As a business grows and adapts, its structure will need to change as well. Small business incorporation may be an attractive vehicle for you, and one that may be necessary for your business to prosper.
Incorporating your small business, at any stage of its growth, is a very important decision as it will dictate what your small business is able to do in the future. You should always consult with a professional about the decision to incorporate.
Many small businesses begin as sole proprietorships or partnerships, and eventually become incorporated when growth warrants that change. Here are some of the main advantages to consider when incorporating a small business:
- Continuance — Continue to exist irrespective of ownership with an unlimited life-span.
- Income splitting — Reduces tax liability, and can involve family members.
- Limited liability — Reduces your own personal liability and protects your personal assets.
- Lower tax rate — Canadian-controlled private corporate tax is approximately 21% and personal income can be reinvested into the corporation or received as dividends.
- Raising funds — Incorporated companies can borrow and there’s an added ability to borrow from the corporation.
- Small business tax deduction — Approximately 16% of the first $200,000 of taxable income is deductible for incorporated businesses and may lower your tax rate.
The process for incorporating your business in Ontario can be time-consuming and complicated for business owners, but the team at Clearwater are here to provide trusted advice on the decision and help you navigate the process.
Contact our expert team for assistance incorporating your business today.