You’ve set up shop – now maybe you should consider incorporating
Now that you’re up and running it might be time to evaluate your risk management strategy. If you are not yet incorporated, now might be the time to do it. Incorporation can be a key part of a company’s risk management strategy and it comes with a number of other perks.
By incorporating your business you are creating a separate legal entity for your business. This limits the liability for claims against your company to the assets available from the company, thus protecting the personal assets of you and your partners.
Number of Owners
Incorporation also allows you to change the number of owners in the company. As well, each shareholder is only liable for their portion of the ownership. This means that they don`t have to worry about their partners financial situation and being responsible for them.
Another great reason to incorporate is access to funds. There are often a greater number of sources of capital available to incorporations. This is mostly due to the limited risk that investors have to take on when investing in your company. Additionally many government grants and loans are only available to incorporated businesses.
Profit Sharing Incentive
Incorporated businesses can offer shares to their employees. This can be used as incentive to improve the profits of a company because it benefits everyone. When everyone works together, this can help drive growth within the company.
Companies that are incorporated live in perpetuity unlike Sole Proprietorships and Partnerships which die with the owners often causing undue stress on a business. This is substantially beneficial in the event of estate planning should something happen to an owner.
Firstly, separating yourself from your business will make doing your taxes easier. But more importantly, Canada offers incentives a lower tax rate to small business corporations which can save you money. As well, being incorporated offers the opportunity to save on taxes by writing off many business expenses such as accounting costs and various types of insurance costs.
While incorporating makes a lot of sense for a lot of businesses, insurance makes sense for all businesses. No Bull about it, the right corporate structure in combination with insurance coverage can be an excellent strategy for risk management to protect your business and personal assets. You’ve put a lot of effort into launching your business – contacting Bullfrog Insurance to see about protecting it is a good way to ensure continued success.