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Should you incorporate?

Starting or operating a business can entail risks. Although it is impossible to entirely eliminate all risks it is often possible to minimize them.

The corporation is the most often used form of business structure as it can provide a very effective means of limiting the commercial risk that is inherent in any business venture.

Contrarily to a registered business or a partnership, a corporation provides its shareholders the benefit of limited responsibility. This limited responsibility stems from the fact that a company is considered, by law, to be a separate legal entity with its own assets and liabilities that are distinct from those of its shareholders. As such, creditors of the corporation have no recourse to claim their debts against the shareholders of the corporation, except in cases of fraud or where a persona; guarantee has been given. The incorporation of a business and the limited responsibility it affords the shareholders can therefore prove very useful in minimizing the commercial risks of a business venture.

In addition to minimizing risks, incorporating a business can prove very useful for tax planning purposes. Using fiscal planning tools and methods available for an incorporated company can prove very advantageous for the corporation itself as well as its shareholders. An incorporated company is taxed at a lower rate than that of an individual.

Generally, the advantages offered by incorporating a business well justify the costs related to its incorporation. Furthermore, incorporating a business constitutes a valuable protection and fiscal planning tool that warrants serious consideration.