Sole Proprietorship vs Corporation

Stay updated with current accounting standards, business compliance, tax preparation tips, and latest news.

    13 Dec 2021
    There seems to be several factors to consider when starting a small business, whether you are looking to earn extra income or want to become your own boss. You could either start your business as a sole proprietorship or can incorporate a company. Each option has its own advantages and disadvantages.

    Starting a sole proprietorship is simple and straight forward with minimum starting cost. On the other hand, incorporating a company has initial accounting and legal cost and would need to complete some paperwork before you start doing business.

    Advantages of sole proprietorship: The real advantage of starting a business as sole proprietorship is low cost and no wait time. You can start and stop business any time you like. You will be the boss and responsible for everything.

    Disadvantages of sole proprietorship: The main disadvantages are personal liabilities for business work and limited growth opportunities. Also, the net profit will be taxed at gradual personal tax rate which could be very expensive. .

    Advantages of a corporate: The main advantage of a corporation is lower tax rate and limited liabilities. A corporation can continue to operate ff stockholders or shareholders leave the company by estate planning. Unlike sole proprietorship, incorporated companies can expand their business easily.

    Disadvantages of a corporation: Formalities are much more compared to sole proprietorship. Companies must hold director and shareholders meetings and higher professional cost than sole proprietorship business.

    Should you incorporate a company? There are various variables which could influence your decision. We are here to assist. If you have any questions, about starting business as a sole proprietorship or as a corporation, please feel free to contact us.v
    Search
    Recent Post
    27 Feb,2024
    Canada’s 2024 Tax Brackets and Rates: Here’s What You Need to Know
    23 Feb,2024
    Important Tax Updates, Tax Breaks, and Tax Credits You Must Not Miss in 2024
    21 Feb,2024
    3 Things to NOT Miss When Filing Your Corporate Tax Return (T2) in Canada – 2024 Edition
    Search
    Get In Touch

    Don't Hesitate To Send Your Message To Us

      Leave a comment

      Your email address will not be published. Required fields are marked *