TAXES Andréa Agnoloni
To Incorporate or Not to Incorporate?
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o incorporate your business or not to incorporate . . . that is the question! Many clients ask that question when they start a new business. They also ask it when they have been operating as a proprietor or a partnership and wonder if it is the right time to incorporate. The correct answer is always, “It Depends!” on the circumstances and the goals and objectives of the businessowner. Volume 26 Number 1 Spring 2017
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The correct answer is always, “It Depends!” on the circumstances and the goals and objectives of the businessowner. ADVANTAGES OF INCORPORATING Limited Liability Before we discuss the tax benefits, the main advantage to incorporating is the limited liability of the company. For that reason, companies are also called limited corporations. The Scrivener | www.notaries.bc.ca/scrivener
• In a sole proprietorship or a partnership, the owners are fully responsible for all debts and obligations of the company. A creditor could make a claim against the business and personal assets of the owners to satisfy the debts. • As a shareholder in a corporation, the owners cannot be held responsible for the debts of the corporation, unless they have given a personal guarantee. Over the years of operation, a corporation can accumulate corporate assets from the yearly profits. If the nature of the company is risky, the TABLE OF CONTENTS
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