Why should I incorporate?
One of the most frequently asked questions by entrepreneurs starting a new business is: “Should I incorporate?” The answer to this question is usually: “That depends on your particular situation and your particular needs.” Among the factors to consider in making these decisions are the benefits of incorporating (versus operating the business as a sole proprietorship or partnership) and the implications that incorporation may have for the business.
Many people prefer to carry on business in Ontario as a corporation because a corporation is a distinct legal entity, an artificial person quite different from the people who are its shareholders.
When you incorporate a new company in Ontario, you actually create a new person in the eyes of the law. The assets and debts of a corporation belong to it — not to the individual shareholders.
Since a corporation is an artificial person, it must be created by someone. A corporation may be incorporated or “born” by a certificate of incorporation granted under either the Canada Business Corporations Act or the Business Corporations Act (Ontario).
Because of this, there are four major advantages for an Ontario Corporation
(1) There may be a greater source of capital available than in a partnership.
(2) Since the corporation is a separate “person,” it does not expire when the shareholders die.
(3) The most advantageous and unique characteristic of a corporation is its limited liability, and this is why corporations are referred to as “limited companies.” This means that as a shareholder you are not liable for any act, default, obligation, or liability of the corporation, with certain exceptions. This is obviously an important advantage.
Company Formations Canada provides fast and easy Ontario Incorporation Service and provides all the documents your new Ontario corporation will need to stay up-to-date and in compliance with the Ontario Business Corporation Act.
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