If you decide to incorporate your business as a non-profit business, either provincially or federally, it means all profit is non-taxable and a Board of Directors (minimum three directors) will govern the business.
The directors will be responsible and liable to the public's trust. The directors cannot profit from the business, it becomes their responsibility to re-invest all profit back into the organization.
This special tax status transfers the liabilities from the individual sole proprietorship or partnership to a non-share capital business operation. The liabilities primarily include employee severance, employee/employer income tax, Canada Pension and Employment Insurance contributions, leaseholds and final resolution of insolvency.
All revenue earned will be directed to the not-for-profit organization, rather than to the individual, and therein all expenses will be the responsibility of the not-for-profit organization. This is a transfer of power and responsibility. As a freelancer, your income will be paid by the not-for-profit organization and only those personal expenses and income outside of your work for the not-for-profit organization will be eligible on your individual income tax.
As of the date of incorporation any assets (sets, costumes, etc.) created or aquired become the property of the organization and they are not that of the creator(s), excluding copyright license.
Article originally contributed by Myles Warren
Updated October 2005
RESOURCES:
Genovese, Vanderhoof & Associates. An Economic Case for Government Support: The Not for Profit Performing Arts Industry in Canada. Association of Canadian Orchestras: Toronto, 1995.
Available at DUO Library
McDaniel, Nello & Thorn, George. Rethinking and Restructuring the Arts Organization. FEDAPT: New York, 1990.
Available at DUO Library
Merritt, Loretta P. and Straszynski, Peter C. Employment Issues for Non-Profit and Charitable Organizations: " Dealing with Employees and Volunteers". Torkin Manes Cohen & Arbus: Toronto, 1999.
Available at DUO Library
|
