Incorporating a Business/Starting a Business

◂ BLOG

If you are contemplating incorporating or starting a business in Grande Prairie or anywhere else in Alberta, you are in good hands with Hayes Fry Law. Our corporate lawyers are eager to meet with you and determine the best type of business structure to operate your business under. There are several ways to structure a business, which include corporations, partnerships, limited liability partnerships, joint ventures, and sole proprietorships. Choosing amongst the various options may be daunting at first, but our lawyers will educate you on the various options and the benefits and drawbacks of each.

Incorporation is often the best choice for business owners for the following reasons:

1.Corporations are taxed at a much lower rate than individuals, and therefore strategic tax planning is available to help you pay the least amount of tax possible on corporate income. Tax deferral is a common and simple means to avoid paying higher taxes on income, where the income remains in the corporation and shareholders only draw upon the income as needed and pay the personal income tax rates on only the income drawn.

2. There are more available tax write offs for corporations compared to an individual/sole proprietor.

3. Corporations are a separate legal entity apart from their shareholders. In most instances the activities of the corporation will not make the shareholders liable if a lawsuit arises, meaning the personal assets of the shareholders will not be subject to a judgment or seizure. If there is any possibility that the business may be subject to a lawsuit, then it would be wise to incorporate to protect your personal assets.

4. A corporation has perpetual existence if maintained properly. This allows for a business owner to sell or pass on their business to a family member if desired.

5. A corporation has a greater ability to raise capital through the sale of shares and issuing debentures.

6. A corporation is often seen as more credible, secure and reliable than a sole proprietor and may lead to greater recognition with clients.

7. There is the potential to realize your capital gains exemption.

As you can see, there are many benefits that can be realized by incorporating your business, no matter the size.

If after meeting with you we determine that incorporating may not be the best fit for you and your business needs, we can establish a partnership, sole proprietorship, or other business structure to best achieve your goals.

 

 

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