To Be Inc. or Not To Be Inc.

There are two primary reasons to incorporate your business: 1 – liability or risk exposure and 2 – tax savings.

The very nature of your business might strongly suggest you incorporate, such as, if you manufacture products used in construction, or if you provide foods that are inherently risky for food poisoning. You could review your insurance policy first to see if there is a risk that your exposure could exceed your policy limit. If so, your personal assets and home are at risk and you may want to incorporate your business.

Of course, there are a few industries where the individual’s regulating body will not permit incorporation or where insurance simply isn’t enough or even available. Those individuals should speak to a lawyer to find out what options and strategies they can employ to protect themselves and their families.

Perhaps, one of you is the primary employee of your business, and in which case you can reduce your taxes by incorporating and including your spouse in the company, either by dividends or a family trust. This model has been popular with health professionals for many years.

There comes a time financially, when paying a few thousand dollars today to your accountant and/or lawyer, will save you many thousand dollars for each tax year, but how do you know when this is? Your accountant or financial planner are most likely the professionals to alert you to this but some will not offer this unless you ask.

There are many ways your accountant or lawyer or financial planner can look at your finances for your business for you and your family... But you might have to take the first step and make an appointment. Whenever I have client, new or old, in my office, I make a point of asking some general questions about their finances and personal life. I have no problem suggesting that maybe they should check in with the accountant or insurer to discuss their goals where I see room for improvement. 

Ask yourself – if your professional team is not helping you – why not?

YOUR BUSINESS TEAM: Insurance Agent, Lawyer, Accountant, Financial Planner

Darlene Dort, Lawyer