A sole proprietor is liable to the full extent of his or her personal assets for the liabilities of the business. To reduce this risk, companies are incorporated to limit the liability of the owners. A corporation is an entity separate and distinct from the shareholders whose liability is limited to the extent of the money invested by the shareholders. Corporations are managed by the directors. This registry does not maintain a list of the shareholders.
Advantages of Incorporation
- Perpetual existence
- Flexibility for financing
- Assumption of risk by each proprietor is reduced
- Shares can be issued to employees without them becoming involved in management
The cost to incorporate a company is $300. Three forms are required:
To incorporate a corporation without share capital (eg. for a social or charitable purpose) the cost is $70, and, in addition to the above noted forms, schedule A (8 KB) and schedule B (4 KB) must be completed.
See Also: Business Taxation (Department of Finance)
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