Why Should I Incorporate My Business to Canada Revenue Agency?
Incorporation- A smart integration to obtain profit without individual responsibility
In this blog we’re peeking an in-depth analysis:
- How to incorporate a business to CRA?
- Why does business incorporate?
- When to incorporate?
If you are a business owner looking to incorporate or an individual seeking to establish a business and assuming, is this the right move to dive straight into a corporation? Then this blog is for you as it will help you with all of these answers.
Before we get into anything, let’s have a brief view of what is a corporation.
What is a Corporation?
The term “corporation” is defined in three simple words- A separate legal entity, like giving birth to a new entity or creating a new structure. Mostly, people think about a board of directors, multiple owners, and public shares involved in a corporation.
All these aspects might be genuine because every corporation needs shareholders or a board of directors to operate.
Now it’s time to discuss the main course, why do you need to incorporate a business while residing in Mississauga, Ontario? See below:
Why does Business Incorporate?
Although it is a simple process, not easy or cheap to start, maintain or file because corporate tax returns can be 3 to 4 times more costly than a sole proprietorship.
So why do people incorporate? Well, there are three core reasons:
1. Legal Sense
Legal sense helps you with specific options, such as:
- It help you to get a layer of legal protection.
- Secure personal belongings and assets.
- Due diligence
NOTE: People think that they are not responsible for any illegal or fraudulent activity they do. But this is not true, court of law cannot swing it the other way. You will be liable for every action, and the corporation will not be going to save you.
2. Business Sense
Business sense is crucial for many reasons, such as:
- It helps you to launch a successful business.
- Dealing with industries that prefer incorporations
- Helps to build trust within companies
- Fulfill legal requirements to run a business
- More professional approach
- Name protection
3. Tax Sense
You can get multiple benefits from tax sense, such as:
- A better tax rate than a sole proprietorship
- The cost of a corporation equals the tax benefits.
- You should get incorporated if you’re hitting a general benchmark of $45,000 (net taxable income) for a better tax rate.
You will be eligible to incorporate if you fulfill any of these three elements.
Remember, before making any quick decision, kindly reach one of our experts at BG Accounting and Business Solutions to get the best advice.
When to Incorporate Business to CRA?
It’s important to think about when to incorporate your business to take the best step forward.
Most of the time, people think they should incorporate it from day one well, but the answer is NO because it can be costly at the beginning.
BG Accounting and Business Solutions suggest you incorporate it when your company starts to receive high returns on its investment. Talk with one of our experts at BG Accounting and Business Solutions for the best advice.
Initially, there’s a start-up fee, which might be costly. Once started, then consider the other transitional costs if moving from a sole proprietorship.
Fortunately, limited liability protection starts instantly, and given the other benefits, it may be best to incorporate it now rather than wait for good times.
How to incorporate a business to CRA?
For the readers’ ease, BG Accounting and Business Solutions follow a step-by-step process to incorporate a business:
Step 1: Give your company a name.
Start with a good and legal company name. The name can be of two types:
- word name, a blend of letters and symbols; or
- numbered name, for example, 12345678 Canada Inc For CRA.
Step 2: Submit articles of incorporation
It helps to build the structure of your corporation. If you are setting up a small business, basic incorporation will be the best option. You can select from the pre-defined articles for your business and amend them later on.
Step 3: Register the office address and personnel.
The next step is to get the physical address of your corporation for any business activities. It allows you to receive and send legal documents under the right business name. In addition, you must finalize the panel of the board of directors of a corporation.
Step 4: Fee Submission
You can choose Bg Accounting & Business Solutions’ online portal to submit your application and incorporation fees with ease.
