Blog Layout

Is it time to incorporate my business?

Starting out your own small business is an exciting and admirable task. So what should you do once you’re ready for the next step?

When most small business start out, they begin as sole traders or partnership, which means that they and their business are essentially one and the same. But once your business starts to take off, it is often worth rethinking your business structure.

Wanting to make the move to incorporate your small business can be an extremely daunting task. One that often small business owner would rather avoid. However, there are so many benefits to this next step that will make your life easier in the long run.

Still not sold? Well here are 5 reasons why we think that incorporate your small business should be your next move.

Personal Asset Protection

Turning your business into an incorporated small business compared to a sole tradership is really great when it comes to personal asset protection. In a properly structured and managed incorporation, owners should have much more limited liability for business debts and obligations. This does also mean that more formalities and paperwork are required, but it is well worth it to ensure that should anything go wrong, your personal assets aren’t at risk. If your business is starting to grow, then this is a really important factor to consider.

Additional Credibility & Name Protection

This may seem like a minor point, but it is one you definitely should not overlook when considering whether it’s time to incorporate your small business. Adding ‘inc’ after your business name instantly adds authority and legitimacy to your name. Consumers, vendors, and partners more often than not prefer to do business with an incorporated company. Incorporating your small business not only helps your business legally, but also helps with brand building and marketing.

Permanency

Another often overlooked benefit of incorporating your small business is that it means that it will continue to exist, even if ownership or management changes. Should a sole trader decide to move on from a business, it will cease to exist. If you have started your own small business, it’s only natural for you to want it to continue, even if you personally decide to move on. Incorporating your small business is the best way to ensure this.

Have Easier Access to Capital

Raising capital is generally easier if your small business is incorporated as it means you can issue shared in return for cash. Having this as an option makes it a lot easier for your business to grow and develop. If you’re in the need for a bank loan, that is another reason why incorporating your small business is beneficial. In a lot of cases, banks prefer to lend money to legitimate, incorporated businesses. You will also have access to more alternative sources of capital through which they can pay off their debts.

Tax

As an incorporated small business, you are taxed on your profits. These taxable profits can then be reduced by qualified business expenses which includes marketing and advertising, operating, travel and entertainment expenses. You are also able to deduct employee salaries should you grow enough to hire, and contributions to qualified pensions and retirement plans for employees. This all being said, taxations can become a bit more complicated once transitioned from sole tradership to incorporated business, so it’s worth hiring an accountant to assist.

What next?

Incorporating your small business does mean in ways that there are more administration, more expenses and attention to detail. However, the benefits definitely outweigh the negatives if your business is succeeding and growing.

To get started you need to register your business, decide on shares and establish directors.

This can be an overwhelming task, although rewarding at the same time. Never hesitate reach out to professionals in order to make the transition smoother, earlier and avoid simple mistakes.

Please don’t hesitate to contact us if you have an questions or need assistance of any kind. 

Need help with your accounting?

Find Out What We Do
March 14, 2025
If your business interacts with the public — whether through customers, suppliers, events, or onsite work — public liability insurance can protect you against claims for injury or property damage. This generally covers legal costs and compensation, and although it’s not legally required, being sued for negligence can be costly (and bad for your business rep), so it’s highly recommended.
March 14, 2025
Co-owning a property can be a practical and financially beneficial arrangement, but when circumstances change, sometimes one party needs to jump ship. Whether due to financial strain, health issues, relocation, relationship breakdown, or differing property goals, it’s not uncommon for one co-owner to buy out the other. While this process may seem straightforward, there are several financial and legal considerations to consider.
March 14, 2025
Most people who sell a property — especially if it’s their first time doing so — are surprised (and frustrated) at how complicated it can be. Expenses (expected and unexpected) are a big part of that — and there are numerous costs throughout the process. These include real estate agent fees, legal expenses, marketing costs, and property preparation. Understanding and anticipating these expenses beforehand can help ensure a smooth and well-prepared road ahead.
March 14, 2025
As an accounting firm, we understand the importance of structuring investments wisely. One key aspect that investors should carefully manage is their participation in Dividend Reinvestment Plans (DRPs). These plans can be a strategic way to grow an investment portfolio, but they also come with tax and record-keeping responsibilities can’t be overlooked.
February 13, 2025
Thinking of starting a business? Here’s what you need to know! Read our latest blog to learn six key things to consider before starting your business.
February 13, 2025
Donating to charity is a great way to give back, but did you know not all donations are tax-deductible? To claim a deduction, your donation must be made to a Deductible Gift Recipient (DGR), and can’t receive anything in return. Read our latest blog to learn what you can claim and how to maximise your tax return.
More Posts
Share by: