Should I incorporate my business?

To decide whether or not to incorporate your business, you have to think about why you want to incorporate it.

Some people want to incorporate their businesses because of the perceived liability protection of corporations - but directors of corporations can be held liable, especially if they've personally guaranteed loans for the corporation.

Others want to incorporate their businesses because of the supposed tax advantages. However, unless you make more than $120,000 a year, incorporating your business for tax reasons doesn't make sense. And you need to bear in mind that incorporation is an additional expense. Not only does it cost more to incorporate your business, but maintaining a corporation costs time and money, too because of the additional paperwork.

However, you may need to incorporate your business because of provincial requirements or to get the clients your business needs. Certain types of businesses need to be incorporated in some provinces, and some companies will only assign contracts to incorporated companies (because of liability issues).

Should you incorporate your business? A Big Return will go over the pros and cons of incorporating with you. And remember, you can always incorporate your business later on, changing your sole proprietorship or partnership to an incorporated company.