Why Incorporate A Business?

In Canada there are many ways to carry on a business. The three most common methods are a sole proprietor, a partnership and a corporation. Incorporating your business can provide many advantages, and it’s not limited to larger businesses. Individuals conducting business on their own can also benefit from incorporation.

Some of the many benefits of incorporating include:

Liability protection. Incorporating a business creates a separate legal entity, protecting the owner’s personal assets from business liabilities. This protection also extends to shareholders, who also have limited liability based on their investment in the corporation.

Tax advantages. Corporations are subject to lower tax rates and deferrals and are eligible for tax credits and business deductions. Additionally, corporations are taxed separately from their shareholders.

Access to capital and grants. Corporations can structure their business to secure financing more easily, including obtaining loans, grants and attracting outside investors.

Employee benefits. Corporations can offer stock options and retirement plans to motivate employees and encourage growth within the company.

Perpetual existence. A corporation continues to exist indefinitely, regardless of a founder’s lifespan.

Credibility. Prospective clients and investors often view an incorporated business as more professional. For example, a unique business name and its perpetual existence signals your commitment to a long-term presence in the market.
Easier transfer of ownership. Corporate law allows corporations to have a flexible share structure. One of the benefits is making it easier to transfer ownership of the business either to a third party or to the next generation.

To learn more about incorporating your business, please reach out to Momentum Law LLP at +1 (416) 594-0791 or email at info@momentumlaw.ca.

This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. Momentum Law LLP does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of Momentum Law LLP.