There are several considerations when making such a decision.
The first advantage of incorporating is that it provides a limit to
the liability of an individual shareholder. Generally, the shareholders
are only risking the value of their shares in the corporation and the
shareholder loans that have been made to the corporation. The same can
not be said for a sole proprietor, who is risking every personal asset
that he or she owns when they own their business personally.
Another important factor to consider is the tax advantage of incorporating.
For example, there are certain tax rate reductions available for qualified
small business Canadian corporations.
Other advantages to incorporating include: the continuity of life as
the corporation can not die, the transferability of the shareholder’s
interests and the ability to raise capital.
Whether you set up a corporation depends upon the circumstances. It
is a very complicated question that requires an analysis of all the
facts. There are instances whereby it is better to delay incorporating.
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The general opinions expressed herein are for information
purposes only and are not to be relied on. Individuals are encouraged
to seek legal advice as it relates to their specific fact scenario to
ensure they are fully aware of their legal rights and obligations.
