Should I Incorporate my Business?

The simplicities and complexities of incorporating your business

There comes a time in every self-employed businesspreson's life when they start thinking about incorporating their business.

The most obvious advantage of incorporating the business is tax deferral as the business owners can control how much money they can take out of the business in forms of salaries and dividends. This can help to minimize personal taxes especially if the business brings in a high profit every year putting the business owners into the highest tax bracket. Another advantage of incorporating a business is that it is often easier to obtain financing due to the fact that an incorporated business is considered to be more stable by most lenders and can assist business owners in obtaining the necessary equipment to replace the old equipment or even expansion.

The disadvantages of incorporating are the high incorporation fees and the fact that corporate taxes and related financial statements must be prepared by accountants. This can lead to higher costs. In addition, estate planning must be made as the business would still exist on death of shareholder and may have implications on beneficiaries of the estate.

Seeing how complex incorporation can be, it is extremely important that the business owners speak with a professional to discuss their needs to ensure that incorporation is right for their business.