To Incorporate or Not Incorporate…The Age Old Question!
The decision to incorporating a business is based on an individual client’s circumstances and needs. Our experts can help you decide if incorporating is right decision your business, and implement the ideal corporate structure to reduce taxes and meet your financial goals. Listed under are some reasons why many businesses choose not to incorporate:
• Losses are trapped in the corporation
• Increased reporting costs, have to file annual corporate returns to CRA
Listed under are some reasons why businesses choose to incorporate:
• Separate legal identity
• Limit liability
• Reduced Taxes
• Beneficial for Estate planning
As a general rule when starting a new business many owners choose not to incorporate as the company is more likely to incur losses in the beginning and small business owners are often unsure of the future viability of the business. This way they can offset the losses from their business income against other forms of income they may have. But as soon as they see potential growth and profitability businesses incorporate to take advantage of the benefits as mentioned above.