Incorporate your business? Yes! Learn why.
Higher than ever costs of living have led many Canadians to consider creative ways to keep up with inflation and maintain financial security. In turn, the pandemic has brought upon us a new wave of entrepreneurship as more Canadians than ever before look to take advantage of both more flexible work arrangements and low costs of borrowing by starting their own business either as a replacement to their primary employment or as a secondary source of income.
Those entering the world of entrepreneurship for the first time are likely going to want to consider the benefits of incorporating their new business. Here are a few reasons why it might make sense for you:
- Creditor Protection
This is the main reason people choose to incorporate their business. If your company is sued, your personal assets are protected. Please note you are still personally liable for CRA debts and any other debts covered under a personal guarantee. You need to ensure you are properly advised on setting up and operating your business. People can ‘pierce the corporate veil’ (go after your personal assets) under certain circumstances, for example if fraud was committed or if it wasn’t clear that they were dealing with the corporation.
- Perpetual Existence
Corporations exist until they are dissolved, either voluntarily or involuntarily.
- Ownership Flexibility
Setting up a corporation doesn’t make you the owner of it. Shares need to be issued. The owner of these shares become the shareholders of the company. The company articles of incorporation will specify the types of shares that are authorized to be issued. Shares can be classified as voting or non-voting.
While the allure of low costs may push you in the direction of a do-it-yourself incorporation, if you’re serious about setting yourself up properly both legal and tax professionals should be involved in supporting your decision making.
Typically, a lawyer will advise on classes of shares, federal vs provincial incorporation, trademarks (name protection), unanimous shareholder agreements and anything else relevant to your situation. Your lawyer will also maintain your minute book, file your annual returns and file resolutions as required, in most cases.
CEO Law offers a flat rate, affordable option for incorporation which includes strategic consultation with a lawyer, offering the confidence that you’re setting up properly with your specific goals and objectives in mind.
Not sure if an incorporation is right for you? No problem. Book a free consultation here and we’ll be happy to help you determine the right solution for your business.