Incorporation can be done at the federal or provincial/territorial level (Alberta Corporations). When you incorporate your business, it is considered to be a legal entity that is separate from its shareholders. As a shareholder of a corporation, you will not be personally liable for the debts, obligations or acts of the corporation.
It is always wise to seek legal advice before incorporating.
Limit your personal liability: Corporations are different than other business structures because shareholders’ liability is limited to the money they’ve paid for shares. They cannot be held personally responsible for any debts or legal trouble the corporation might run into.
Create a separate legal entity: In Canada, corporations have the same rights and obligations as a natural person. This separate legal status continues until the corporation is dissolved – even if the people that started the business die. See Industry Canada for more on why you should incorporate your business.
Greater tax options: Once your business’ revenue reaches a certain point, you will pay less in taxes if you incorporate.
Raise capital more easily: It is easier to raise capital investments with a corporation because you can sell shares.
Additional reasons you may want to incorporate:
If you’re thinking about having business partners or hiring employees
If you are making substantial revenue (for example, more than $50,000)
If it’s required to get hired for a contract or to go on site
If you need a WCB account
If you’re signing a commercial lease or signing a major contract
If you’re making or selling a product
For unlimited existence
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