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Whether to incorporate is often a combination of legal advice from a lawyer and tax advice from an accountant. Usually, the two biggest considerations as to whether to incorporate a company are the limited liability benefits of a company and the tax benefits (or not) of incorporating.
Incorporating a company will lead to obligations to file annual reports and tax returns for the company that will be a significant yearly cost ($2,500-$3,500). Sometimes it will make more sense to delay incorporating and remain a sole proprietorship for a period of time to offset a fledgling business’ losses against other employment income that the proprietor might earn or, alternately, if there is no ability to retain money within the company. If and when the business starts turning a decent profit, that might be the time to better consider incorporating. Sometimes the nature of a business (i.e., construction) is so inherently risky that the limited liability benefits of doing business through a corporation makes the most sense. Other times a partnership (whether a general partnership, limited partnership, or limited liability partnership), or some combination of incorporation and partnership, etc., will make the most sense. Each situation is unique and will require specific advice for the situation.
We are happy to provide corporate and commercial law services to businesses of all shapes and sizes throughout the Fraser Valley. Our corporate and commercial lawyers are well-versed in all aspects of business law, including:
