Advantages of Incorporation
Starting a business as a sole proprietorship or partnership is simple and affordable. However, there are advantages of incorporation you may be interested in:
- Limited liability
- Tax savings
Even though there is a higher initial cost to incorporate and more administration, the advantages of incorporation are worth the extra expense and time investment.
A corporation is a distinct legal entity. That is, legally it is viewed as though it is a separate person. This means that the liability of the shareholders is limited to their investment. The corporation, not the shareholders, owns the assets and is responsible for the liabilities.
The shareholders are, with a few exceptions, immune from legal claims against their personal assets.
Tax Advantages of Incorporation
Perhaps the best benefit of incorporating is the ability to plan tax strategies.
In a sole proprietorship or partnership, all profits are treated as personal income. In a corporation, profits can be allocated to the corporation and to shareholders, allowing you to develop a solid strategy for tax deferral and tax minimization.
Profits can be left in the corporation to defer tax to later years, or paid to the shareholders by salary and/or dividends.
It’s Easier Than You Think
Incorporating your business can be both quick and affordable. We are happy to discuss the process with you and help you determine the tax advantages of incorporation and whether incorporation is right for you. If you are thinking of incorporating your Calgary, Alberta or BC business, call us today for your no-obligation consultation.