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General Advice on Benefits and Risks of Incorporating
Running your business through a corporation can have many advantages. You can take advantage of a lower tax rate. You can add limits to your personal liability, and you can use a corporation for a great retirement and Estate plan.
There can be drawbacks with corporations as well. There is often more “corporate maintenance” work that can cause extra work for yourself as well as extra legal and accounting fees.
There are also some legal problems that can give you liability later down the road when you sell your corporation.
Our Advice on Incorporating
We offer straightforward advice on the benefits and drawbacks of incorporating. We will ask you about your business and your goals for the future. We will give you honest advice on whether it is better to incorporate now, or later in the future.
We will help you set up the best corporate structure to fit your growing corporation. We can make them as complicated or as simple as you would like.
How a Corporation Works
A corporation is a legal entity that acts as a single, separate “person” from yourself. It is as if you have created a separate person who owns and operates your business. The only thing you get are shares that own your corporation.
This corporation acts as if it is its own person. Therefore, when you give assets to your corporation, the corporation owns it as if it is a separate person. You no longer own those assets yourself. All you own are the shares in your corporation.
This concept is what gives you your legal benefits and limits.
When you begin to operate your business through your corporation, you do not get customers, your corporation does. When you sign a contract, you do not enter into the contract, your corporation does, as if it is its own person.
Therefore, when someone eventually wants to sue your business, they can’t sue you, they have to sue the corporation. That means the assets you own personally may be completely protected from any lawsuit that is against your corporation.
Beware!
There are limits to the protection a corporation gives. Firstly, you MUST enter into any agreement or contract as the corporation, and not in your personal name.
Our firm successfully sued an individual because he signed a contract under his personal name and not on behalf of the corporation. We were able to get a lien against his house using this strategy.
This is only one limitation of corporations. There is a lot more we can discuss in person.
Want Us to Give You a Quote?
You have a right to pick the lawyer that best fits your needs. If you want us to give you a free quote, please feel free to call us at (705) 476-6600 or email us at info@sangsterlaw.ca.
