Items to consider before incorporation.
1. Do you need to borrow money?
2. Does your business have any financial or legal risks?
3. Is your business income exceeding the amount of cash you require to fund your personal income?
4. Do you plan to expand?
So, you have been running a successful business however, you started it as a sole proprietor and now considering incorporating. As a sole proprietor, you are the business and as a result, you are taxed on 100% of the profits on your personal tax return.
As a corporation, you can be separate from the business and therefore, determine how much income you wish to take from the corporation. You must declare all income that is taken from the entity for yourself personally, to record on a personal tax return. This is done by way of a T4/T5 filing requirement in February each year.
A corporation is a separate legal entity. This is a more complex business structure that requires a separate financial statement and corporate tax return to be prepared annually.
There is several items to consider, therefore, I suggest you schedule a call to discuss your specific situation to determine if this step is right for you.
