Bob GauvreauAsk Bob Gauvreau Questions Based On His Training

Having Tax Planning in Place #shorts

7 Feb 2024 · 1 min

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A short YouTube clip by Bob Gauvreau advising small business owners to implement tax planning early. He warns that many start as sole proprietors (easy entry) and can end up paying very high effective tax rates (he cites ~57–58%), putting the business at risk. He recommends selecting a tax-efficient business structure once the business starts earning taxable income and cites specific rates: Canada corporate tax ~12% and a 20% C-corporation rate (mentioned for comparison with U.S. rates).

Questions this video answers

Approximately 57–58%.

12% (business tax rate for a corporation in Canada).

20% (referred to as a C corporation tax rate).

Chapters

One of the greatest risks that I see that small businesses face is not having tax planning put in place. A lot of times when you're a small business owner and you're just getting started, you use the wrong business structure. I see it happen a lot where people enter into sole proprietorships because it's super easy for them to get started. Barriers to entry are super low. Next thing you know, they're paying 57, 58% tax rates and their business is in jeopardy because they're paying all this money to the government. Once your tax starts, once you start paying tax as a business, you should be looking at the structure that optimizes you. And don't wait too long, because once you start making money, you know the tax obligations are coming on the other end. In Canada, 12% is the business tax rate for a corporation, 20% is a C corporation tax rate. In the United States, if our tax rates are projected to get above that, we need to be looking at these types of entities to make sure we're saving tax money.