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Advantages of Incorporating . In other words, the owner of the business would not assume the entire liability of the company. A sole proprietorship is an unincorporated business that is owned by one individual. From a tax and legal perspective, the A/P and A/R belongs to the sole proprietorship. For the first $400,000 in income, the tax rate would be about 17% compared to the top personal tax rate of about 44%. When incorporating a business in Canada, it is important to determine the jurisdiction in which your corporation will operate. Do you really need to incorporate, or is it more appropriate to use a partnership or sole proprietorship? There is … Currently serving Ontario, Alberta, and British Columbia. In British Columbia, you can establish a sole proprietorship by filing a statement of sole proprietorship business name registration with the British Columbia Registries Office. The owner of a sole proprietorship has sole responsibility for making decisions, receives all the profits, claims all losses, and does … Simplicity: Best of all, registering your business as a sole proprietorship is simple and easy to do. Limited Liability The main advantage to incorporating is the limited liability of the incorporated company. With some tax and reporting implications, BC allows all of the directors, officers, and shareholders of the corporation to be non-residents of Canada. Sole proprietorship is one of three ways of organizing a business in Canada: The other two are general partnership and incorporation.Each has its own operational, accounting, tax and legal requirements. Once the name has been cleared by the BC government, it will be given a registration number that will last two months. Incorporating a Company in BC. The decision to incorporate depends on the personal needs of the individuals involved (often called the "principals") and the goals of the organization. It is easy to see why so many businesses start out as sole proprietorships. When a business is started, it can be structured as a proprietorship, partnership, or corporation. Introduction. While incorporating a business can take some time and planning, a sole proprietorship is the most basic form of business. Often, it's not worthwhile to incorporate Transferable. Additional benefits of incorporating Raising money. The sole proprietorship may be a suitable choice for a one-person start-up operation with no employees and little risk of liability exposure. A sole proprietorship is a business with a single owner who alone is responsible for all liabilities—legal debts a company owes to third-party creditors. Retrieved on 2008-02-01. Incorporating a Company in British Columbia. Incorporating Limited Liability. Having the sole proprietorship of a business could be a major risk. All of the profits of the sole proprietorship belong to that person. CanadaBusiness.ca. Limited liability can be considered as the key advantage that is associated with incorporating. A sole proprietorship is when you own and operate a private business, which can be accomplished by filling out the appropriate permits. Conversely, sole proprietorships automatically dissolve when their principals pass away. Advantages It is the simplest kind of business structure.   A sole proprietorship is a business that is owned and run by a single person. ... consider setting up a British Columbia corporation. What are the main advantages of a sole proprietorship? ... Companies can officially incorporate, or they can register as a sole-proprietorship or a partnership. So succession planning is much easier in a corporation than a sole proprietorship. We'll help you incorporate your business, including managing and filing the necessary paperwork and securing the documentation you need. One person performs all the functions required for the successful operation of the business. A sole proprietorship is one person operating a business, without forming a corporation. Whether you choose option 1 or 2, the sole proprietorship’s bank account must remain active to clear out old balances. Sole Proprietorship. Incorporated companies are more likely to attract investors than a sole proprietor or partnership. A business with anticipated losses and little legal risk can likely start as a sole proprietorship, but increasing risk and more significant earnings will favour incorporating later on. Proprietorship. When operating a business, there is a risk the business will incur losses or will build up debts it cannot pay. If the business operates as a proprietorship, your personal assets such as your house and car can be seized to pay for the business’ debts. In Canada, there are basically four choices of business ownership, a sole proprietorship, a partnership, an incorporated business, or a cooperative. Potential investors, lenders, suppliers, customers and employees will immediately know that you are serious and thinking about the longer term. It can be embarrassing if your poor little corporation dies, as well as leading to legal and financial hassles. If you have decided that this is the best type of business for your needs, ask other business owners to refer a trusted professional. A sole proprietorship doesn’t stand alone as a legal entity as it’s just you operating a business. The income of the business is then taxed in the hands of the owner (the proprietor), at … Difference between incorporation and sole proprietorship. 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