Business Incorporation
We provide business incorporation services in Canada. Based on your business plans, operating structure, and future goals, we can assist you in choosing an appropriate business structure, incorporating your business, and considering the related tax implications.
The following are answers to some common questions about business incorporation.
Do I Need to Incorporate Before Starting a Business?
Not necessarily.
Many new businesses operate as a sole proprietorship during the start-up stage. If your business is not yet consistently profitable, operating as a sole proprietor is often simpler and may allow business losses to offset other personal income.
As your business grows and becomes consistently profitable, incorporation may become a suitable option.
What Are the Benefits of Incorporating?
One of the main advantages of incorporating is limited liability.
In general, a corporation is a separate legal entity from its shareholders, which may help reduce personal exposure to business liabilities.
A corporation may also benefit from lower corporate income tax rates on active business income, depending on its circumstances.
Do I Have to Incorporate? Are There Other Options?
No.
Besides incorporating, you may also operate as a sole proprietorship or a partnership.
Each business structure has different tax, legal, and administrative considerations, and the appropriate choice depends on your circumstances.
Will Incorporating Reduce My Taxes?
Not necessarily.
A corporation generally pays tax at corporate tax rates, which may be lower than personal income tax rates. However, when profits are later distributed to shareholders, additional personal tax may apply.
For many businesses, incorporation provides a tax deferral opportunity rather than a permanent tax saving. Whether incorporation results in tax savings depends on your overall business and personal circumstances.
What Should I Consider If I Am Starting a Business With a Partner?
When two or more people start a business together, one of the most important considerations is the relationship between the owners.
Share ownership, voting rights, profit distribution, responsibilities, and exit arrangements should be discussed early to help reduce the risk of future disputes.
How Much Does It Cost to Incorporate?
In addition to government filing fees, there may be legal or accounting fees depending on the services required.
Government incorporation fees vary by jurisdiction and are generally modest.
Can I Incorporate a Business Myself?
Yes.
The incorporation process is relatively straightforward, and many business owners complete it themselves.
However, decisions regarding the business name, share structure, jurisdiction of incorporation, and future tax planning may have long-term legal and tax implications. Proper planning at the beginning can help avoid unnecessary changes later.
Do I Still Need to File Corporate Tax Returns If My Company Has No Business Activity?
Yes.
As long as the corporation remains active and has not been dissolved, it generally has ongoing filing obligations, even if there is no income or business activity.
If the corporation will no longer operate, dissolving the corporation may help avoid unnecessary filing requirements and potential penalties.
What Ongoing Filing Requirements Will My Corporation Have?
After incorporation, a corporation is generally required to file an annual corporate income tax return.
Depending on its business activities, it may also need to file:
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Annual Return
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GST/HST Returns
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Payroll Returns
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Other required government filings
The filing requirements depend on the specific circumstances of the business.
Can You Help Me Incorporate My Business?
Yes.
We can assist with incorporating your business in Canada and provide guidance based on your business plans and circumstances.
If you are considering incorporation or would like more information, please feel free to contact us.