Key Benefits Of Incorporating A Business In British Columbia
Many sole entrepreneurs and business partners in British Columbia wonder if they should incorporate their ventures or not. When you incorporate your business, you register it officially as a separate legal entity. This is when your business becomes separate from you (in the case of a sole proprietorship) and your partners (in the case of a partnership).
Incorporating a business in British Columbia requires legal assistance. Ensure that you work with a skilled and experienced corporate lawyer before making any concrete decision.
If you are on the fence about making the right decision, allow us to give you a few major benefits of incorporating a business in British Columbia:
Limited Personal Liability
When you incorporate your business, it becomes a separate legal entity. This also means that its liabilities will be different from your liabilities. An incorporated business gives its founders and directors the benefit of limited liability. This means that your personal assets will never be used to pay off your company’s debts. Incorporating your business gives you financial cushioning and safeguards your personal properties.
Easy Transfer Of Ownership
Being a separate legal entity from you, you will not directly own the assets it possesses. Instead, you will hold shares in your business. This makes the transfer of ownership interests easier.
Simpler ownership transfers attract more investors to your incorporated business. Many venture capitalists and angel investors prefer knowing if they can enter and exit their investments on pre-agreed terms. Unlike other business structures, an incorporated business does not cause unnecessary delays in such matters.
Your Business Will Never Die
Until you consciously pull the plug, your incorporated business will never die. When the shareholders of a company pass away, their shares are either inherited by their children or sold to new shareholders. On the other hand, sole proprietorships and partnerships tend to dissolve when the owners/partners pass away.
Quick Credibility
You can earn quick credibility by incorporating your business in British Columbia. Such decisions are always seen as signs of an entrepreneur getting serious about their venture. High credibility will attract investors, customers, suppliers, and shareholders, giving your business the push it needs.
Having said that, you should also know that incorporating a business in British Columbia comes with additional effort and cost. Your company will need to maintain a separate set of accounting records that should not overlap with those of its owners. Your company will also be paying annual registration fees, filing separate tax returns, and dealing with individual financial statements.
Better Access To Capital
Incorporating a business in British Columbia will give you better access to capital and grants. As your venture’s credibility increases, negotiating with suppliers and seeking finances becomes easier. You will also have better attention from angel investors and venture capital firms if your business is incorporated. Moreover, there are certain Canadian government grants that are applicable only to incorporated businesses.
Tax Benefits
Another major benefit of incorporating your business in British Columbia is that it will receive tax benefits. Corporations tend to pay lower taxes than individual entrepreneurs. Moreover, corporate tax rates are not as high as income tax rates, putting you in a better financial position as a company as well as an individual.
Choice Of Incorporation
As an entrepreneur, you get a choice between incorporating your business in a federal or provincial jurisdiction. You can also opt for both options. This decision mainly depends on your business expansion plans. If you run a small local business and do not have massive expansion plans, it is advisable to incorporate your business in a provincial jurisdiction. On the other hand, larger and national/international-level businesses should go for federal jurisdiction.
Incorporate Your Business And Give It A Separate Legal Entity With Cube Law
If you are an entrepreneur planning to take the leap of incorporating your business in British Columbia, Cube Law will help you throughout the registration process. Our corporate lawyers are in sync with the ongoing and prevalent laws and regulations in British Columbia. From helping you understand complex jargon to making the incorporation process simpler, Cube Law provides holistic and wholesome legal help to entrepreneurs aspiring big!
(Please note that this content is for informative purposes only. This is not legal advice from Cube Law.)