We see many professionals and business owners wanting to grow and build their businesses. They know incorporating is a goal of theirs, but they often feel lost when it comes to knowing when it’s the right time to incorporate and how to do it.
What are the Benefits of Incorporating?
Setting up a corporation can open up a lot of options for innovative financial planning. It allows you the flexibility to pay yourself however much you want, save on tax each year, use the Capital Dividend Account, and accumulate wealth.
Upon incorporating, your business becomes a separate legal entity. From there, your corporation now has an unlimited life span, meaning it would not die with the owner because you can easily transfer ownership between shareholders.
For the most part, you’re no longer personally responsible for liabilities since your personal and business liabilities are now separate. Any financial responsibilities from your business will not impact your personal finances.
(Read more about the 4 key benefits of incorporating)
When is the Right Time to Incorporate?
The right time to incorporate is different for each individual and business.
A simple rule of thumb is if you have extra cash sitting in the bank from your business after paying your living expenses, then it’s a great time to explore if incorporating is right for you.
But, more importantly, you need to consider your own financial situation. The best way is to sit down with a financial planner and discuss the goals you have in mind for your financial future.
A financial planner can help highlight the benefits of incorporating and how that aligns with your goals.
Now, if incorporating is something you need to check off your list, this is how to set up a corporation successfully.
How to Properly Incorporate a Business
To get incorporated properly, there are people you want to include on your team who can bring you peace of mind and confidence.
This includes the expertise of a:
- A small business lawyer
- An accountant
- A financial planner who specializes in working with business owners and incorporated professionals
Here is how each of these professionals can help with the incorporating process.
A small business lawyer will help set up your corporation and submit the corporate records. They can organize lease agreements, employee contracts, and client service agreements.
Your accountant will give you one-on-one tax planning advice and recommend a proper corporate structure based on your needs. For example, if you have plans to sell your business in the future, your corporate setup would differ from someone who has no intentions to sell. They’ll also help prepare and file your taxes, assist with payroll registration, take care of your financial reports, and keep you and your business compliant.
You need to hire the right financial planner to set your corporation up for long-term tax savings and investments. A financial planner will walk you through tax-efficient cash flow planning, proper debt structuring, corporate insurance planning, corporate investment planning, and maximizing your Capital Dividend Account.
(Using corporate investing strategies, you can maximize your investments and save tax. Here are five ways you can do that)
In an ideal world, you want all three professionals working together as a team. The accountant and lawyer are essential to setting up your corporation and keeping you on track. The financial planner focuses on maximizing your corporate planning.
Watch the video to learn more about incorporating a business
Making the most of the expertise from these professionals will reassure your corporation is set up for success, and every dollar is maximized. You can sleep better at night knowing your wealth is working for you and your future is secure.
If you want to take your corporate structure to the next level, book a call, we’d love to help.