Reasons to Incorporate
Clients often ask us why they should incorporate their business and when they should do so
- There are two important considerations: (1) income/tax planning; and (2) risk management. If your unincorporated business is generating more than enough income to cover your living expenses, then it may be beneficial to incorporate your business and thereby defer some personal income tax on the surplus income.
- Incorporating your business can also be very helpful to manage risk. A company is a separate legal entity from its owners and therefore protects the owners from being sued personally (subject to the many ways that directors and officers of corporations can be held personally liable under Ontario law). Certain businesses are risky by their very nature and even non-risky businesses could be sued in the future for many things, such as someone slipping and falling on ice in the winter outside of the business. If such an event happens, it would be better to be incorporated so that the business owner is not sued personally.
How to Get Started
At Kay Law, we specialize in all aspects of business law and we regularly incorporate companies for our clients. We have a customized intake list that sets out all of the information needed in order to incorporate a business.
The basic information needed to incorporate is listed below:
- the proposed name (could be a numbered company or a named company, in which case a NUANS name search will be performed)
- who will be the shareholders and what share structure should be used (we can speak with your accountant to determine the best share structure)?;
- who will be the directors and officers of the company?
- what will be the registered office address for the company?
- who will be the accountant?
- what fiscal year-end will the company have?; and
- which bank will the company use for its accounts?