Every business changes over time. Businesses change the products they sell, their corporate culture and the people who keep the enterprise running. Many companies also go through changes in their structure.
For example, if you are a small business owner, you may be thinking about changing your business structure by incorporation provincially or federally. To determine if this might be a good option for you, consider your answers to the following questions.
Why do you want to incorporate?
There are numerous benefits to incorporation in Canada. These benefits include:
- Limiting your personal liability for corporate debts
- Making your business its own legal entity
- Having the exclusive right to use your business name in your province or throughout all of Canada
- Having various tax incentives
- Improving your position to raise money
If any of these benefits are driving your decision to incorporate, it can be an effective solution for you and your business.
Are you prepared for incorporation?
Incorporating your business requires more work than filling out a few forms. In fact, incorporating will involve:
- Establishing a board of directors
- Having a registered address
- Creating your articles of incorporation
- Paying a fee or fees
- Submitting paperwork
Even after you incorporate, you will have tasks to complete. Such duties include filing separate taxes and maintaining meeting minutes. Consider if you currently have the workforce to handle these responsibilities or if you will need to hire someone.
Are there time-sensitive issues to consider?
Incorporating sooner rather than later can be wise if you are worried about liability issues or want to take advantage of certain tax benefits. And if you have yet to open your business, starting it as an incorporated business can streamline the process.
If you are not concerned about these issues, there may be no reason to rush to incorporation. That said, the end and beginning of the year prove to be the most popular times for businesses to incorporate.
Whether you decide to incorporate or start your business under a different structure, it can be prudent to discuss your situation with a lawyer to ensure you make informed decisions about your professional endeavour.