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Another type of business structure is incorporation. Incorporation can be done at the federal or provincial level. When you incorporate your business, it is considered to be a legal entity that is separate from the owners and shareholders. As a shareholder of a corporation, you will not be personally liable for the debts, obligations or acts of the corporation. When making such decisions, it is always wise to seek legal advice before incorporating. Advantages:
Limited liability
Ownership is transferable
Continuous existence
Separate legal entity
Easier to raise capital
Possible tax advantage as taxes may be lower for an incorporated business
Disadvantages:
A corporation is closely regulated
More expensive to incorporate than a partnership or sole proprietorship
Extensive corporate records required, including shareholder and director meetings, and documentation filed annually with the government
Possible conflict between shareholders and directors
Possible problem with residency of directors
More information:
To learn more about incorporation, please consult the following information:
Guide to Federal Incorporation
Step by step guidelines to help you incorporate your business and set up an appropriate structure.
Provincial or territorial incorporation
Québec
Incorporate a business (Quebec) Learn the steps to incorporate your business in Quebec, especially the forms to be filled out and the application process.