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If you’re ready to incorporate your business, you’re on the path to giving your business a solid standing. But, like other essential decisions of your life, incorporating a business also comes with its own set of considerations.
No doubt, incorporating a business can have several benefits. However, incorporating a business also involves some complexities. It also comes with a certain set of considerations.
Cost is one of those considerations. If you have decided to incorporate your business, it is essential to know how much it is going to cost.
In this article, we will try to find out how much incorporating a business costs. Continue reading to find out more about this process.
What does it mean to incorporate a business? Incorporating a business means giving it a legal identity. It means to separate your business from you as an individual.
When a business is separate from its owner, it can own things and make agreements. And authorities can hold a business accountable under its name. These attributes make incorporation different from a sole proprietorship.
No doubt, incorporating a business can be a complex task. But no one can deny the fact that incorporating a business can have several financial benefits. Here are the reasons why you should incorporate your business.
When you incorporate your business, you give it a legal entity. And it means your business can have separate taxes and debts. This helps your business safeguard your personal belongings, like your house and car, from creditors if you can’t pay. However, in a sole proprietorship, creditors can claim your assets in case of default.
Taxation is different for corporations. They have a lower tax rate than other business forms. So incorporating a business can enable you to benefit from taxation.
A corporation has more credibility than other forms of business. So incorporating a business will enhance your business’ credibility in the eyes of customers, suppliers, and business partners.
The enhanced credibility can help your business raise capital. Investors prefer to invest in corporations rather than sole proprietorships. So this is another benefit of incorporating a business.
In corporations, it is easy to transfer ownership to others. It means corporations can continue to exist regardless of what happens to the owners or shareholders. So incorporating a business provides continuity in the long run.
So how much does incorporating a business in Canada cost? Well, this question can be tricky to answer. And the reason is there is no one simple answer to this question. Various factors contribute in costing of the incorporation.
Here are some common costs associated with the corporation of businesses in Canada:
To incorporate your business in Canada, you’ll need to pay a fee to the authorities. Incorporating your business in Canada doesn’t have fixed government fees. These fees vary depending on which province or territory you’re incorporating a business.
The fees include the administrative costs of processing the documents. These fees range from around $350 to $1,100 or more.
A business name is an essential tool. It gives your business a unique identity. Considering this, companies reserve names exclusively for their use. It is to make sure nobody else takes the name you want before you can get things official.
Name reservation has a cost. And in some provinces or territories, this could cost around $40 to $50.
Legal fees are not obligatory in incorporating a business. But it is a smart investment that can ensure a smooth incorporation of your business. Legal and financial professionals can help you avoid pitfalls and ensure that your incorporation takes place smoothly.
Their fees can vary depending on various factors. However, it can range between 500$ to 1000$.
The authorities in Canada require corporations to file an online return. It provides up-to-date information on the business address and the date of the last annual meeting. It also provides details about its directors and officers, and other key details. And in case you fail to complete this annual return, you can face financial penalties.
If you’re planning to do business locally, provincial incorporation should be your ideal choice. And this option would protect your company name in the province where you register your business. But if you choose this path, you may not operate in other provinces.
The charges of provincial incorporation depend on which province or territory you want to incorporate in. British Columbia can cost you up to 400$ including name approval.
Alberta can charge up to 480$. And Ontario can cost you up to 360$. Charges for other provinces range between 200 and 300$.
While incorporating a business, you can also consider the option of federal incorporation. This incorporation has more benefits than provincial incorporation. And federal incorporation also has a lower cost than provincial incorporation.
Federal incorporation gives your business increased name protection. And it gives you the right to carry out business anywhere in Canada.
It will cost you only 200$ to incorporate federally. But this incorporation has some conditions. First, you’ll need to register your business in the province where your company has its head office. At least 25% of your business’ directors must live in Canada and be Canadian citizens or permanent residents.
Incorporating a business is a significant step for every businessman. Incorporating a business can have various financial benefits such as tax benefits and limited liability.
The step also involves some complexities. But once you understand the process, it will be easier for you.
In this article, we tried to make one aspect clear by mentioning the costs of incorporating. We hope it will help in incorporating a business in Canada.
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