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Incorporation Services in Canada
Decided to start your own business and need a Canadian corporation? Looking for a job, but your employer requested you to incorporate your own corporation? Working as a medical professional and need to incorporate a professional corporation? Have an established business but need another corporation for another type of business or for claim of additional small business tax deduction? Need a holding company to protect your patents?
Our company is able to assist clients with incorporation in all these cases. We incorporate federal corporations in Canada and provincial corporations in Ontario, British Columbia and New Brunswick.
Why people would like to incorporate corporations, spend money for incorporation, pay accountants for preparation and filing corporate tax returns? Why not to register a simple sole proprietorship and start doing business for less?
Because a corporation provides limited liability to its owners. You would not be at risk of loosing your house, when a corporation takes a loan and fails to pay it back to your bank. This is the major and most important advantage, which comes with incorporation of your business. It gives you freedom of being more risk taker and have greater chances to succeed.
Benefits of Incorporation
A corporation has the same rights and obligations under Canadian law as a natural person. A corporation can acquire assets, go into debt, enter into contracts, sue or be sued, etc.
Limited Liability to the Owner
Shareholders of a company are not liable for the company's debts. If the company goes bankrupt, then a shareholder will not lose more than his or her investment (unless the shareholder has provided personal guarantees for the company's debts). A creditor cannot sue shareholders for liabilities incurred by the corporation, even though shareholders are owners of the corporation.
Lower Income Tax Rate
A corporation is taxed separately from its owners and generally at a lower tax rate. For example, a Canadian controlled private corporation incorporated in Ontario pays 15.5% tax rate on the first $500,000 of taxable income. Moreover, the corporation is able to hold after tax income and invest it in different projects without triggering any tax obligations for its owners.
In comparison, a sole proprietor conducting his business in Ontario pays 40.16% income tax, when his taxable income exceeds $132,406.
Greater Access to Capital
Raising capital is often easier for corporations than for other forms of business. For example, a corporation is able to issue shares to those who invest money in the corporate business. Other forms of business must rely solely on their own money and loans.
Corporations often are able to borrow at a much lower rate than other forms of business. Banks usually consider loans to corporations as being less risky investments.
Unlike a sole proprietorship or partnership, a corporation does not cease to exist upon the death of its owners. Ownership would be transfer to another persons and the corporation would still live on. Such continuous existence gives business greater stability and ability of planning over a longer term.