Benefits of Incorporating Your Business in Mississauga
You know that the corporations have a different tax and reporting structure than those you'd be submitting if you were a sole proprietor. However, there are many advantages as well. Some of them are:
One of the most significant advantages is that it will protect your personal assets. When running the business as a sole proprietor, you will be responsible for any liability that your business accrues. On the other hand, when you incorporate your business, your assets would be protected from any legal problems that you might face, so the personal loss is minimized.
Small Business Deduction May Apply
When you are operating a Canadian-Controlled Private corporation (CCPC), you might be eligible for the federal business deduction on the business income earned in Canada. Currently, this small business deduction is granted to the business owner when they make their first $500,000 of taxable income and may allow you to pay a lower net business tax rate than you do on your personal income.
Incorporating Can Help With Succession Planning.
The net assets go to the heirs when a sole proprietorship dies; however, some vital contracts and leases may not. On the other hand, incorporation of all the contracts and agreements will continue to exist even if the company owner dies or the ownership of the company changes. Having the ability to transfer corporation shares provides an advantage when it comes to succession planning. You may sell it all together, give it as a present, or buy it for your family. The corporation and all of its contracts and leases should stay in place regardless of choice, and only the owner of the shares would be affected.
Corporate And Personal Taxes Are Separated
Once you incorporate your business, then your taxes for your personal income would be separated from your business income. Your accountant dealing with the company incorporate tax would calculate the corporation tax rate, and doing some calculations would let you know if Incorporating would be helpful or not.