JOINT VENTRURES 101

A joint venture is not a structure, but is really a contract.  A joint venture exists when two or more people agree to contribute goods, services, labor or capital to one business enterprise. Canada has no specific laws governing joint ventures, outside of contract law.  Currently, joint ventures are governed by the contract between the parties involved in the jurisdiction they are agreed to be governed by.

The main advantages of using joint ventures are:

Ø  You can make up the rules as to what the joint venture contract will look like.

Ø  Joint Ventures are very flexible.

Ø  Joint Ventures bring people together to share resources and/or talents.

Ø  Joint Ventures can simply end when the deal is done (unlike a partnership or corporation).

The main disadvantages of using joint ventures are:

Ø  Contracts can be complicated and costly.

Ø  The objectives of the Joint Venture may not be clear, or each JV partner may have different objectives that cause conflict.

Ø  Legal Contracts come down to interpretation, and in Joint Ventures there are no major laws governing them.

Joint ventures can be used in conjunction with corporations, trusts and other types of structuring.  If you have structuring questions, don’t hesitate to contact us!

On my next blog, we’ll discuss Limited Partnerships. Please check back on Thursday! 

Holding Companies 101

Also called a parent company, a holding company is a company that owns part, all, or a majority of other companies' outstanding stock. (shares)  A holding company may or may not be used for holding other assets and leasing them to an operating company. 

The main advantages of holding companies are:

Ø  A holding company offers the ability to segregate earnings from the main operating company.

Ø  With proper planning you can creditor-proof the assets of the business.

Ø  Can be used for Income Splitting Purposes.

Ø  Generally, if set up properly, you can issue dividends from an operating company up to a holding company on a tax-free basis (Onshore and Offshore)

Ø  Easy to move money between Holding company. and Operating companies via dividends and loans, etc.

The main disadvantages of holding companies are:

Ø  Requires more cost and time, as you now have more than one corporation.

Ø  Requires more planning to be able to effectively use your Holding Company.

Ø  Holding Companies don’t qualify for the Lifetime Capital Gains Exemption on qualified small business shares.

Holding companies should be used in conjunction with a family trust where possible.  The advantages of having a holding company far outweigh the disadvantages, so if you are considering implementing a holding company in your structure please do contact us.  We are here to assist you with all your structuring needs.

Please check back next week and we’ll discuss how Joint Ventures work. 

Be part of the KD Team - General Accounting Manager Job Posting

General Accounting Manager -- Calgary, AB

THE KUSTOM DESIGN TEAM is a team of professional accountants, tax specialists and strategic planners supported by a dedicated staff and strategic alliances. 

GUIDED BY A CODE OF HONOR THAT INCLUDES being positive, recognizing personal contributions, being a good steward, doing whatever it takes for the team to succeed and honoring and respecting one another (and more!) we are looking to add an amazing team member as a General Accounting Manager.

RESPONSIBILITIES WILL INCLUDE:

• Client support including corporate year end (some bookkeeping), corporate structuring and tax planning, client presentations and customer service
• Manage flow of corporate year ends and business package clients
• Oversee accounting technicians’ work and provide leadership/mentorship as needed

QUALITIES/SKILLS:

• 5+ years of accounting experience
• 3+ years of management/leadership experience
• A CGA/CMA or equivalent is preferred
• Full cycle accounting knowledge (for small to medium size businesses)
• Tax knowledge specific to small and medium size business owners
• Demonstrate key leadership attributes such as a passion to serve, humility, challenging status quo and driving to the top
• References who support a strong history of superior client service
• Strong analytical and organizational skills
• Self-starter, highly motivated and a demonstrated ability to work well in a diverse environment
• Excellent verbal and non-verbal communication skills

WHY KUSTOM DESIGN:

• We’re a small, growing team that allows for flexibility and career development
• We live by a code of honour that encourages respect for all and a team approach to solving problems
• We develop real, meaningful relationships with our clients

TO APPLY:

If you’re interested in pursuing this amazing opportunity, please send your resume to info@kustomdesign.ca.  We thank all those who apply!

Cooperatives 101

A cooperative is generally described as a business that is organized, owned and democratically controlled by the people who use its products and services, and whose earnings are distributed on the basis of use of the cooperative rather than level of investment.  A distinct feature of a cooperative organization is that the role of owners and patrons / users are closely connected.

The main advantages of Cooperatives are:

Ø  Cooperatives have many of the same advantages of investor-owned corporations such as limited liability of owners and perpetual existence of the cooperative.

Ø  Cooperatives are allowed to deduct patronage refunds to members out of before-tax income.

Ø  Control of the business can be kept in the hands of those who use the business.

Ø  Profit distribution may be allocated in shares or cash.

The main disadvantages of Cooperatives are:

Ø  It may be difficult to raise funds for a Cooperative.

Ø  Cooperatives may not provide incentives for members to contribute additional capital.

Ø  Extensive Record Keeping and more complex tax and registrations filing is required.

Ø  Longer decision making process with more possibility of conflict between members.

Cooperatives are used much less than corporations and trusts, however they do have their place.  Cooperatives are very typically large businesses.  If you have questions on structuring your business or investments don’t hesitate to contact us.

On my next blog, we’ll take a look at Holding Companies.  

Sole Proprietorships 101

For the next few blogs, I will be discussing briefly each of the business structures available to you should you plan to start up your own business.  Let’s first look at Sole Proprietors.

A sole proprietorship is the simplest and most common form of business structure, and it is the oldest form of legal ownership in Canada.  It is owned by one person who retains all of the legal rights and bears all of the responsibilities associated with the business.

The business of a sole proprietorship is not considered as a separate entity from the owner.

The main advantages of sole proprietorships are:

Ø  It is the simplest and least expensive type of organization to create or dissolve. 

Ø  The owner retains absolute control over business decisions.

Ø  A sole proprietor can deduct business losses from other forms of personal income.

Ø  It is simple and inexpensive to maintain.

The main disadvantages of sole proprietorships are:

Ø  The owner faces unlimited liability.

Ø  With regard to liability and taxation, the owner and the business are one in the same.

Ø  You can’t raise funds through sale of Equity.

Ø  Upon death of the owner, the business is legally terminated.

Sole Proprietorships can be formed at any time once you have an idea for business and decide to move forward.  Please contact us if you require more information on business structuring or sole proprietorships.

We’ll look at how Cooperatives work on my next blog! Please check back!