Why Incorporate your Business?

Incorporate your business and get personal liability protection, lower corporate taxes, the ability to raise money, and more.

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Incorporating Your Business

3 Main Reasons to Incorporate

Personal Asset Protection

Separate your personal and business obligations by incorporating and gain personal liability protection.

Lower Taxes

Take advantage of a lower corporate tax rate and save money to reinvest in your business.

More Professional

Your business will appear more professional and stable, enabling you to land larger clients.

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Limited Liability

Unless you have incorporated, there is no legal separation between you and your business. Your business debts are your personal debts. So if your business fails to pay its debts, you are putting all your personal property at risk: your home, your car, and your savings. Incorporation makes your business a distinct person for legal purposes. After you have incorporated, your business debts become separate from your personal assets. So if those debts do not get paid, it’s only the business’s property that is at risk, not your hard-earned personal assets.

Tax Planning

When you incorporate, you gain several tools which will help you reduce your taxes as a small business owner. In Canada, the tax rate on corporations is lower than the tax rate for individuals. You also have the flexibility of choosing how you get paid. You can pay yourself in salary, dividends, or a combination of both depending on what will result in the lowest tax burden. As a business owner, if you are able to leave money in the company and not take it all out for personal expenses, you can reduce the taxes your business will pay. This means that the money you leave in your company could be used to invest back into the business: for example, to spend on marketing, buy new equipment, purchase additional inventory or hire new staff. If your corporation is owned by a majority of Canadian citizens or residents, you will gain further tax benefits available to Canadian Controlled Private Corporations (CCPCs) including the Small Business Deduction. Tax questions can be confusing and will depend on each business’s circumstances. This is why it’s recommended to speak with a tax professional or accountant if your tax situation is complex.

Fundraising and Investment

Many small businesses and startups raise money by finding investors. But investors can’t invest in a business that isn’t incorporated. In exchange for providing money to a business, investors will expect to receive shares and potentially become directors of the business. Incorporation is necessary to build a share structure and a board of directors. Also, incorporating provides better access to bank loans and government grants. Corporations are often able to secure loans at lower rates than businesses that are being run as partnerships or sole-proprietors. Additionally, many government grants require the underlying business to be incorporated in order to apply for particular grants.

Appear More Professional

Another benefit to incorporating is that your business will appear more professional and more stable. After you’ve incorporated, you’ll enter contracts and send invoices through your corporate entity, rather than your personal name. As a result, no matter if you’re a freelancer, startup or small business, your business will seem larger as an incorporated entity and this will help you land bigger clients. Also, sometimes companies only want to do business with incorporated companies. Incorporating your business ensures that you don’t lose out on contracts for this reason.

Continuity & Planning for the Future

Corporations continue to exist even if the shareholders were to die. This is because the corporation is a separate legal entity that can acquire its own assets, enter into contracts, obtain a loan and more. With a partnership or a sole-proprietor, however, if an owner were to die, the business would cease to exist. As a small business owner, you likely don’t have the luxury of a pension or generous retirement savings plan. Your future will be funded by your business. Incorporating gives you the tools to plan your future. When it comes time to sell the business (either because you’re retiring or not), the purchaser will be looking to buy your shares and become the owner.

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$499*

Complete Incorporation

One-Time Fee

Incorporation & Filings with the Government

Free Online Minute Book Plan for First Year

Company Name Registration (NUANS)

Company Formation Documents & Shares

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Ownr™ is not a law firm and does not provide legal advice or legal services. We provide self-help services at your specific direction.

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