Should I Incorporate?

Have you been thinking about incorporating a Canadian business?

Below are some questions that might help you get closer to deciding if now is the right time.

Should I Incorporate? Quiz

An assessment tool for Candian business owners. Note answers are not necessarily cumalitive. A strong answer to any one question could mean incorporating is worth considering.

 

1. Does your business make enough profits to justify tax savings?

$45,000 Or Less

You could wait to incorporate. Your answer to this question doesn’t suggest you should incorporate at this time. Take a look at some of your other answers, you may have other factors in your business that would suggest it is time to look at incorporating.

 

Over $45,000 But Less Than $75,000

You could wait to incorporate. Your answer to this question doesn’t suggest you should incorporate at this time. Take a look at some of your other answers, you may have other factors in your business that would suggest it is time to look at incorporating.

 

Over $75,000

You maybe could incorporate. Talk to your accountant and see if you are ready or if you should wait.

Over $150,000

Yes, now might be a good time to incorporate. Talk to your accountant.

2. Do you have personal debt (other than house mortgage and car loan) for which the interest is not tax-deductible?

Yes

You could wait to incorporate. Your answer to this question doesn’t suggest you should incorporate at this time. Take a look at some of your other answers, you may have other factors in your business that would suggest it is time to look at incorporating.

 

No

Yes, now might be a good time to incorporate. Talk to your accountant.

3. Is your business “capital intensive”? Are you constantly reinvesting your profits? In other words, do you have substantial personnel, equipment or inventory?

Yes

Yes, now might be a good time to incorporate. Talk to your accountant.

No

You could wait to incorporate. Your answer to this question doesn’t suggest you should incorporate at this time. Take a look at some of your other answers, you may have other factors in your business that would suggest it is time to look at incorporating.

 

4. Is your business in dramatic growth mode such that you constantly need to put your profits back into business?

Yes

Yes, now might be a good time to incorporate. Talk to your accountant.

No

You could wait to incorporate. Your answer to this question doesn’t suggest you should incorporate at this time. Take a look at some of your other answers, you may have other factors in your business that would suggest it is time to look at incorporating.

 

5. What is the size of your business?

Over 3 Employees

Yes, now might be a good time to incorporate. Talk to your accountant.

1 to 3 Employees

You may want to start thinking about incorporating.

No Employees

You maybe could incorporate. Talk to your accountant and see if you are ready or if you should wait.

6. Do you have a shareholder or shareholders to split the income with?

Yes, I do.

You may want to start thinking about incorporating.

No, I don't.

You maybe could incorporate. Talk to your accountant and see if you are ready or if you should wait.

7. As an investor, the corporation you are part of can provides some sort of legal protection. Are you concerned with legal liability protection?

Yes

You may want to start thinking about incorporating.

No

You could wait to incorporate. Your answer to this question doesn’t suggest you should incorporate at this time. Take a look at some of your other answers, you may have other factors in your business that would suggest it is time to look at incorporating.

 

8. Most accountants would argue that there are no benefits in owning the properties. Do you own properties in your corporation and require cash flow immediately?

Yes

You could wait to incorporate. Your answer to this question doesn’t suggest you should incorporate at this time. Take a look at some of your other answers, you may have other factors in your business that would suggest it is time to look at incorporating.

 

No

You maybe could incorporate. Talk to your accountant and see if you are ready or if you should wait.

9. Do you plan on owning just one property?

Yes

You maybe could incorporate. Talk to your accountant and see if you are ready or if you should wait.

No, I plan on owning more than one property

You may want to start thinking about incorporating.

I don't plan on owning business propetry

You could wait to incorporate. Your answer to this question doesn’t suggest you should incorporate at this time. Take a look at some of your other answers, you may have other factors in your business that would suggest it is time to look at incorporating.

 

10. Most taxes will still come even after the owner passes away. Do you plan to leave your assets to your children?

Yes, I do.

You maybe could incorporate. Talk to your accountant and see if you are ready or if you should wait.

No, I don't

You could wait to incorporate. Your answer to this question doesn’t suggest you should incorporate at this time. Take a look at some of your other answers, you may have other factors in your business that would suggest it is time to look at incorporating.

 

11. If you don’t plan to incorporate now, do you plan to try it in the future? Take into account that the amount of money required to transfer now and later is different.

Yes, I plan to incorporate at a later date.

You maybe could incorporate. Talk to your accountant and see if you are ready or if you should wait.

No, I plan incorporate as early as possible

Yes, now might be a good time to incorporate. Talk to your accountant.

12. Do you have a business you likely could sell in the future?

Yes

You maybe could incorporate. Talk to your accountant and see if you are ready or if you should wait.

No

You could wait to incorporate. Your answer to this question doesn’t suggest you should incorporate at this time. Take a look at some of your other answers, you may have other factors in your business that would suggest it is time to look at incorporating.

 

Ted has assisted hundreds of clients with incorporating over the years including standard Ontario corporations, professional corporations, parent-subsidiary and sister corporations, holding companies, opco/holdco/trusts and now real estate agent corporations (three so far). He also has some federally incorporated clients and out of province clients, divestitures and wind-ups and even a non-profit client (though all of these are more on an exception basis for his practice but happy to discuss). A large part of his practice is Ontario incorporated CCPCs (you can ask Ted what that is).

If you are thinking about incorporating your business, we’d love to help. Contact us.