Business owners who want to take their sole proprietorship to the next stage or who want to start a new company can take advantage of incorporation. This process can provide numerous benefits and opportunities that will set your business apart from your competitors.
Incorporation, in simple terms, is the process of legally establishing your business as a separate entity from yourself. This means that it’s going to be different from the shareholders and owners when you register the company as a separate legal entity.
Give your professional practice a new level of credibility and competence with this process because it shows potential investors, customers, and partners that you are serious about your venture and dedicated to its long-term success. Limited liability protection is present because your personal assets are protected in case the company faces financial difficulties or lawsuits, where any debts or liabilities incurred by the company do not affect the owners in any way.
Businesses in Edmonton, Grand Prairie, Red Deer, Lethbridge, and Calgary are also able to issue shares and attract investment capital from outside sources more easily than if they were operating as sole proprietorships or partnerships. With the help of Country Hills Plates, incorporation is now easier than ever, and you gain access to various resources provided by the provincial government aimed at supporting entrepreneurs, and fostering economic development within the region. See more about the location of here:
Checklists for Incorporation
Decisions to incorporate should never be made on a whim, and it’s something that you should take lightly. talk to a corporate accountant for adviceand know more about the drawbacks to see if this is really the right move for you.
File the Articles of Incorporation in the province of Alberta, and fortunately, some packages include all the forms that you need if you go to the right company. Everything should be active within 3 to 6 business days after the filing.
Corporate Bylaws should also be adopted, and they offer a description of the internal rules, obligations, and duties of the officers and directors. You also need to maintain and create a minute book or a binder where the records should be kept. Corporations that fail to maintain accurate minute books may face severe consequences, and they might be in danger of losing their corporate status.
Businesses that are located in villages, cities, or towns should obtain a business license from their Municipal Office and they should ensure that they are compliant with the zoning bylaws. A business number is also a must when you need to open a GST, corporate income tax, payroll deductions, and import/export accounts. See more about GST on this webpage here.
Selecting a Business Name
It’s also important to select a unique name for your corporation and ensure that it complies with the rules set by the Alberta Corporate Registry. People may find this a little stressful, but you can always find a company that provides you with unlimited name searches using their tools.
Domain name searches are also applicable because you would want to make sure that the name that you want is not taken. Although .coms are often already taken, there are .co’s, ca’s, and other TLDs that you’ll find suitable. Being distinctive and descriptive with a legal ending is also ideal where you would want to try out names like Shell Cakes Inc. Next is the trademark search so you’ll avoid confusion with your customers.
Complete the necessary paperwork where you include the articles that outline details about your business, such as its purpose, share structure, directors’ names, and registered office address. Submit it along with the required filing fee to the Alberta Corporate Registry, and the amount can vary depending on various factors, such as the type of corporation being formed and whether expedited processing is requested.
Ongoing obligations for maintaining your incorporated status are required and these may include filing annual returns with updated information about your corporation’s directors and shareholders.
Benefits of Incorporation
Separate your business and personal obligations so that when things start to go south, your home and other assets will remain untouched. However, directors are still going to be responsible for any unpaid taxes and employees’ wages, but this can have a different effect than when you remain a sole proprietor as a business.
Raise money and get the capital that you need when you’re going to start another venture. You can sell your shares, and everything can be transferable. Continuous lifespan can also be present because a corporation is not too dependent on the lifespan of the owners.
However, there are primary drawbacks that you need to know, such as the ongoing accounting and the annual filing costs. You also need to be prepared for the added expenses, but you can always find affordable online platforms.
Tax Benefits for Incorporated Businesses in Alberta
Incorporating your business in Alberta can offer a range of tax benefits that can help reduce your overall tax burden. Alberta has one of the lowest corporate tax rates in Canada, which is currently at 8%, which means that by incorporating your business, you may be able to save significant amounts on your taxes compared to operating as a partnership or sole proprietorship you can find out more at this link: https://corporatefinanceinstitute.com/resources/management/sole-proprietorship/.
Have access to various deductions and credits that are not available to unincorporated businesses, and this includes deductions for expenses such as salaries, rent, utilities, and more. Instead of paying tax at your personal or marginal rate on your income, you can do some incorporation if you’re a practicing physician and you only pay the small business rate after the overhead costs. Taking advantage of the tax deferral is now possible and this can translate to thousands of dollars each year.
Professionals and businesses can also retain certain flexibility concerning how they distribute income among shareholders. By carefully structuring dividend payments and salaries, it may be possible to minimize individual tax liabilities while still benefiting from the profits generated by the corporation.