Tax Tip Thursday

Pros and Cons of Incorporating a Business

Lately I have been getting more and more questions from small business owners about incorporating. It’s funny how it comes in ebbs and flows!

Should I or should I not set up a corporation? That is the question.

We have talked about it before, but below is a refresher course to help you remember! I’ve also updated the information with some things that are of interest to real estate agents because they can now incorporate as well.

Advantages of Incorporating

There are some very significant advantages to incorporating! To name a few:

  • Protection against personal liability
  • Tax rate is only 12.2% on corporate earnings
  • Flexibility in terms of when and how much you pay taxes on your personal earnings
  • Opportunity to include your family in your business (income splitting)
    • There are very specific rules about this and you definitely need to come see me to make sure it is done properly!
  • Funding your kids’ education (people like this one!)
  • Legitimacy/public perception
  • Sale of your business leads to a capital gains exemption of almost $900,000
  • Making the best of losses in your business
  • Business name protection

Disadvantages of Incorporating

Of course, nothing in this world comes for free. There are also some disadvantages to incorporating:

  • It costs a little more to incorporate (either with or without a name)
  • You will still be liable for HST, WSIB, and any other personal guarantees you make
  • Losses in the business cannot be applied to your personal income the way you could with a sole proprietorship
  • Tax preparation costs tend to be higher for corporations because they are more complicated

The good news is that we can get you set up to deal with any issues you might have along the way!

How We Help

Here is a list of our services that we offer to help you incorporate:

  • Incorporation
  • Set up your HST
  • Set up your WSIB
  • Set up your payroll if you need it
  • Set up all associated accounts with the CRA
  • AND we will complete your first annual filing!

All this for a single incorporation fee! Then, once you’re set up, we have lots of other services we can offer you to help keep things running smoothly.

Don’t hesitate. Book a FREE consultation now to find out how we can help you with your business!

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.