individuals?

A: Starting a company can be expensive. You are probably looking at $1,000 or so to set it up and then $1,500-$2,000 per year to maintain it. (Tax returns, annual reports etc.)

If you are pulling out the profits right away there isn’t an advantage to incorporating. If you plan to leave profits in the company, then you benefit from the low tax rates.

I suggest you talk with your accountant before making a final decision.

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