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Old 3rd November 2015, 10:50 AM   #1

Join Date: Oct 2015
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Default Business Incorporation For Small Business?

Iím running a small business of designer cakes in Toronto and itís just been 3 months since I started the business. One of my friends told it would be good if you get the Ontario business incorporation, even though itís a small business. He also mentioned some of the benefits of it. Iíve contacted an online business incorporation company in Ontario called Ontario Business Central. How important is business incorporation for small business?

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Old 3rd November 2015, 01:53 PM   #2
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It depends. Your choice of business organization can have significant legal and tax implications. This isn't an area where I'd feel comfortable taking advice from a friend (who doesn't happen to be a tax accountant or a small-business lawyer), no matter how well-meaning. Even if they're a business owner themselves, what was right for them in their situation might or might not be right for you in yours.

And of course a company that's in the business of helping others incorporate is not necessarily going to be the most objective, unbiased advisor.

Some people mistakenly believe that by incorporating they will absolutely protect all their personal assets from any business-related liabilities that might arise. Unfortunately, that is not the case, especially when the "corporation" is actually only one person running a business. In situations like that, the "corporate veil" is actually fairly easy to pierce. But incorporating can provide some limited protection in some instances, so it's not necessarily "worthless" in that regard.

As to whether you'll do better on taxes by incorporating or through some other business organization, only a tax accountant familiar with your specific situation can answer that for sure.

I strongly suggest you get a consultation from a lawyer and/or a tax accountant before you decide (I promise, it will be money well spent).


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