Incorporate a Business in BC, Reap the Benefits

Описание: Incorporate a Business in BC, Reap the Benefits
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Hey guys, my name is Perpinder. I'm a business lawyer with Patrola Law offices. Today, I want to have a quick chat with you about corporations.

Now, in my practice I do a lot of work with entrepreneurs, startups, small businesses and my clients come to me with beautiful ideas, great plans on how they want to sell certain products & services and different gaps they've seen in the marketplace that they want to fill. But they are unsure of actually how to start their business. What is the foundation for their business going to be? How do they actually put their plan into play?

Now there is generally 3 different ways to move forward. You can start your business as a sole proprietorship, as a partnership when there is more than one individual involved, or as a corporation. Good, competent, experienced legal counsel will be able to guide you through which of these 3 vehicles is going to be best for you. In my experience, many of you, if not the vast majority of you, are going to benefit from a corporation.

What is a corporation?

A corporation is a legal entity. Under Canadian law, a corporation is considered a person. What that means is the corporation will actually run the business. The business will run via the corporation. The corporation will incur the losses, incur the costs, and generate the revenues. You yourself as a shareholder of that corporation, as the owner of that corporation will not be receiving any moneys from the business itself directly. Instead, once the company has generated revenues, after the losses have been deducted from income and so forth, You will touch base with your accountant, and your accountant will help guide you through the best way to get that money out of the corporation and into your personal name whether as management fees, or a salary, or as dividends. Talk to your accountant.

What is the benefit of a corporation? There's many benefits. 3 principle benefits are:

1) Protecting your personal assets

By incorporating, any risks and any liability that attaches to the business operations, stops at the corporate level. That means that liability will not spill over to you as a shareholder. There is a corporate veil and it is very difficult to pierce that corporate veil and come after you personally. So you can protect your personal assets from creditor claims or from any other liability that may attach to the corporation itself.

2) You have greater flexibility to transfer ownership of the business, of the company.

You can transfer shares amongst other shareholders, to new shareholders, and you may end up in situations where one shareholder or a group of shareholders want to sell their shares and another group does not want to sell their shares. Now you have the flexibility of selling these shares to other individuals and there’s just much more flexibility involved with a corporation than if you were doing it otherwise.

3) Lower corporate taxes

Your company is going to incur much lower taxes than if you were taking the money to your name personally - 12% or 13% as a corporate tax as opposed to taking the monies into your own name, in which case you’re paying taxes at your personal income tax rate which might be 30% plus.

Who should incorporate your business? NOT YOU!

I have yet to see someone incorporate a company on their own without legal advice who’s done it correctly. More often than not, and I actually say every single time I’ve seen a corporate minute book that’s been prepared by a layperson or a company that’s been incorporated by the client themselves, they’ve done it incorrectly. It takes more time and effort and more expense to fix an improperly prepared corporate minute book than if it was done properly the first time around.

On that same note, make sure you go to a competent, experienced, business lawyer and not a general practitioner. General practitioners - they may see a corporation once in a blue moon. They’re not going to have the experience to provide you with the nuanced and specific advice you may need for your corporation. And this comes down to how you set up your class share structure, who should be brought on as shareholders, what different rights and restrictions which might be necessary to meet your particular business goals or your financing objectives and so forth.

#incorporate #bc #startup #entrepreneurs #smallbiz #legal #bclaw #vancouver #surreybc #patrolalaw
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