There are a few reasons why you should consider incorporation. Perhaps you may have a passion that you want to expand or a business looking to create a product or service. Incorporations enable you to become a legal entity. Moreover, it can provide numerous benefits to you as a business. But first, you must find out how much it’ll cost and what steps you should take to establish your company as a legal organization in the field of your choice.
Cost of Registration
Notably, the cost to Incorporate in Ontario costs CAD$360 for both online and manual filing.
The Province of Ontario will accept electronic registration through third-party processors. They have permission to handle the Articles of Incorporation. While the fee is the same, they also tend to charge an additional fee.
The process of electronic registration only takes a few minutes to complete. You must provide the necessary details to the websites. If a prompt for a Newly Upgraded Automated Name Search (NUANS) report is requested, you must first obtain the document. The seven-page report contains similar trademarks, brands, businesses, and existing corporations that resemble the proposed business name. It verifies that the business name you choose is not already in use, allowing you to prevent future issues.
After you’ve entered the information, you’ll receive a receipt as proof that you’ve completed the incorporation procedure electronically.
If you’d instead handle the filing manually, you can head to the Ontario Business Registry office. The registration fee remains the same. Similar to electronic registration, you will need a NUANS report that the corporation is under processing. Aside from the document, you must also procure two copies of the Articles of Incorporation, each with signatures from the incorporators. Include a cover letter containing the name and contact information, such as phone number or email address. If the business owner is the one filing the registration, they must have their information on the letter.
Why Incorporate your Business
Incorporating your business comes with a few benefits you don’t want to miss. Here are the following:
When you incorporate your company, its entity adds another protection to your personal assets. It comes in handy if your company incurs debts you’re unable to repay. The entity legally binds your assets and elevates them to a level where creditors have no legal authority to demand payment.
When tax payments are deducted from the income, corporations are recognized as separate taxpayers. In Canada, businesses are handled by persons or corporations that are residents of the country. Furthermore, when it’s a Canadian-controlled private business, it can enjoy a reduced annual taxable income rate of less than CAD$500,000 due to actively pursuing a business in the country.
Freedom of the Organization
An incorporated business is free to establish and operate a legal business that can generate revenues. However, if the owner and shareholders desire to focus on a specialized specialization, such activities may be limited. They are also free to form an alliance or partnership with other incorporated organizations or individuals for a given period. It’s possible by creating a joint venture they can work on together.
Exemption of Lifetime Capital Gains
You might think of venturing onto a different path and decide to sell your business in the future. An incorporated company has its liability and assets, thus indicating independence. If you make a profit after selling your business, the Lifetime Capital Gains Exemption (LCGE) may allow you to avoid paying taxes on either the total or portion profits. For the current tax year, your company might save up to CAD$913,630.
Your Business becomes Credible
Similar to LLC, incorporating your company gives it credibility. It establishes your business as a legitimate company that can progressively work towards obtaining its credit rating. When a company establishes its credit rating, it can aid in the growth of the company, especially when requesting a business loan. Keep in mind that when you have a solid credit score to present lenders and banks, they will be able to evaluate your company’s ability to repay a business loan. Therefore, if the firm is profitable, you’ll be able to demonstrate your creditworthiness.
Ability to Grant Shares
When a business can reward shares to other people interested in its products or services, it can support the growth of the business. Incorporating your business allows investors to partake in dividends from the corporation’s profits. If the company is liquidated, the shareholders can also divide the capital. The corporation must be equal in all respects when it has one class of shares. In addition, an incorporated business can also elect a board of directors, and people involved in the property dissolution can receive shares.
The online and manual registration of businesses in Ontario requires an affordable fee that will get you various benefits for your business. When filing for registration, ensure you have all the requirements to save time and money. Lastly, it’s also crucial to register for the correct entity and website to avoid mistakes.
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