Incorporation is the legal process whereby a newly formed business entity is legally created in order to protect the owners of a business from legal liability. The incorporation process is governed by either the federal or provincial laws under which the corporation was established. Therefore, it is fundamental to employ someone familiar with the incorporation laws and regulations of your jurisdiction and the governing body that regulates your profession. There are a number of steps that one must take in order to incorporate their business; at Fractal Accounting we make this process simple for you by walking you through this and providing guidance on requirements that you must be aware of to move forward.
Once a company is incorporated, the business will become subject to lower corporate income tax rates. Corporations are typically subject to more favourable tax rates as compared with the individual tax rate. Lower tax rates result in more money being available to help grow the business.
Furthermore, corporations often also allow for income splitting between family members which can also result in further tax savings in comparison to operating a business as a sole-proprietorship. Income splitting is done using family members such as spouses, parents and children; by utilizing family members in lower tax brackets, you may be able to bring down your family’s overall tax burden by income splitting using a corporation.
If you are looking to incorporate your business, contact Fractal Accounting. We look forward to guiding you through this process and putting your business on the path to success.