A Corporation is a separate legal entity, owned by its shareholders. When incorporating your business, you create formal ownership shares and you and your partners (if you have any) become an actual shareholder of the company, which produces a taxation and legal distance between the shareholders and the company . This in turn has tax advantages for the owners, who are usually paid as employees of the corporation. Incorporation is most often done under a charter in the operator’s home province, but some companies that operate in many provinces or internationally, or that require enhanced credibility, incorporate federally, except for the registration fee, can be more costly and complicated.
Why Incorporate Your Business
Businesses incorporate to protect their shareholders. When a corporation is formed, the shareholders no longer become individually accountable for the corporation’s debt and obligations. In other words, creditors cannot seize a shareholder’s property if the corporation goes bankrupt. However, there is one exception. When a business does not have the assets to secure a loan and the shareholders provide a personal guarantee, they can become personally accountable for the corporation’s financial obligations.
The directors can also be liable for the corporation’s debts if they breach a fiduciary duty, such as not paying GST owed.
Most jurisdictions require the filing of Articles of Incorporation and the appropriate government incorporation fees. Corporate Solutions Plus will prepare and file the Articles of Incorporation upon receipt of your order. Government fees vary depending on the jurisdiction of your corporation.
Incorporating a Canadian Business
Businesses that wish to incorporate in Canada can choose between a federal corporation or a provincial corporation.
The primary difference between the two methods are in the: