Should I incorporate my business?
It’s a question lawyer Jeffery Cormier has expertly advised many Prince Edward Island business owners to answer throughout his 17+ year career with Key Murray Law.
As with any business decision, there are many variables to consider moving from sole proprietorship to a corporation, from the type of business you own to how much money your business makes and if the timing is right to incorporate.
Here are some of the factors Jeff advises his clients to consider when incorporating a business on PEI:
“Incorporating your business provides a liability protection for the business owner, as an incorporated company is a separate legal entity,” explains Jeff. If something happens to your corporation, such as being sued or bankruptcy, you likely won’t lose your personal assets, only what you’ve invested into the business.
Enhanced Tax Planning Opportunities
There are several tax advantages to incorporating your business, and it’s a big reason why many owners decide to do so. Corporate tax rates are generally lower than personal income tax rates, which can be beneficial during tax season. Some corporations may also have access to tax deferrals and deductions, giving business owners greater flexibility.
Incorporation Holds More Prestige
Being incorporated gives your business credibility and legitimacy in the eyes of potential clients and customers. In certain instances, some agencies may even require incorporation before they will work with your company.
Increased Administrative Obligations
In terms of the ‘cons’ of incorporation, Jeff cites that there are additional administrative obligations to consider, such as the requirement to file annual returns plus a corporate tax filing. There is a lot of meticulous paperwork that comes with incorporating, and failure to stay on top it could be detrimental to your business.
Bottom line, our team’s knowledge and expertise in Business & Corporate Law has helped clients across the Island to decide if the time was right to incorporate. We can do the same for you, too.