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Why Incorporate a Business In Canada

When starting a business in Canada, you’ll need to make some crucial decisions.  One of the most important is whether to incorporate your business or not. Although consulting a business attorney is always recommended for any serious individual, below is some information to get you started.

What Does it Mean to be Incorporated?

Incorporating a business simply means that you are turning your general partnership or sole proprietorship into a company that is formally recognized as a separate legal entity that can transact business on its own.  You can incorporate on a provincial and/or on a federal level.

Benefits of Incorporating

There are some definite advantages to incorporating your business including:

Your Name

You will be able to operate under a single unique name throughout Canada.  Therefore, you can expand your business to multiple territories or provinces under that same name.

Easier Access to Capital

Since corporations are oftentimes able to borrow money at a lower rate and can sell shares or bonds to shareholders (investors) in order to raise funds, you’ll have those resources available.

Recognized Globally

When you are federally incorporated, you’ll be recognized across the world, which is ultra-important if you are thinking future plans may include expansion outside of Canada.

Continued Existence

Your business will continue to exist and will be able to do business unless you voluntarily give up your charter or go bankrupt.


Being incorporated affords you the opportunity to conduct your official business anywhere in Canada and also to hold meetings digitally as well as in any location in the world.

Lower Tax Rates

Owners of corporations do personal taxes separately from the corporate taxes.  Typically corporation’s taxes are lower than regular businesses’ tax rates and individual rates as well.

Limited Liability

Shareholders of corporations are not held liable for the corporation’s debts.  In the event the company goes under in bankruptcy, you as the owner will not be responsible and you won’t suffer any loss except the investment you have in the company through shares.

Separate Legal Entity

A corporation has the same identical rights as a real human being does.  The corporation can own property, attain loans, and enter into contracts. If you were to lose your home due to bankruptcy, you would not lose a business that was incorporated.  Otherwise, you could.

Is Forming a Corporation Right for You? 

If your business is making money that is beyond what you need for survival (bills, food, shelter), you would be wise to at least consider the possibilities.  The first step is to set up a meeting with a business attorney who can explain the benefits of incorporating even further and walk you through the process if you decide it’s to your advantage.

It is possible to do the work yourself to form a corporation, but there are many things involved and one mistake could spell disaster.  It is always recommended that you seek legal counsel from an expert.

There are many benefits to setting up your business as a corporation but only you and your business attorney can make the final decision if it is right in your particular situation.

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