Should I Incorporate?
There comes a time in every business owner’s life when they must ask themselves, should I incorporate? It’s not an easy decision to make because it comes at a cost and with new CRA filing deadlines and compliance requirements. However, there are plenty of benefits too. This blog will take a look at some of those benefits.
If you are looking to finance your business or startup with a personal loan or the “bank of mom and dad,” consider incorporating. Corporations can borrow money at lower rates than sole proprietorships and can also sell shares (if they go public) to raise even more capital.
Is there a chance you could be sued for a product malfunction or a project failure? Corporations are treated as separate entities. This means, the corporation – not you – bears the legal responsibility. A sole proprietor could lose personal assets (home, vehicles, savings) in a lawsuit. Incorporating means only the business’ assets, not your personal ones, would be affected (unless your personal assets are used as collateral for business loans).
In the same way, having your business name in your email domain rather than a generic email provider (name@xyzcorporation vs firstname.lastname@example.org) makes you look more professional, incorporating elevates the status of your business among your network and clients. If you are in a competitive industry, this is something to consider.
When considering incorporation, most people worry about the cost. It can be lower than you think. There may be higher costs associated if you use the services of a business designed to help companies incorporate. However, if you do it yourself online it costs just $200 and you get your certificate in one business day. You can start the process with a click of a button.
It is easier to evaluate and sell a corporation than it is a sole proprietorship. If your company is growing fast or your plan is to grow and sell it, incorporating would make this final step much easier.
You get that CEO title
Maybe this is just a little vain but having a CEO as your designation is a really good feeling! On the practical side, the CEO is elected by the company’s board. This increases investor and customer confidence and further grows your reputation and brand presence.
Incorporating a Canadian business is not a decision to take lightly. One should consider the company’s future goals, market share, the potential for growth, and be very honest about the company’s performance. You can consider incorporating from the start or incorporating as the business grows, but you don’t have to make this decision alone. AF Accounting is here for small business owners across Canada. We can take a look at your financials and help you make a decision on if incorporation is right for you. This is just one of the many services we provide. Contact us today to learn more.