You may be in the state of weighing the advantages and disadvantages of operating a corporation if you are about to decide whether to incorporate your own Ottawa-based business or not. Corporations have their own fair share of merits and demerits just like those of the other forms of business. Let’s get down to these entries:
Limitation of Liability
A corporate business form is regarded to as a stand-alone entity, indicating that you are not personally liable for business debts and assets. Incorporation helps protect your own corporate assets incurred from debt collection, lawsuits, and any other potential business issues.
Treatment of Tax
Stand-alone entities separate tax liabilities, noting the separation of corporate taxes from personal tax liabilities. Owners of corporations need to only pay taxes based on the money paid by the corporation through commission, dividends or salary. This is actually part of your personal tax return. It is also the responsibility of the corporation to pay corporate taxes on the profits earned by the company.
Long-Lasting Business Operation
Corporations do not stop operating even when the entrepreneurs do. These entities continue to live on even after the decision of shareholders to dissolve them, merge with other companies or move on since they are their own entity. Merging or selling a corporation is easier because it changes shareholders rather than establishing a new business.
Corporation as a Legal Entity
Corporations are often regarded as legal persons having a perpetual existence in the business arena. They continue to exist until they are liquidated and change in ownership or death has no impact on the corporation.
Complex Business Establishment
The process of setting up a corporation can be complex and may require registration with the central government of Ottawa. This may also need a listing on a stock exchange with the fulfillment of specific requirements associated with the number of directors, amount of capital and more.
Great Number of Shareholders
In a normal setting, corporations have huge number of shareholders and they usually delegate governance to a board of directors. The board then recruits a management to oversee the daily affairs of the corporation. The management may also act in furthering their own interests rather than the owners’ interest.
The costs in operating a corporation involve money in incorporating with your business. You will have an option whether to recruit an accountant or a lawyer to complete your incorporation paperwork. This is however, not a requirement. Corporations may also have ongoing fees related to it.
Maintenance of Documentation
Corporations are expected to maintain more of their records compared to business entities. They need to file tax returns and annual reports and maintain their bank records and accounts separate from their personal accounts. Records of the board of director meeting, licenses, records of shareholder meeting, and other corporate records are also important.
More in-depth information of these pros and cons of corporations as well as on how to buy or sell one is also accessible in websites like those of business for sale Ottawa.