Incorporation of business in Canada through a consultant ensures business growth. There are numerous advantages of incorporating as well as disadvantages that small business owners should be conscious of before resolving on a decision. Incorporation simply means setting up a new legal entity, where the business is essentially renowned as a person under the law. Companies are usually businesses but not always. For example, a corporation can also be a not-for-profit, a sports club or even a government of city or town. For company Incorporation in Canada, simple visit http://ascventures.ca/, and contact with the legal experts to avail comprehensive service.
What are the Advantages of Incorporation of Business in Canada?
Limited Liability: This is probably the most important benefit and likely the chief reason that most small business owners set up. Companies are lawfully considered separate entities and as such any income or debt suffered belongs to the company, not the owners.
Increasing Capital: Companies can increase money more easily than individuals, which makes it easier for your companies to reinvest in development and expansion. Companies can sell off shares and raise equity capital, while sole proprietors cannot.
Optics: Whether or not your company is incorporated can influence how your operation is perceived by potential investors, partners, and customers.
Income Deferral: Being incorporated permits you the flexibility to opt for the most tax-proficient way to pay yourself.
Income Splitting: Companies are permitted to pay dividends to their shareholders from the company’s earnings.
Tax Credits: Incorporated companies may qualify for the Federal Small Business Deduction (SBD) which could decrease your net business tax rate to a much lower rate than what is applied to your income.
Disadvantages of Setting up Business in Canada:
Costs: Incorporation of a company either provincially or federally can charge a few hundred dollars. Usually, the procedure of doing business in Canada costs somewhere around $1,000 to $3,000 or more, plus supplementary legal or accounting fees as required.
No Personal Tax Credits: Every dollar a company makes must be taxed. As a sole proprietor, you would be capable to entitle tax credits that a company does otherwise could not.
More Paperwork: Companies must file separate tax returns, an annual return, and one-time articles of incorporation and announcements of share sales, moves or modifications of directors. You will also require to submit an annual corporate financial statement.
Less Tax Flexibility: A company doesn't have the same flexibility in managing business losses as a sole proprietorship. As a sole proprietor, if your company experiences operating losses, you could use these to decrease other types of taxable personal income in the year the losses occur.
Process to Close: Closing a company needs a proper procedure that needs a lot of paperwork and money. There must be a resolution passed in the annual general meeting to dissolve the company, winding up payroll accounts, and sending a copy of the Articles of Dissolution to the Canada Revenue Agency along with the final tax return for the company.
