Companies and businesses can be owned through various methods. For the purpose of this post we will look at a business that is owned through an individual in comparison to a business that is owned through a corporation.
Benefits of a corporation
- A corporation is a separate legal entity allowing an owner of a corporation to have a limited liability
- Can lead to significantly lower taxes by having planning flexibilities such as tax deferral and a low corporate tax rate for Canadian controlled private corporations (CCPC). Canada has been ranked as eighth in global comparison for most advantageous place to pay corporate taxes
- Businesses that are incorporated tend to have stronger consumer values and have a better overall brand value
- Ability to attract investments through the issuance of corporate shares
- Canadian corporations can apply for a capital gain exemption of up to $750,000 when the business is sold (certain tax restrictions apply)
Benefits of an individually owned business
- Lower compliance costs associated with incorporating
- Business losses can be applied against other income
Conclusion
Incorporating is the way to move your business forward, save on taxes and build shareholder value. Contact us, your Ottawa accounting firm, to learn how you can save money by incorporating your business.
