For small start-ups it’s often a question of “why?” when trying to figure out whether or not incorporation is the way to go. If you currently have a successful business in Canada, but are not too sure if you should incorporate your business, consider reading my Shopify Guide To Business Incorporation In Canada. Below in my short guide, you will be able to understand the benefits of incorporating your business as well as the issues that arise when trying to successfully incorporate your business.
What Is Business Incorporation?
What being an incorporated business means is that just like a corporation; the business being incorporated is ruled to be a legal entity with no relation legally to its owners and shareholders.
In Canada businesses have two options for incorporation, they can choose to have it done at the federal or the provincial level. While the legal jargon and tax benefits would make this seem mandatory, really incorporating yourself or a business is truly a personal decision. The real beneficiaries of incorporation are owners in a company looking to reduce their tax liabilities and bring a certain amount of legal protection for themselves.
What Are The Benefits?
The benefits to being incorporated primarily benefit the entity and for good reason, since it’s their business that they are attempting to incorporate. One great benefit of incorporation is those corporations never die. The shareholders, the owners, the founder’s will all say goodbye, but the business will be around forever. Other reasons for incorporation would include, being able to raise money easier due to your company being a legitimate entity and the other benefit would be tax advantages. Some of which include, allowing you to defer paying your taxes as well as offering certain business deductions for smaller companies.
While incorporating your business may seem like the right fit because of all the benefits, its important to remember it can be expensive and paperwork will be long and arduous. Having a corporate entity means that you are no longer a sole-proprietor and keeping records are now mandatory for tax purposes each year.
1. Name your company. This can be tricky so try to establish your name before incorporating. This will make it as easy as putting your company name down, instead of brainstorming and putting off the incorporation filing.
2. Request your business number. Requesting a business number will be important because the nine-digit account number will be the number that the Canadian government will use to identify your company.
3. Decide whether to file your incorporation provincially or with the federal government.
a) Provincial Option: If you decide to go this route, this would be the easiest. You can actually file your incorporation through your province’s online website. You can pay for it there as well and all you need is your future corporation’s information to fill out the required documents.
b) Federal Option: There is a 66-page guide available to read for exact details if you want to file federally. If you don’t care to read then just complete the process online the same way. Once your done, pay the fees and wait for all of your official business documents to come.
Using this guide as your aid, decide whether you think incorporation is right for you and then decide what option you would prefer to go with. Just remember the paperwork only grows for corporations and so does the work.