A corporation is the largest structure for your business, owned by shareholders who elect a board of directions that run the corporation. It is an entity that is legally independent of its members, which means they are not personally liable for the debt that the corporation might carry.

There are two key advantages of incorporating a business: 1) limited liability and 2) income tax deferral. In general, if your business is earning over $60,000 in net earnings and you anticipate it will continue to grow, you should consider incorporating a business. The savings from tax deferral, dividend splitting and favorable tax rates will be greater than the additional legal and accounting costs.

You may benefit from the small business deduction (SBD) which lowers the federal tax rate to 9% on its first $500,000 (compared up to 53.5% marginal tax rate if you’re not incorporated).

Corporations Canada is the country’s federal corporate regulator. It administers laws and regulations to create and maintain a corporation under Canadian federal laws that govern corporations in the country. The Office of The Superintendent of Financial Institutions administers the incorporation of financial institutions.

There are many reasons to incorporate your business. We’ve listed them down below:

• Tax Considerations: There are tax considerations such as salaries, bonuses, operation and advertising costs that are good examples of tax deductions that you can enjoy after forming a corporation.
• Asset Protection: This is one of the primary reasons to incorporate your business, which then creates a separate legal entity from your personal assets. It means your business’ assets and debts are separate from your personal assets and debts.
• Unlimited Life: Corporations have an unlimited life. Unlike other business entities which have a date of dissolution or cease to exist once the owner passes away, for in the case of a sole proprietor. In a corporation, you can buy or sell your shares at your own discretion without having to get approval from other shareholders like in a limited liability company.
• Credibility: Incorporating your company shows that you mean business and often adds a sense of credibility to your company when reaching out to customers and clients.

There are 5 steps for business incorporation:

• Step 1: Name your corporation
• Step 2: Create your articles of incorporation
• Step 3: Establish the initial registered office address and the first board of directors
• Step 4: Submit and pay the fee
• Step 5: Create a Digital Minute Book which contains Bylaws, Resolutions, and Shares

As there is a lot of paperwork involved, it is best to ensure this is done with the help of a Corporate Services Expert guiding you through the process. At Kedden, we offer business incorporation where we handle this process for you at very cost-effective prices, ensuring your business is incorporated and ready to soar.