Should I Incorporate My Small Business?

There are two common setups for small-businesses:

Sole Proprietorship
A sole proprietorship is an individual operating business without incorporation. The main advantages include a simple and cost-effective setup and the utilization of losses in the business with other income of the proprietor. Disadvantages include virtually unlimited liability, higher taxes in the case of a profitable business, and the risk of discontinuity of business on the proprietor’s death.

Corporation
A corporation is created by an application to either the federal or provincial government. The main advantages of incorporating include limited liability, lower tax rates, a shareholder’s ability to utilize lifetime capital gains, exemption from the sale of shares of a qualifying small-business corporation, and continuity of the business after the death of a shareholder. Disadvantages include higher setup and administration costs, and the inability for business losses to be written off against the shareholder’s other income.

Call Now Button

    Book an Appointment to get started