How do I incorporate?
If you would like to incorporate your business, enlist the professionals who will guide you through starting up, maintaining, and operating your corporation.
A corporate accountant can work with you to uncover potential tax benefits, develop a suitable share structure, and, once your business is incorporated, he/she can produce annual financial statements, and file the corporation’s annual income tax return.
A business lawyer can prepare and file your articles of incorporation (in accordance with your accountant’s instructions, where applicable) and set-up your corporate minute book. Once your business is incorporated, he/she can keep your corporate records up to date, ensure that your corporation is compliant with applicable laws and regulations, assist you with preparing and negotiating contracts (i.e. shareholders’ agreements, commercial leases, and contracts with third parties), and represent your corporation in commercial transactions.
An insurance broker can offer you the appropriate insurance coverage for your business activities.
Depending on your specific business goals and circumstances, you may wish to consult other professionals such as a financial advisor, business coach, real estate agent, or broker. Your business lawyer can likely refer you to some other trusted professionals in his/her network.
When should I incorporate?
The best time to incorporate will depend on your particular circumstances. You may find yourself in a position to enjoy the benefits of incorporating when:
- Your business begins to generate surplus profits, and there is more revenue than what is needed to cover your personal expenses;
- The tax advantages associated with having a corporate structure outweigh the extra costs and administrative requirements of starting up and maintaining a corporation;
- There is an opportunity to reinvest large amounts of profits back into your business, and you wish to shield the non-tax-deductible portions of those profits from higher individual tax rates; and/or
- Your business is using a large portion of its profits to pay off debt, and you wish to shield those profits from tax.
Prior to initiating the incorporation process, it is important to consult with a corporate accountant to determine whether incorporating is right for you.
Conclusion and next steps
Once you have gathered the necessary information, and if you have determined that incorporation is right for you, the next step is to prepare for your first meeting with your business lawyer. Stay tuned for the fifth and final part of this blog series, which will guide you through the information your lawyer will need to incorporate your business.