Should I incorporate?
What are the tax benefits?
Incorporation and estate planning
When should non-profit groups become registered?
What about bylaws?

Should I incorporate?

Incorporation can protect you as the business owner. Once your business is incorporated, it becomes responsible for its own debts and contracts. In other words, if someone wants to claim against your incorporated company, they can only claim against the assets that the company owns, not against the assets that you own personally. But remember that many creditors, especially banks, will insist that you personally guarantee the debts of your company before they grant you credit.

What are the tax benefits?

Many people find there is a tax benefit to incorporation. An incorporated company can choose its year-end for tax purposes, while a sole proprietorship or a partnership has to report its taxes by the calendar year.

The profits of the business can be taxed at the corporate tax rate, which you may find is lower than your personal income tax bracket. Also, you can pay yourself less money from the business so that your personal taxes are minimized. Speak with your tax advisor before incorporating to ensure that your new company will have the best structure for your needs.

Incorporation and estate planning

A corporation can exist longer than you do. You may want to incorporate your business as part of your estate so that your heirs can just carry on the existing business after you’re gone. In contrast, if you were doing business as a partnership, then one partner’s death would effectively dissolve the partnership.

When should non-profit groups become registered?

Non-profit groups may want to register as societies. Being a registered society puts a responsibility on the group to ensure that financial records are disclosed to its members and that there is a structure in place for the election of directors. You may also find it helpful for fundraising purposes to be formally recognized as a society.

Although many non-profits initially begin as a small group of people with a good idea, they can grow and change. Interpersonal conflicts are almost bound to happen. The best way to protect the original purpose of the group is to formalize your existence as a society.

What about bylaws?

The bylaws of your company or society are your set of rules. No matter what the purpose of your company or society, the directors and officers need to know their own bylaws and ensure they are being followed by everyone. If you fail to follow your bylaws, you can be held responsible.

A well-run company or society has a clear set of rules that are understood and followed by everyone. Your lawyer will be able to recommend bylaws that will best help you to get things done fairly.