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The decision to incorporate your business is a big step. Incorporation means you have created another legal person that is separate from the shareholders. Unlike a person, a corporation can have an infinite life by changing the shareholders. A corporation does not cease operations on the death of the shareholder.
Like a person, a corporation can operate a business, acquire assets and liabilities, enter into agreements, and must file and pay its own taxes.
An advantage of owning a corporation is the liabilities of the corporation are restricted against the shareholders with one exception. Canada Revenue Agency, under certain circumstances can bypass the corporation and come after the Directors for unpaid taxes.
A corporation may find it easier to raise capital or obtain financing from a lender especially if acquiring a building or major equipment. However, lenders may want a personal guarantee to support the loan or lease.
Corporations are closely regulated and require extensive record keeping. There are restrictions on how the shareholders can remove money from the corporation. Accounting for shareholder income and taxes can become complicated.
Since a corporation is a legal person it must pay its own taxes on income.
Therefore, there are two sets of taxes that must be prepared, one for the corporation, and one for each shareholder.
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