To Incorporate or Not to Incorporate Your Business in Canada?
- Gilmore Antonio
- Sep 19
- 2 min read
By Far East Accounting – Bookkeeping & Tax Services for Individuals and Small Businesses
What Is Incorporation?
Incorporation means your business becomes a separate legal entity from you personally. This separation can provide both legal protection and tax advantages, but it also comes with extra responsibilities.
Benefits of Incorporation
✅ Limited Liability – Protects your personal assets if the business faces debts or lawsuits.
✅ Tax Planning Opportunities – Lower small business tax rates, income deferral, and options for salary or dividends.
✅ Professional Image – Adds credibility and can make it easier to attract investors, partners, or buyers in the future.
Drawbacks of Incorporation
⚠️ Costs & Paperwork – Setup fees, corporate tax returns, and annual filings.
⚠️ Complexity – Money in the corporation isn’t “yours” until it’s withdrawn properly.
⚠️ Not Always Tax-Efficient – For modest incomes, incorporation may add costs without saving taxes.
When Incorporation Makes Sense
Your business earns more than you need personally, allowing you to leave income in the company.
You want legal protection from personal liability.
You plan to grow, hire staff, or eventually sell your business.
When It Might Be Better to Wait
Your income is modest, and you need to withdraw it all for living expenses.
You’re focused on simplicity and lower accounting costs.
You’re just testing your business idea.
Our Advice
There’s no universal answer—it all depends on your unique situation. At Far East Accounting, we can help you weigh the costs, risks, and tax benefits so you can make an informed choice.
📍 Serving Edmonton, Camrose, and Alberta
📞 780-839-8415
Far East Accounting – helping individuals and small businesses make smart financial decisions.
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